Brand value degradation due to counterfeits

Abstract

Counterfeiting is a widespread issue for companies, leading to financial losses and a decline in consumer trust. As a result, brand protection programs become important. However, measuring the impact of these programs remains a challenge. This is especially true when looking into how counterfeiting affects brand value degradation. Therefore, this thesis aims to develop an equation to estimate brand value degradation due to counterfeiting and assess the return on investment for brand protection programs. To gain insights into measuring brand protection effectiveness, an iterative method inspired by grounded theory was employed. Three data sources were utilized, internal documents from a counterfeit takedown provider, a narrative literature review, and semi structured interviews. This thesis identifies key variables that influence brand value degradation caused by counterfeiting. These variables include, the number of unique customers buying counterfeits, the percentage of deceived and unsatisfied customers, exposures required for attitude change, information diffusion, customer acquisition cost, and the cost of brand protection programs. The identified variables are then incorporated into equations that calculate brand value degradation due to counterfeits, total costs due to counterfeits, and the return on investment of brand protection programs. This approach offers an advantage by shifting the focus from the complexities of measuring brand value to estimating the costs associated with customer losses due to counterfeiters deceiving customers. By leveraging the developed equations, firms can gain valuable insights into the brand value degradation caused by counterfeiting. This information can be used to empower brand professionals to effectively report these losses to management, enabling informed decision making. Future research should focus on evaluating specific brand protection activities, quantifying the impact of individual variables, and exploring additional factors influencing brand value degradation. Keywords: Counterfeiting, Brand value degradation, Brand protection programs, Return on investment