Counterfeiting runs parallel to main industry. Firms create ‘originals’ and pirates make quick money by creating knock offs. And it is no small industry. One estimate puts the value of counterfeiting industry to touch $1.78 tn by 2015. This industry not only affects the commercial firms but also nations when their currency is faked. This phenomenon is present in almost all economies of the world. A variety of products are counterfeited including luxury watches, designer cloths and bags, footwear, pharmaceuticals, food and drinks, medical equipments, tobacco, spirit, and automotive parts. Technically these are illicit activities that violate intellectual property rights. Swiss watch industry alone suffers a setback to the tune of $ 1bn due to imitation products.
Counterfeiting industry thrives on two broad principles. First there some customers who deliberately buy fake products at a friction price of the original. Secondly a big section of customers are passed on knock offs as originals. In the second case customers are duped into paying almost full price for a fake. In the first case customer is equally is to be blamed along with the counterfeiter for this illegal activity. However in the second case, it is the customer who is duped, it is a fraudulent act based on misstatement of facts.
From consumer behavior perspective, counterfeiting industry is built on the principles of stimulus generalization. The marketers of knockoffs play a perceptual deception game in which a merchandize is made to appear so similar that potential buyers mistake them as original. Technically the difference between the fake and the original is kept below smallest detectable difference and hence the difference is not picked by the sensory system (jnd). Consequently the beliefs, values and behaviors that belong to the original products get generalized to counterfeited merchandise. A variety of brand elements, like the color, size, shape, texture, store appeal, packaging and name are orchestrated to create perception similarity. For instance a Lifebuoy is often spelled Lifeboy and Philips is has letters like Phillips. It all depends upon the customer’s individual sensitivity or differential threshold level whether the fake would be separated from the original. Customers under the conditions of low involvement or low competency are more prone to fall prey to counterfeiting.
So what are the strategies available to the makers of the original products? Counterfeiters elicit generalization response by drawing attention to similarity (keep the differences below jnd). An opposite strategy which prevents generalization from happening could be used by the makers of original products. So customer attention should be focused on differences (between fake and original) so that one can be separated from the other. HUL and Philips should draw buyer attention as to how their product is spelled (e.g. is it BUOY or BOY/ how many Ls the real Philips has? This would obstruct fake from being perceived as an original.
Maruti faces almost similar challenge in automotive car parts market. A big chunk of this market is dominated by players who pass on their parts as genuine parts which later damage cars and bring discredit to the company. The company is currently running a campaign ‘Don’t be a Pappu, Always use genuine parts’. Its print campaign goes with the headline ‘ Make sure your Maruti remains genuine’ with a closure statement ‘There is nothing called a spare part. Every part is vital’. The ad also tries to educate customers as to how a genuine part can be separated from the fake. The ad draws customer attention to a number of things (dissimilarities to prevent stimulus generalization): high security hot stamped scratchable holographic strip, Maruti Suzuki logo which will disappear when heated when rubbed by hand to 40-50 degree centigrade but will resurface when temperature drops, and a specific area on packaging when scratched with a coin which show MGP logo.
The strategy for the makers of original products is to prevent generalization of attitude by magnifying differences above jnd. However counterfeiters do exactly the opposite.