According to the World Customs Organization, product counterfeiting accounts for 5% to 7% of world trade or as much as $500 billion yearly. As a result, product security is increasingly an important part of packaging design.
Will the increase in product piracy impact your company? How does the need to better protect your product impact your packaging design? What is a good approach to defining a course of action?
It is important to establish an assessment framework for thinking rationally about applying security technology to product packaging.
First you should consider the need for adding “security” to your packaging. You need to determine what is at risk and what is it costing your company. Examine likely risk factors:
• Is your brand exceedingly popular and very recognizable?
• Is there a large customer demand?
• Is there a high gross margin? (product price versus production cost)
• Are significant components or products manufactured by external providers?
• Is there evidence of product counterfeiting or gray market diversion for your product—or your competitor’s product?
If it is easy to believe that significant money can be made by brand piracy and that the obstacles to product counterfeiting or diversion are not great, it is safe to conclude your product is at risk.
Label and package considerations
Next you should assess the areas of greatest susceptibility in your product labeling or packaging. Imagine you are the pirate and are determined to copy or divert your product. Identify features such as the label or packaging that your customers identify with your product.
• What would be easy to copy or reproduce?
• What would be challenging? Why?
• How easy to replicate are the key features that customers use to authenticate their purchase?
If it's reasonable to believe that key features for product identification and authenticity enforcement are easily replicated and there are reasons to believe your product is at risk, your company would benefit from implementing product package security.
In order to design a successful product package security program it is important to focus on the key elements of your product design that will be used to authenticate and secure your product. Assess your product's packaging design and channel distribution processes.
• What unwarranted or illegal behavior are you trying to prevent?
• What packaging, labeling, or other printed information do consumers rely on to authenticate their purchases?
• What packaging, labeling, informatics do the security authorities rely on to enforce authenticity?
Understand the package
For instance, if you were attempting to protect an automotive part from counterfeiting, it would be important to understand its packaging at the point of sale. After reviewing the risk factors and understanding package security susceptibilities, you might conclude that it is important to provide security features on the product package for the consumer to utilize and covert authentication features on the product labeling for the security organization to validate authenticity.
Furthermore, if the product packaging becomes an important element to enabling authenticity you will want to establish some feature or mechanism to prevent box reuse, for example in the seal or closure design.
By establishing a framework for assessing the risks to your product and by understanding the current packaging and labeling susceptibilities, you can design key features into your product packaging that will rationally and successfully secure your product from intellectual property theft.
If you are wondering how to best protect your brand, address your questions or concerns to Gary Lerner at email@example.com.
About the author
Gary Lerner, a Senior Partner and CTO with the Red Oak Group, LLC, uses advanced engineering techniques, innovative security technology and information systems to secure products from tampering, fraudulent returns, counterfeiting and product diversion. Since 2000, Gary has designed and developed product security systems for more than 35 leading brands and has successfully secured more than 400 million product units.