May 2008 - Marketing Judo

How to beat knock-off artists by mastering and deflecting their techniques, Part 1

By Anthony Sziklai

I know several direct response marketers who are brilliant at what they do. They are masterful pitchmen with an uncanny instinct for hit products. They are meticulous planners who build elaborate spreadsheets to analyze every data point of their campaigns. They are serial risk takers who know the odds and yet beat them time and time again. What truly amazes me the most about these alpha marketers is how resilient they are to being knocked off and ripped off by other marketers and even their own trading partners.

I often hear the same jeremiad: My design has been copied by several factories in China and now everyone can buy a knock-off version.

What ultimately saves these marketers is their instinct to act swiftly and crush the counterfeiters before they can seriously impact the bottom line. Having said that, I often feel that theyand the rest of uscould be more proactive. In an age when product information can be transmitted around the globe in less than a second, you need to know what your enemy is going to do before he strikes. You need to arm yourself with knowledge and be willing to spend money to avoid losing money. The following is Part One of a two-part series that teaches you how to get into this mindset and beat the bad guys by mastering and deflecting their techniques. In short, it teaches you the fine art of marketing judo.

My definition of a knock-off artist is someone who not only copies your product, but also moves lightening fast to produce a show, buy media and lock up retail deals before you have even finished testing. Knock-off artists can literally put you out of business, so it is critical that you take defensive, even preemptive, measures to protect your investment. Following are some judo moves that work:

Do your research You should have a healthy amount of paranoia in this industry and always be on the lookout for knock-offs. Even if you are still in the manufacturing or production phase, it is never too early to start Googling your product name or idea to see who else is out there. According to Greg Sater of the law firm, Rutter Hobbs, My clients find that, once their product is on TV, soon someone else will be selling it online, bidding on its name as a keyword and driving traffic to their website. One thing to do is check those sites to see if they also are offering a look-alike knock-off of your product, in addition to yours. Another thing to do is order your product from those sites to see what is fulfilled. Do they in fact have no inventory of your product (responding to your order by admitting that) and thus should not be using your products name online as a keyword for their website? And if they do have it in inventory, and ship you a unit in response to your order, is it your product or is it a counterfeit? Take prompt legal action if you find these things happening.

Out-optimize them on the search engines There is always a tradeoff between staying in stealth mode and promoting your product before it launches. I am of the opinion that in todays world, you need to be proactive about some forms of promotion, such as Internet search engine optimization (SEO), to prevent others from jumping your claim. Some of the more sophisticated knock-off artists have existing websites and online catalogs that they can harness to get quick search engine results. Beat them to the punch by building a product website and launching it as quickly as possible. Optimize the sites title, description, keywords and content so that you are number one for your products name on major search engines, such as Google. Links from other websites (called external links in SEO-speak) are treated by the search engine algorithms as votes for your site. Make sure you get links from well-regarded sites to fortify your position and block SEO-savvy knock-off artists from leapfrogging you. Above all, be proactive and get your site out there as fast as possible. The search engine algorithms tend to give higher weighting to those who are indexed first.

Out-maneuver them on pay-per-click advertising In addition to SEO, you should also be prepared to beat the knock-offs at pay-per-click (PPC) advertising, where nothing more than an account on Google AdWords can give someone ownership of your product name. According to Ken Osborn of interactive agency Liquid Focus, the cost of clicks must be factored in when making a DRTV media plan. One reason is to assure top ranking from the start. People dont realize there are facets of pay-per-click that mirror search engine optimization. For example, just bidding the highest for a term does not mean your listing will be number one. So, bid high and bid first on your trademark terms and youll win in the long run.

Note that Google and the other big search engines have a very easy procedure (no lawyers needed) for removing another companys ads that contain your trademark or copyright. Just file a complaint and Google will have them take down their ads, or at least remove reference to your IP.

Make double sure your manufacturer is trustworthy Some manufacturers will sell your idea out the back door the same day they get your specs. Some will even knock you off and start selling your product under another name on Alibaba, EC21 or one of the other online trade portals. Get references and do your due diligence before selecting a vendor. Once you have made your selection, the best judo move is to develop a relationship with the vendor and, above all, pay fairly. There are many cases of relentless grinders winning price concessions up front, only to lose in the long run as the manufacturer supplements his income through back-door sales. It is also a good idea to hire a reputable third-party inspection firm to keep the manufacturer honest. These firms can do factory audits and quality inspections, as well as keep an eye out for back-door dealings. On a related note, some marketers put a unique mark on their product to indicate that it was produced from their original mold. Others use a proprietary serial numbering system. When trust is no longer an option, these tactics work.

Beat them to the retailers Knock-off artists who have existing relationships with the big-box retailers can lock up retail deals before you even know what hit you. Selling virtually identical, lower-cost versions of your product, they can offer buyers deals that are hard to pass up. Beat them to the punch by meeting with the major retailers before you launch. Develop a plan and get your sales reps on board so that everyone is on the same page. One of the interesting contradictions about retail is that the more retail deals you cut, the higher the likelihood that you will have knock-offs. Carefully consider how big a retail footprint you want to have, and think twice about selling to smaller, lesser-known distributors who might knock you off.
According to Osborn, If you wholesale to a not-so-nice entity, they can sell knock-offs and you wont even know it. They buy 400 units and then sell cheaper knock-offs. They are allowed to compete on the search engines and on trademarked terms because they have an agreement with you and have purchased your goods. Marketers need to know whom their sales reps are selling to. If at all possible, only sell to the big-box companies at the onset.

