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As the fake trade mushrooms and with internet sites already awash with World Cup merchandise at knock-down prices, Umbro is braced for an influx of copycat kit.

The company is right to be anxious. With 12% of all sports goods now counterfeit, global figures reveal the shocking scale of the problem. Dozens of unscrupulous suppliers are preparing to replicate Umbro’s designs and products.

Consumers queuing to exchange their cash for cheap and cheerful imitations have one question on their lips. Why pay 40 quid for a genuine football team strip when a tenner buys a pretty good rip-off? For Umbro, stemming the supply of these cheap copies is only part of the problem. Handling the demand side: persuading the public to ditch the fakes in favour of genuine items from authorised outlets, is even more of a challenge!

At a time when all types of consumer goods are fair game for the counterfeiters, Umbro’s drive to interrupt supply is understandable. In a market awash with everything from fake watches and designer labels to cosmetics and prescription drugs, even the artificial tan is fake. Soon car boot sales, market stalls, newspaper classifieds and Internet auction rooms will swell with soccer gear, as cup fever fuels demand for the best-loved strips.

For Umbro the stakes are high: these counterfeit encounters are much more than a short-term threat. The risks include long-term damage to its brand and consequences for its financial fortunes.

Supply is fed by an overwhelming influx of dubious goods from counterfeiting hotspots such as the Far East. Consumer protection specialists explain that there is a high price to pay for supporting the fake trade. The image these experts present is stark, and their warning for consumers is bleak: your kit may be cut-price, it may even be the right colour and fit, but it’s likely to be shoddy quality and your consumer rights will disintegrate when the second-rate materials and printing fail in your washing machine.

"Your soccer shirt could be funding illegal trade, gun crime and even terrorism"

More shocking still, your soccer shirt could be funding illegal trade, gun crime and even terrorism. And that’s not all. Legitimate business is paying the highest price. Last year alone 17,000 European jobs were lost as a result of brand counterfeiting. According to the Anti-Counterfeiting Group (ACG):

Legitimate traders are hit when fakes undercut their markets, and the black market each year is worth around £9bn, on which unpaid VAT alone would fund several new schools and hospitals.

Despite such dire warnings, many consumers remain relaxed about the counterfeiting malaise. A recent report for The Organised Crime Task Force revealed that shoppers see fakes as a bargain, justifying their behaviour on the basis of the prohibitive price tags of genuine items. Many are either unaware or unwilling to acknowledge the darker side of the trade.

"Ultimately it is the consumer who decides whether to pay full price or be lured by the bargain-prices of copycat kit"

For Umbro, this is the root of the problem. Ultimately it is the consumer who decides whether to pay full price or be lured by the bargain-prices of copycat kit. These shoppers are savvy, and a growing number are prepared to pay for counterfeit brands. Umbro’s best chance of solving the problem is to develop an effective marketing strategy based on a clear understanding of consumers’ motives, perceptions and behaviour.

Consumer behaviour is defined as the purchase and consumption activities of ultimate consumers who buy products and services for personal or household use. Anticipating these buying patterns is the challenge for all marketing practitioners as they strive to influence this behaviour. Consumer expert Bernard Dubois explains that analysing these aspects of human behaviour involves answering three fundamental questions:

1. Who buys? What is the consumer’s identity?
2. How? What is the purchasing process like?
3. Why? What factors explain the purchase?

This last question is particularly intriguing for businesses striving to understand key customer drivers. Dubois expands on this point by describing three groups of explanatory factors, occurring at these levels:

• individual
• interpersonal
• sociocultural

Taken in combination these variables influence consumer preferences and purchase patterns. At the individual level, this involves an appreciation of consumer motivations, perceptions, experience and attitudes. It is with these factors that Umbro must grapple if it is to successfully attack the fake demand problem.

Umbro needs a twin strategy to tackle the fakers. Whatever action the company takes to locate the counterfeiters and stem supply, it must also strike at the heart of consumer demand. The sports gear supplier must rapidly tune into what motivates shoppers to buy these cheap imitations. Is it really all about price? Is quality a key consideration, or are there other factors at play?

