WHAT IS FAKE BRAND?

The term fake brand refers to those brands which resembles the real
popular brands. Fake brands can be classified into various categories.
There are three different shades of fakes:
 Look-alike (a red soap that looks like Lifebuoy)
 Spell-alike (brands with different spellings of originals)
 Re-packaged (repacking fake products in original packs).

WHY PEOPLE BUY FAKE?

Fake brands clearly supply a basic demand for low cost items that the
consumer can associate with less affordable, scarce premier brands.
However, psychologists have looked far more deeply into this area of
consumer behaviour and a wealth of research has been published. A very
basic finding is that despite the low price factor, fake brands are regularly
bought by relatively high income households in developed countries.
A few other points to note about fake brand buying:
 Fake brands are more affordable, often with a huge price difference to
the original brand;
 Fake brands can have far wider availability than the real, exclusive
brand – especially in the low income countries where they are made;
 Buying situations such as holidays favour fake purchases, as
consumers are away from their normal social/legal restraints;
 Counterfeits can reflect the prestige of exotic travel (to fake buying
centres) and provide an authentication of the travel experience;
 Many consumers see fake brands as fun and a form of popularising the
real brand;
 Consumers sometimes believe they are contributing to the local
economy when they purchase fake brands.

REASON FOR BORN OF FAKE BRAND

Fake brands are available both in urban and rural landscape but the
problem is more acute and challenging in the rural sector where most
FMCG brands suffer because of their fake “counterparts”. Various issues
like unavailability of the real FMCG brands in these deep pockets and no
policing allow rampant distribution of fakes here. Fake brands flourish
more in the rural sector because companies have huge marketing
budgets. There are ads on Doordarshan and radio, which the rural
consumers have access to and thus, they are aware of the brands.
However, distribution problem to these areas is still there for most FMCG
brands. So when consumers want these brands, they are unavailable and
thus fakes are born.
Another main reason is the lack of policing. There is no check on
fake brands in rural markets. Unlike urban areas, there is no service by
sales team of FMCG brands in rural areas and thus fake brands have a
field day. Policing is simply not possible in rural India. Inability to offer
value is the primary cause of emergence of fakes in the first place.

LOSS BECAUSE OF FAKE BRAND

Fake brands in the rural sector burn a deep hole in the pocket of FMCG
companies every year. About 25-30% of the sales in rural markets are
fake. The fake brands are estimated to be of the size of 10% to 15% of the
rural market. The percentage varies across various product categories and
geographies. This means the FMCG sector loses around Rs. 7000 crore
every year. In rural India, these fakes are predominantly sold in the haats /
fairs as well as retail outlets.
The loss could well be over Rs 2500 crore if one includes all
categories of FMCG products and categories like soft drinks and packaged
water. An estimated loss of around Rs.27 billion to the exchequer due to
fake or counterfeit products - almost 15 percent of consumer goods sales
in India is estimated to be of fake products. At an 18 per cent tax rate, the
loss to the exchequer works out to be around Rs 2,700 crore or 27 billion.
The real brand's image suffers because of the existence of its fake
versions. In most of the cases, fake brands of inferior quality are
purchased around the same price band as genuine products. This leads to
erosion of brand loyalty, further impacting the market share of the
genuine brands.

ADRESSING AND AWARE RURAL PEOPLE AGAINST FAKE BRANDS

The original brand gets affected negatively when it actually manages to

reach the rural markets where its fake versions exist already. The impact
will be negative if it gets addressed only through distribution. So it is
important to communicate effectively to consumers by educating them
with respect to the veracity of the original version and how to identify fake
versions, what damage fake versions can cause to their well being and
then ensure consistent product availability via active distribution so that
consumer can experience difference between real and look-alike products.
Pricing is obviously an issue during conversion from fake to original.
It should be communicated that Counterfeit products are sold at the same
price or slightly lesser than the originals but the production and marketing
cost are usually less than a fourth of the real's price. The use of cheap
ingredients zero expense on advertising and minimal distribution costs.
Drastically low cost is a pointer to the dangerously high health and safety
hazards that fake products pose which could actually prove very harmful
to the real brand.
List of Fake Chocolates/Toffees available in rural areas

S. No. Original Product Fake Product

1. Dairy Milk Daily Milk
2. Kit Kat Kir Kat
3. Coffee Bite Coffee Rite
4. Mango Bite Mango ripe and mango bits
5. Aasai Aasha
6. Polo Rolo
7. Vicks Vibex

It has been found out that fake chocolates and toffees are available in
more number of petty shops for the leading brands.

We all have seen many packaging innovations from companies.

Brands in leadership position have taken high ground and lead the
category expansion both through education and launch of variants. Some
companies have combated the challenge by building affinity like they
constantly undertake programs to get closer and connect emotionally with
their consumers. These above fake brands have earned a lot from the
rural areas because these brands used to resemble with the real brands.
The packaging which contains colour and design were quite same and
since these fake chocolate brands were quite cheaper than the original
one so it was given preference. And unavailability of original chocolate
brands made these fake brands sold mostly. Hence they have earned
good revenue from their sales.

STRATEGIES CHOCOLATE/TOFFEE COMPANIES IN RURAL

MARKETING (TO KILL FAKE BRANDS)

Product: Without compromising on quality, the leading chocolate

companies can reduce their size to match the rural demand.

Pricing: As the rural consumers are bothered about economy pricing the
leading chocolate companies can follow the strategy of "penetration
pricing"
Promotion: The traditional method of promotions has to be changed by
the MNCs and National Companies in attacking the fake products. A
portion of the ad budget can be allocated for retailers' margin. Through ad
campaigns, the companies can also create awareness among consumers
regarding the evils of fake products.

Physical Distribution: Sales professionals of the local region who have

familiarity in the local (regional) language can be appointed to look after
the sales of rural areas, so that they can easily converse with the retailers
and can build goodwill.
Submitted By:
Mamta Rawat
A09024