Come out with your own low-cost version It has become a clich in the DRTV industry that it is often wise to knock yourself off. I agree with this to a point. If your product looks like it is going to be a mega hit, then it may be wise to develop your own knock-off product, film a second show and even buy media to discourage would-be knock-offs. Another, less costly countermeasure is to develop virtual knock-offs and launch them online: create fake products, ads and supporting websites to give the appearance that the market is already saturated with knock-offs. You may even want to send out press releases announcing that you are suing your faux knock-offs. I know this sounds over-the-top, but if you have the numbers to support asymmetrical warfare like this, then why not?

Invest in trademarks, copyrights and patents Developing intellectual property can be expensive, especially for cost-conscious DRTV marketers, but it may pay off in the end. If you are serious about building a brand, consider at least trademarking and copyrighting your logos, brand names, slogans and creative content. I have seen ugly situations where unprepared marketers have been bushwhacked by knock-offs with virtually the same logos and namesand there was nothing they could do about it. Register your marks early on with an IP law firm that understands the DRTV industry, preferably one with a reputation for aggressive IP protection.

According to Sater, A very cheap and effective step to take is to file papers to register the text, images and photographs of your own web pages that advertise your product, as well as your infomercial, with the U.S. Copyright Office. Filing fees can be as low as $40 per work. When you later find another website using your text, images and photographs, you then have a lot more leverage for a quick and favorable settlement because under U.S. law, you then are entitled to recover attorneys fees and statutory damages from the other side.

Patents take more time and money than trademarks and copyrights; however, they are probably the best way to protect your product. They are the ultimate trump card, especially if you are patient and willing to plan several years in advance. If you go the patent route, be careful not to publicize your patent application any more than you need to, as some people are masters of designing around or ringing patents.

Dont be afraid to use lawyers Like IP, lawyers cost money. I often think of the catchphrase bring lawyers, guns and money when I think of knock-off artists, because there is no way to play nice with these people. Sometimes you need to bring the fight to them and use a serious law firm to stop them in their tracks. If several people are knocking off your product, target the small guys to set a precedent. Develop press releases to announce your victories. Make it known in the industry that you are not afraid to litigate.

Returning to the theme of being proactive, you can avoid litigation and other costly measures by simply being prepared. Sater says, the best time to think about knock-offs and keeping them at bay isnt when youre already on TV or in the stores, its back when youre selecting your products name in the first place. Pick several different names and use a good lawyer to help you choose the one that sounds good, looks good and is distinctive enough to help you when, later on, you want to keep a competitors similar name off the market. Liquid Focus Osborn further adds: Be sure to secure your products Internet domain name and all misspellings and possible related domains. This way, even if you have a knock-off company running on TV, people will be more inclined to remember your domain name and not the others.

In the long run, international knock-offs can cost you just as much as domestic knock-offs. I am not just referring to those shady manufacturers who produce the knock-offs, but also to the local distributors, marketers and retailers who sell them abroad. Many domestic marketers deal with this problem by simply avoiding overseas markets. But you can no longer afford to think this way, especially if you manufacture your product offshore.

We live in an increasingly globalized world dominated by free market economies. Swelling middle classes in Europe, Asia and Latin America have tremendous buying power that is historically unprecedented. Putting it bluntly, the U.S. market with its credit woes can no longer be treated as the sole market. To sally forth into this new world, the direct response marketer needs to think globally and bring along a little marketing judo.

Partner with the right global distribution firm There are several highly reputable global distribution firms that can help you launch your product in other markets. These firms are connected with legitimate local resellers that can become your ally in stamping out local knock-offs. According to Osania Del Rio of international distributor, Williams Worldwide Television, reputable distribution firms with a history in the industry have cultivated long-standing relationships with overseas resellers and have therefore, gone through the leg-work of weeding out the legitimate and ethical local distributors from the fly-by-night companies that want to buy one container from you, and the other 20 containers back-door from their own manufacturer. Every local reseller will claim to be the biggest and the best in their market; however, global distribution firms have the expertise to know which distributors are best for your product and which ones to stay away from.

Invest in international IP, especially in problem countries While applying for trademarks, copyrights and patents in every country is probably unrealistic, consider doing this in problem countries that are known for intellectual property theft. It is not a bad idea to develop an IP portfolio in the country you are manufacturing in to help you stamp out local knock-offs before they can supply the global market.

Del Rio sees IP as a key plank in any marketers international strategy. Very often, suppliers neglect to apply for foreign patents within the allotted one-year window they are given when they applied for the U.S. patent. As a result, suppliers are faced with the challenge of international knock-offs sometimes even before they launch overseas. The key is obtaining the appropriate IP before your product is a hit, as well as speed to market. The unfortunate reality is that copycats are quick, they know exactly which products are hitting, and their goal is to get to market before you do.

Use local law firms and get tough Local law firms can help you crack down on copycats. If you are manufacturing your product in China, for example, you can retain a local law firm to track down potential knock-offs and pursue them for trademark, copyright and patent infringement. Well-publicized factory raids will put would-be copycats on notice that you mean business. And dont forget to go after foreign shopping sites and trade portals. As Sater points out, foreign trade portals, such as Alibaba, make it easy for counterfeiters to sell their wares. Having a registered trademark and other IP (in the country where the offense is taking place) really helps to get the infringing offers pulled down quickly and cheaply from those sites.

Now that I have shared some key techniques to ward off foreign and domestic knock-off artists, next month, I will provide more tactical moves for taking on ruthless resellers, unscrupulous affiliates and fraudsters.

Anthony Sziklai is president of Moulton Logistics Management in Van Nuys, Calif. He can be reached at (818) 997-1800.


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