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  • Part 3: Marketing, Distribution and Psychology in Brand Protection

    von Prof. Dr.-Ing. Hans Demanowski 4. Januar 2021

    Before taking a closer look to modern distribution channels and data based security features, allow some thoughts on the correct positioning of security features.

    It was already shown, that the attention of the public to security features and the ability to correctly identify them are insufficient. The more it is important to place such features at the correct place. This is, of course, a competing claim to other targets, e.g. marketing needs. Despite of this, it is one of the central questions, deciding on success or failure of the security feature.

    To find “the right place” for security features was target of a study, carried out in Beuth University of Applied Sciences Berlin, few years ago.

    The test design was quite tricky, because participants must not knew what was sought-after. Towards some initial trials, it was decided to use a well-known packet soup box, which was altered in only one detail: the content information in grams and its position on the box. The rest of the package remained unchanged. Test persons were briefed, that the content information had been changed and they were asked to tell the present content of the present box. In order to do so, they had to find this information, first.

    The box was divided into 16 sectors, four on front and reverse, each, and two on both sides, on top and bottom of the boxes, each. The wanted content information was put into one of these sectors.

    In order to generate a scale, the time between handing over the respective box and the communication of the content figure by the probands was measured by stopwatch. As a result, the time to address attention to a certain region of the box (in seconds) was received as a scale unit for its appropriateness for the installation of important information, such as security features. The best place was, as expected, left top on front side, while the worst place was on right hand side of the bottom of the box. By the way, it should be interesting to repeat this trial in the Arabic world, where the reading direction is reversed. The most interesting finding was that the difference between the best place and the worst place accounted for nearly factor 8! This means, when you put your (expensive) security feature to the wrong place, you may lower the probability of proper use eight times, compared to the best place (on the other hand, you may hide incommodious mandatory information, such as fat or sugar content, very successfully by choosing these “bad” areas).

    Summarizing it can be stated that it is important that the Customer is interested in buying a genuine product, that he can use well-defined, easy to identify and easy to find security features, which are difficult to alter / manipulate and which are resistant against environmental stresses during time of use.

    The growing number of new copying technologies – especially in the field of data handling – and new distribution channels require entirely new protection measures and prosecution. While the impact of physical counterfeits in the analogue world was more or less local and quantitative restricted, it has reached totally new dimensions in the time of e-commerce and internet trade.

    In the “good old days” you could, in many cases, personally return a counterfeit product to the dealer or send him the police. It is much more difficult to catch an illicit e-commerce trader today, the more, if he is based in a foreign country, far away from you. While you was able to check the product, you are buying in the analogue world before paying, you can see the product nowadays only on a computer screen, not knowing if the pictured article is what you get, not even knowing if the dealer behind is the one, you believe he is, but you have to pay in advance, in most cases. This is because the dealer, too, does not know if you really exist or not. Internet trade is, in most cases, fully anonymous – with all advantages and disadvantages, linked.

    You cannot be sure that the dealer really exists, and the dealer does not know, if you are the one you claim to be. By the way, this was the secret behind the big success of old-fashioned mail-order houses in the early days of e-commerce, some 20 years ago: They simply knew their customers still from the analogue world, while newcomers, who tried to start an internet business, did not – and thus received up to 90% of so-called “dummy-orders”, e.g. orders which came from “somewhere” and never were payed for.

    The huge coverage and the really small risk to get caught is one of the major reasons for counterfeiters to switch their activities to the internet. The problem is not yet in the main focus of many brand owners, unless the indicators are very clear. Some specialized companies, like IPBee in Germany, are searching the internet for fraud products, discovering really interesting facts.

    Some online offers for certain goods exceed the yearly production capacities of the original manufacturer by far, some luxury good companies, who believe to have some 10 authorized dealers in a certain country, see thousands of different points of sale online in the same territory. Some offers for high-priced products are much below 1% of their normal price, depending on the obtained quantity, in some online shops. All this is really obvious, but astonishingly many brand owners do not see any necessity to act, when confronted with such figures. This is irresponsible and the relevant management should be fired better today than tomorrow!

    Unless it is impossible, in most cases, to catch the culprits and to bring them to prison (which is not possible already because of the really weak legal norms in most of the countries, considering counterfeiting more or less a trivial offense, unless they are directly responsible for many deaths caused by forged spare parts or drugs), you can make them a hard life very effectively, when using intelligent support.

    Most of the internet criminals are depending on appropriate infrastructure, such as big virtual market places or trading platforms. They need them to be spotted with their offers in the endless virtual space. A fraud dealer who is not found by potential customers is a nobody! Big internet traders, such as Alibaba (China), Taobao (China) or, much smaller und thus less important, Amazon (USA) are paying big attention to their image and are willing to co-operate in the fight against fraud (which they did not, still few years ago, but now, they do!).

