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  Greg Miller Leveraging Consumer Engagement to Fight Product Counterfeiting
by Greg Miller
August 26, 2011

Counterfeiting high-brand-value consumer products is a serious, expensive problem. Fortunately, the technologies and techniques are in place to stop a large portion of it. Stopping this kind of fraud improves the customer experience, increases margins, and generates even stronger brand loyalty.


A key to success is building customer engagement into the authentication solution.

Why is Counterfeiting So Attractive?

Intense direct-to-consumer advertising drives consumer purchasing behavior, assigning significant value to star brands. Consumers identify products by their names, not their functions. You don’t buy a gaming platform, you buy a Wii® or a Playstation®. You don’t buy a phone, you buy a Droid™ or a BlackBerry®. Counterfeiters reap the rewards by stealing the brand names, affixing them to lesser-quality goods, and selling them at higher prices.

It is fairly easy to create compelling counterfeit labeling and packaging. A simple desktop computer and printer can create sophisticated, interactive websites and high-resolution labels. The ubiquity of such comparatively inexpensive equipment empowers almost anyone to be a counterfeiter, making authentic brand identity much harder to protect.

The Internet offers counterfeiters the perfect advertising and distribution platform for global illegal activities. There is virtually no barrier-to-entry. Counterfeiters can offer goods on any number of unregulated sites and can generate considerable fraudulent sales volumes before anyone is the wiser. Consumers have become accustomed to seeing lower and lower prices, and indeed some sites now offer online bargaining. This furthers an attitude of, “if it’s too good to be true, it might just be a good deal.”

Lastly, the penalties for counterfeiters, besides being very difficult to enforce in the multinational Internet environment, are just not that substantial compared to the potential profits. Penalties are very hard to enforce. One big problem is that consumers are often complicit in this fraud. If they think they’re almost getting the real thing for a substantially lower cost, they’ll look the other way. With complex electronics, they may not understand why working with a reliable brand through their authorized channels is important. They’re willing to take chances with something cheaper as long as a big-name brand icon is affixed to the front of the item and printed on the box.

So, with all these factors working against them, how can manufacturers protect their brands without alienating consumers?

Engaging Consumers in Brand Authentication

Consumers often greet authentication with a groan. Authenticating identity can mean long lines at airports. Authenticating a credit card can mean pulling out a driver’s license as backup. Proving that “you’re you” online means remembering any number of usernames and passwords. We’re willing to do it, but there’s rarely any joy in it.

The key for manufacturers trying to engage consumers in effective authentication is to create a positive experience: entertain the user in some fashion and show that they’re getting value. The simplest way to entertain is to offer visually pleasing graphics. For example, holograms can be constructed that show elaborate motion. Labels can integrate these holograms with pigments that shift colors as viewing angles change. These are called overt authentication techniques because they are clearly obvious to any viewer.

These visually pleasing, overt techniques work because the expertise and materials needed to create and manufacture sophisticated, pigmented holograms and labels are hard to obtain. Counterfeiters can’t create holograms with flip images and microtext in a garage, nor can they buy sophisticated pigments on the open market. Consumers can immediately tell the difference between a highly designed, expensive-looking label and a cheap knockoff. The consumer can see the quality and relish the value.

Digital tools can complement overt visual effects to both enhance the robustness of an authentication program and engage the consumer in a different way. One example is where a product’s ID is tracked throughout the distribution cycle and the customer purchase. With this technique, the customer’s involvement in the process generates a stronger brand and greater customer loyalty. Here’s how it can work:

  • The manufacturer generates an encrypted ID code for a particular product.
  • A specialized security printer integrates the code (QR code, 2D bar code, or digits) onto an overt authentication label.
  • The manufacturer affixes the label to the product and/or its packaging.
  • Tracking data for the code is managed by a data center: when and where it was shipped, customs information, when it was sold and by whom, etc.
  • The end-consumer scans the bar code or enters the code online.
  • The consumer is taken to a customized landing page where he is informed on the authenticity of the product and other services can be offered. Such services can be customized by the brand owner and may include things like warranty information, special offers, or other incentives.
The customer experience reinforces the exclusivity of the brand and opens a line of communication between the customer and the manufacturer. This increases brand loyalty and offers greater sales opportunities for the manufacturer. It is a win-win solution that can reduce losses due to counterfeiting and heighten brand value.

   Greg Miller is vice president and general manager of the Authentication Solutions Group within the Advanced Optical Technologies (AOT) segment at JDSU. His division provides complete authentication solutions for transactions, high value documents and brands. These solutions leverage overt, covert and digital methods.

Prior to joining JDSU, Greg was CEO of Miradia, a fabless semiconductor company providing components to the display industry. Miradia was acquired in 2009 by Walsin Lihwa, a Taiwanese conglomerate. Greg has earlier experience at JDSU, where he was VP and general manager of the Custom Optical Products Group. He has also held senior positions at Tyco (formerly Raychem) and was a Nuclear Engineering Officer in the U.S. Navy. Greg currently sits on the board of Luxim, a high efficiency lighting company, and NetComponents, an ecommerce company for the Electronics Industry.

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