Problems of fake brands in Rural Markets

27th March 2021 2 By indiafreenotes

Fake brands are identified under two broad categories, namely:

Counterfeit products: These are fake products that bear identical name of product/ packaging/graphics/colour scheme and even same name and address as the genuine manufacturer. They look exactly like real products other than the legal owner of the real products & trademarks.

Pass-Off products: Such products have a similar sounding name or have a similar spelling with similar looking packaging and design. These products are meant to mislead the consumers who are illiterate or in a hurry to purchase goods.

When brand loyalty is difficult to achieve and brand identification is a big challenge in the presence of fakes and counterfeits, innovation in packaging becomes extremely critical. Since only select people can read the name of the brand in the rural market. These innovations in the form of pack sizes and colours act as differentiator and can create demand-pull because of the excitement they create in the mind of consumers.

Rural markets suffer from the problems of low penetration and poor availability of branded products. Hence, although there exists a huge demand for branded products, there are no distribution channels to make the product reach the customer. This has led to the growth of fake brands.

  • Ponds has been replaced by Bond’s talc
  • Fair & Lovely by Fair & Lonely
  • Lifebuoy by Likebuoy/Lifeboy

Fake brands exist in rural as well as urban locations. But the problem is more acute in rural areas especially the deep pockets which are less accessible and people have very little knowledge about the original brands. “Most people in rural India can recognize alphabets but not complete words, so during a research, we found a whole lot of samples of fake Clinic Plus shampoo sachets where the visual was similar to the original brand but the name was changed to ‘Clinton’ as Bill Clinton was to arrive soon in the country. During another such raid, we collected about 99 variants of Fair&Lovely cream including Fair&Lonely, Far & Lovely etc.”, said Mr. Pradeep Kashyap, president, Rural Marketing Association of India (RMAI) and CEO, MART while sharing an interesting incident in past.

The Indian rural landscape being scattered in smaller villages, gaining access in all of them is a tedious task for brands. Also, most of the FMCG brands have not been able to set up an efficient distribution network in such areas. The local entrepreneurs are well aware of these challenges. Hence, take advantage by manufacturing cheap substitutes of original brands, misleading the rural consumers. These manufacturers have an advantage of being local and thus reach the shops before the original brands do.

Such counterfeits piggy back on huge marketing budgets of FMCG companies. The rural consumers are aware of the brand owing to ads broadcasted on radio & television channels. But on time of purchase, the consumers tend to pick their fake counterparts due to unavailability of original product or get fooled by the retailers who on purpose sell cheap products for higher margins.

Over the time the share of fake products in the FMCG market has grown to 10- 15% causing a deep hole in the pockets of the FMCG companies.  A study conducted by AC Nielson, a research agency reveals that FMCG industry loses around 2500 crores annually to counterfeits and pass-off products. In another recent survey conducted by AC Nielson reveals that top brands in India are estimated to lose up to 30 percent of their business to fake products. Besides the loss of revenue, the leading companies also bear the damage to brand image and brand loyalty of consumers.

On a whole, the brands not only suffer in terms of revenue but also have to compromise on the brand image which in no case can be tolerable. Therefore, various brands have come up with unique strategies to overcome their shortcomings in the rural markets and curb the growth of fake brands in rural areas.

Companies like Coca-Cola have set up an elaborate system to curb the menace of duplicate manufacturers, offering incentives to informers.  It has 48 consumer response coordinators across the countries who work with their teams and redress consumer complaints directly, including overcharging and spurious bottling. Besides, it has a large network of route salesmen who have a one-to-one relationship with the retailers on their beat and keep their ears to the ground. When they spot suspicious activity, they inform company officials. So though it is impossible to stop counterfeiters totally, it is possible to minimize the damage they cause.

Upgrading the product packaging periodically or launch product variants so that the manufacturers of counterfeits find it difficult to copy their products. Hindustan Lever has initiated special tamper-proof packs for its deodorant spray ‘AXE’, whose nozzle can’t be detached from the body while Procter and Gamble uses special labels for its Vicks Vapo Rub which does not peel off even if soaked overnight in water. This makes it difficult for spurious goods makers to imitate.

Stopping the counterfeits market is a long process but it’s more important for companies to create awareness among the consumers about the ill effects about such fake products and the hazards they pose.