    The most of them have a points-based rating system for their dealers, depending, for example, on the number of reclamations, complaints and the like. The score decides on the listing of their products. It makes a big commercial difference if you are listed on page one or on page 59, with your offer. It takes a lot of effort, time and good performance to reach a good listing. If you are accused to sell counterfeits, and this proves to be true, you will be asked by your trading platform to remove the rejected offer, and you will be reduced in your score (and fall to a lower listing), which may heavily reduce your turnover. Internet fraud “hunters” like IPBee frequently report on trials of accused dealers, who ask them to pull the charge back, in order to rescue their points, and promise really wonderful thinks, in return.

    Some trading platforms, especially in China, are acting quite hard to unlawful traders. The do not only sharply reduce the score in case of retry, they also totally exclude such dealers from their platforms and do not allow them to get back, which is ensured by a personal identification procedure on registration. This means to illicit traders that they should think twice, before selling some counterfeit goods.

    If you act, as a brand owner, very consequently, you can rapidly reduce the number of counterfeits on the internet within quite short time. As you cannot fight them all at a time, it is recommended to start with the big players, because the small ones are not very relevant. If you don’t act at all, you cast your own brand, your company and your staff away – and thus your own living.

    Some of the counterfeiters are getting really cautious, which makes it even harder to stop them. For example, if a new customer orders a test product from the internet offer, he may receive an original. But then, once having the direct contact, he could buy many more counterfeit products – and if pleased with quality and price, nobody will find out about it. This applies especially to B2B (business to business) commerce.

    Others are moving to the “grey zone” and just use big brand names without permission, but sell own no-name products. They put the famous brand name somewhere on their website, to create traffic for their own goods. This is illicit, too. Some of them are really creative, indeed, and hide the misused brand name, for example, within the html-code or in the (invisible) file name of pictures. While people do not see this, the search engines find them – and bait the customers of different brands to other websites. Thus, if you type in “Marlborow”, you may end with some cheap cigarettes from India, which you have never seen before, because the name of the nice beach picture on the website was “abcmarlborowdef”.

    Others are illegitimately using photos of brand products on their own websites, to attract customers. But also they can be caught by some very specialized companies, too, who trawl the internet for such photos. 25% of an original picture are enough to identify the original – and to inform the copyright owner.

    Another protective idea is the use of digital watermarks by the brand owner. There are, at least, two major types: solid and fugitive digital watermarks. The first can be embedded to an original to mark the copyright. This can, for example, apply to photos or data files. Such watermarks must survive many copying procedures and still remain readable, even if the copy is very poor, to prove the legal owner even after many reproductions.

    Fugitive digital watermarks shall do just the opposite: they must get lost already after the first trial of copy, even if it is a high quality reproduction. If you check a product which was equipped with such type of digital watermark, cannot find it, you may be sure to have a copy in your hands. Such digital watermarks are applied, for example, to banknotes.

    The implementation of encrypted codes is another way of securing goods, but it is necessary to make sure that such codes will be checked by the right target audience, and that they cannot be copied or altered. This includes safe data connections. The concrete way of implementation of such codes is not very important. Clear text is as good as barcodes, QR-codes are as good as RFID.

    Especially RFID is systematically overestimated. Simple RFID at affordable (but still quite high cost – e.g. compared to a barcode) are just another way of data storage, with the disadvantage that a special reader is required. This means, RFID are not “more secure” then a simple encrypted clear text. If you dream of a secure RFID, you need one with own processor capabilities, which requires own power supply and costs your last shirt. RFID are vulnerable in many environmental conditions. And if you think of recycling, RFID is the worst case, because they contain a lot of different materials, which can, for example, spoil a whole glass melt or recycling paper production. First of all, RFID is yesterday’s technology, because it represents decentralized data storage (with reduced capacity), while the whole world is going to the data cloud, with its endless storing capacity and the option of daily updates. You do not need any RFID chip to access a data cloud, a simple barcode or even clear text is enough.

    If you decide to use encrypted codes, think of the given options, you already have! Many products bear serial numbers or expiration dates, already. Just add some digits and your security code will be perfect. And don’t forget your database security. 80% of all data manipulations come from the inside, e.g. from unsatisfied staff.

    A relatively new way to mark own copyrights (and to prove them later on!) is the use of the block chain. After only few iterations, it is impossible to alter the contained data. This gives a high level of security. It is not even necessary to create an own block chain. Just take advantage of an existing one, for example the Bitcoin. The only thing you need to do is to “sell” your original (respectively the digital copy of it) for some thousandth part of a Bitcoin and it will be linked to that part of a Bitcoin forever. Did you have a good idea, you wish to share with someone, or did you, finally, invent the Perpetuum Mobilé? Did you write the next hit melody? Just link it to a Bitcoin before showing others, and you can never be cheated. First Courts of Justice have already accepted such block chain-based confirmation of intellectual ownership. It is that simple!

    Summarizing it must be said that counterfeiters are really creative, indeed. They probably never stop. But the fight against them – be it in the analogue, be it in the digital world – is not hopeless. It is up to every brand owner and to every producer of originals to protect the own business. The fight is not easy but with some intelligent consideration it can be won!

    by Prof. Dr. Hans Demanowski