Recent research by ACG pinpointing cost as a key driver in the market for fakes, also suggests that decisions are not purely driven by economic considerations. For buyers of DVDs, speedy access to new movies has fuelled the fake trade, while availability is also an issue for toy buyers. It is these kinds of nuances which soccer strip suppliers must grasp if they are to dissuade consumers from their errant behaviour. Ready, convenient access through a mix of retailing channels may be as important to consumers as low price.

Football pundits are already speculating about which nation will lift the 2006 World Cup. The victorious team will be assured an enthusiastic response from its supporters. Whether the football strip sported by these fans will be genuine, is much less clear. Some of the omens are good, not least because enforcers are demanding tougher legislation and stiffer jail terms for fakers.

For Umbro the message is clear. Winning the game depends on a twin strategy to tackle both the demand and supply side issues. The final whistle in Umbro’s encounter with the counterfeiters may be getting closer, but the tournament is only just beginning.

Further reading

• Understanding the Consumer by Bernard Dubois, published by Prentice-Hall
• The Deadly Trade in Counterfeit Goods by Tim Phillips, published by Kogan Page
• Anti-Counterfeiting Group
• Fake Nation? A study into an everyday crime research conducted by Dr Jo Bryce (University of Central Lancashire) and Dr Jason Rutter (University of Manchester)
• Securing your brand – how do you build value into a brand and  how do you preserve that value?
• The trainer tamer – how Jonah Perretti became the scourge of Nike

About the author

Sally Dibb is Professor in Marketing at the OU Business School. Sally chairs the Academy of Marketing's Special Interest Group in market segmentation.

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Blogging about

Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

“The Coca-Cola Company exists to benefit and refresh everyone it touches” (Coca-Cola’s mission statement)

Can Coca-Cola, one of only a handful of truly global brands, really be in trouble? Amidst adverse media coverage and concerns about the sugar content of its core brands, Coca-Cola’s share price has taken a nose dive. The drinks giant has been hit by the explosion of the obesity time bomb! Worse still, industry experts are accusing the company of panic as it struggles to bolster market share with a host of new product launches. Diagnosing Coca-Cola’s malaise reveals rising public expectations about the behaviour and responsibilities of such corporates. The danger is that consumers angered by food companies’ role in the obesity crisis will use their spending power to enforce higher ethical standards.

"Some consumers are becoming edgy"

The nation is suffering from a serious weight problem. With a 400 percent rise in obesity levels in just 25 years and weight problems set to overtake smoking as the main cause of premature death, the scale of the problem is huge. Faced with headlines dominated by scare stories about childhood obesity and ‘pester power’, some consumers are becoming edgy.

The problem for Coca-Cola is that these concerns are hitting sales of its core brands such as Coca-Cola, Sprite and Canada Dry. At a time when junk food and sugar-laden fizzy drinks are taking some of the blame for this weighty crisis, the government is getting tough on the food industry. Schools are switching off branded vending machines, campaigns to promote healthy lifestyles are in full flow and bans on junk food advertising may be just around the corner.

So are Coca-Cola and others in the food and beverages sector really responsible for the failing health of the nation? While health experts agree that inactive lifestyles and poor parenting are partly to blame, they are robustly critical of junk foods and carbonated drinks. The bad news for major brands is that public opinion against snack food manufacturers is growing along with suspicions that these corporates may not have consumers’ best interests at heart. With research showing a strong link between corporate social responsibility and profits, Coca-Cola cannot afford to be complacent.

Corporate social responsibility (CSR) has been described as a company’s obligation to maximise its positive impact and minimise its negative impact on society. Expert Archie Carroll writes about a pyramid of social responsibility, with four basic levels of responsibility:

1. Economic – the responsibility to be profitable
2. Legal – the need to obey the law
3. Ethical – an obligation to do what is right
4. Philanthropic – making a contribution to the wider community

At the heart of the obesity debate are the so-called Ethical responsibilities. These involve companies behaving in ways which are right, just and fair and - just as importantly in the current climate - not causing harm to a company’s stakeholders.

"The trouble is that behaving ethically just isn’t that easy"

Handling ethical issues can be tricky. Companies must quickly tune into changing consumer values and implement policies which reflect society’s desires. The trouble is that behaving ethically just isn’t that easy. Identifying consumer trends is tough enough for brands already striving to be noticed amongst the advertising noise in the marketplace.

