This is Part 1 of a 2-part series. Click here for part 2.
When the first iPhone launched in 2007, many prominent tech CEOs and journalists panned this innovative product. Apple succeeded by creating rapid consumer acceptance of this new device through careful design combining observable product usage advantages, and a less-complex user experience. As a result, the company sold its one-millionth iPhone just three months after its release. However, that is not enough.
At the earliest stages of innovative product commercialization, brand protection is essential. Commercial success attracts both legitimate competitors and counterfeiters seeking to take advantage of these fast-growing markets. Strong brand protection can provide important security against would-be competitors, facilitating higher product margins, and creating opportunities for your brand and product extensions.
The Honest Co. is an example of a relatively young product innovator. By building a strong brand, it succeeded in a very competitive market for baby-related products against larger and better-established competitors (e.g., Procter & Gamble’s brands such as Pampers, Dreft and Luvs). This innovator carefully and consistently communicates its brand identity to target consumers highlighting safe, healthy, stylish and environmentally friendly products. More importantly, it has delivered products consistent with that branding to achieve consumer buy-in and loyalty. After just six years, Honest Co. commendably yields a 10-digit corporate valuation, confirming the importance of brand protection.
To maintain such lofty valuations in highly competitive markets requires a multi-layered brand protection strategy noted below.
1. Proactively maintain maximum control of the product. Understand how the product moves (or will move) through the market from creation to consumption. To ensure a strong brand (one that has a specific and predictable user experience), it is important to control who “touches” the product throughout the entire supply chain. Contractual relationships with suppliers and distributors alike should include clauses that facilitate present and future brand-protection efforts. Maintain control of your product through combinations of consumer and distribution targeted tools. For example, customers’ usage of software products can be tracked and monitored through cloud-based systems to protect the integrity of your brand. However, contractual agreements should be put in place to ensure that such monitoring is permitted.
2. Use contractual provisions to impose intellectual property (IP) use terms and conditions in supplier, distribution and sales agreements if the product is intended to be distributed to a specific customer type (e.g., retail), or within a specific geographical territory (e.g., United States). Impose on distributors the responsibility for providing written notice to customers of these restrictions, as well as for obtaining IP agreements between your company and the customers. Additionally, include terms in all supplier and distributor agreements that provide the right to audit channel partners to ensure compliance with brand standards.
3. Be clear and know which obligations will remain after the contractual relationship has ended when structuring contracts with manufacturing and distribution partners. These contractual agreements seek to control and manage access to products and brands to provide additional avenues for brand protection. Enforcement of contract rights tends to be simpler and less costly than other options. Take note, manufacturing and distribution partners will likely change over time, and today’s partners may become tomorrow’s fierce rivals.
4. Make sure all employees have a thorough understanding of your brand identity and its importance to the business. Once customers no longer associate your brand with a particular experience, your customer relationship has been destroyed. In the age of social media, the devastating effect can propagate across the entire market at an astonishing rate. Encouraging and facilitating employees to remain vigilant and report potential threats to your brand (e.g., counterfeits, negative comparisons in advertisements, social media comments) is imperative. For example, one can consider creating a Slack workspace solely dedicated to your brand and to discussions of any potential threats to it. The cost to do so is minimal and your employees will become more emotionally invested in your company when they are motivated to actively contribute to its success.
These steps will greatly enhance brand consistency and continued excellence in your product to avoid copycats.