There is a fine line between innovative marketing and unethical behaviour. Ethical concerns about the impact of unhealthy product lines are much clearer. Faced with such scrutiny, Coca-Cola has two options: make its existing products healthier or diversify. Beguiled by the promise of new brands, the company has decided to sharpen up its market offerings by extending into diet and health-related beverages.

This move into sports drinks, juices, energy drinks and waters it hopes will be the panacea to the company’s ills. Unfortunately, despite radical surgery to its brand portfolio, Coke’s prognosis remains uncertain. Less than three years after launch, the company has axed its much vaunted but unpopular Vanilla Coke and Vanilla Diet Coke. Now some retailers are refusing to stock the new lime and grapefruit-flavoured variants of the Powerade sports drink, accusing the company of spreading its brand too thinly. These are not the only problems. Few will forget the technical hiccup which caused bottled water brand Dasani to be contaminated, hastening the downfall of the company’s foray into bottled water.

Coca-Cola isn’t the only brand with problems. Falling foul of ethical principles is all too easy for food companies vying for consumer visibility. Cadbury thought it had backed a winner with its Get Active scheme, which swapped confectionary pack tokens for school sports equipment. The chocolate giant was swiftly chastised by educationalists for encouraging unhealthy eating practices in the young. Now some retailers are accusing Cadbury of misleading consumers with an ‘over-priced’ 99 calorie chocolate bar. Meanwhile Walker’s free books for schools scheme was criticised by the National Union of Teachers. Even family-favourite Heinz has been attacked for the high-salt content of its products.

Like businesses in all sectors, these companies know that they cannot afford to ignore consumers’ growing ethical demands. Failure to meet expectations for socially responsible behaviour is commercially dangerous, destroying consumer trust and hastening tough new regulations. The Food Standards Agency (FSA) is already naming and shaming the worst offending products for sugar, salt and fat content. With the government ready to reap legislative havoc should the food industry fail to comply, the FSA’s action may only be the start.

So what does the future hold for the world’s biggest drinks brand? Can Coca-Cola shake off its associations with tubby teenagers, bolster its brand and overcome poor performance in Europe? Success will depend on whether the drinks giant can persuade consumers and retailers that it has an answer to declining fortunes in its core markets. Regaining the confidence of consumers with a waist-line crisis will be critical. While no-one disputes the demise of the flavoured carbonated drinks sector, the question is whether Coca-Cola’s investment in healthier drinks and extending brand portfolio will be enough to rebuild its fortunes.

Further reading

• The importance of brands – the value of brands explained by this extract based on Open University Business School course material
• Business briefs: checks and chavs – can brands become victims of their own success?
• Corporate accountability and ethics – what are the forces that control and ensure corporate accountability?
• Marketing: Concepts and Strategies (Fifth Edition) by S Dibb, L Simkin, W Pride and O C Ferrell, published by Houghton Mifflin
• 'The Pyramid of Corporate Social Responsibility: Towards the Moral Management of Organizational Stakeholders' by A Carroll, in Business Horizons (Jul/Aug)
• Business Ethics by C Jones, R ten Bos and M Parker, published by Routledge
• Weight Matters for Children by R Pryke, published by Radcliffe Publishing

About the author

Sally Dibb is Professor in Marketing at the OU Business School. Sally chairs the Academy of Marketing's Special Interest Group in market segmentation.

Subscribe to Sally Dibb's posts

 

Blogging about

Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

What do chavs, Danniella Westbrook and ferrets have in common? All have a penchant for wearing the distinctive beige Burberry-style check! This is bad news for Burberry, which had an altogether more upmarket consumer in mind for its prestigious fashions. All this at a time when the business had been enjoying a resurgence in its fortunes, having successfully repositioned itself away from the staid and middle-aged image of the past. To make matters worse, the market is flooded with fake merchandise and Kate Moss, the ‘face’ of Burberry, whose association with the brand has been linked to its renaissance, is facing drug-taking allegations.

Burberry is right to be concerned, having invested heavily in creating a brand image which closely fits the aspirations of consumers it wishes to attract. The brand, and how consumers perceive it, are among a business's most valuable assets. When the brand is damaged, its value and sales potential are reduced. The repercussions for the bottom line can be alarming.

At the heart of Burberry’s anxieties are the consumers it wants to attract and those that it does not. The enthusiastic adoption of the Burberry cap by chavs was not part of the plan. These young adults with lower class roots and a reputation for hooliganism favour flashy ‘bling’ jewellery, sportsgear and (fake) designer clothes. They listen to rap, hip-hop and dance music and congregate around fast-food outlets and shopping malls; a far cry from the style-conscious, high-brow target consumers of Burberry’s choice. Worries about the reaction of core customers to the brand’s chav connections and about consequent damage to its iconic status, are well-founded.

Advertising guru David Ogilvy, a major force in brand thinking, surmised that consumers buy products with a particular personality or brand image. The closer the connection between the brand and those it targets, the better. The word brand derives from the ancient Norse word ‘brandr’, being associated with the idea of branding (or burning) animals - probably not ferrets - for identification purposes. Current definitions suggest that a brand is made up of a name, term, design, symbol or other features that distinguish one seller’s goods from those of others.

A brand’s success is determined by consumers: an eclectic bunch with different needs, characteristics and friendship groups, who live their lives and spend their time in a myriad of ways. Their diverse shopping behaviour affects how they respond to and perceive the brands on offer in the high street and elsewhere. The brand and the consumers’ image of it are valuable business assets. The value of a strong brand doesn’t generally appear on a company’s balance sheet and may be difficult to measure exactly. Yet companies invest heavily in developing brand images which appeal to, and fit well with, their targets. The value they achieve is in the desirability of the brand and in the competitive advantage this provides.

Branding experts argue that effective branding strategy improves the chances of business success. In his book on brand leadership, David Aaker extols the virtue of brand leadership, which he sees as central in creating strong brands. The asset value associated with the brands which emerge has been called brand equity, described by Kevin Keller as the ‘marketing effects uniquely attributable to that brand’.

Aaker views brand equity as comprising four dimensions: awareness of the brand, its perceived quality, the loyalty of its customer base, and what he calls brand associations. Herein is the problem. Brand associations include anything and everything which links consumers to the brand. This might be the personality attributed to the brand, the situations in which it is used, and even imagery connected with its users. Brand owners like Burberry work hard to develop brand associations which fit closely with the image they wish to create. Associations of Burberry with chavs, Danniella Westbrook and ferrets are definitely not among those sought by the company.

Whatever businesses do to build their brands, it is consumers who determine how the brand is perceived. Consumer perceptions are central to a brand’s success or failure. It’s the consumer who decides on the brand’s image, whether that image fits their personal self-image, and if they will patronise the brand. External factors can shift this brand image and lead to consumers changing their preferences. Nestlé suffered as a result of marketing its infant formula in developing countries. British Airways was recently damaged by the impact of an industrial dispute at the company's in-flight catering supplier. This doesn’t mean that large scale changes in perceptions are achieved quickly or for no reason. Consumer views of the best established brand icons tend to be resilient. The image of Porsche as an exclusive brand dripping with heritage, the luxurious associations of Chanel, and the high-fashion status of Prada have all stood the test of time. For these brands at least, the deeply entrenched views of consumers are hard to change.

So has Burberry been permanently tarnished by the chavs, by undesirable furry mammals and by the attentions of Ms. Westbrook? The company denies that a short-term blip in UK sales growth can be attributed to these factors. Chavs, they say, are old news, and the UK anyway accounts for less than ten percent of total Burberry sales. The hope is that the company’s long-term brand building efforts will be enough to carry it through these current difficulties. Ultimately, this will be a test of Burberry’s brand strength and it is consumers who will decide.

Further reading

• Marketing: Concepts and Strategies (5th edition) by S Dibb, L Simkin, W Pride and O C Ferrell, published by Houghton Mifflin
• Brand Leadership by D Aaker and E Joachimsthaler, published by The Free Press
• Building, Measuring and Managing Brand Equity (2nd edition) by K L Keller, published by Pearson Education Inc

About the author

Sally Dibb is Professor in Marketing at the OU Business School. Sally chairs the Academy of Marketing's Special Interest Group in market segmentation.

Subscribe to Sally Dibb's posts