Why brand names are vulnerable to counterfeits

Carlos Velasco, Melanie Labusch, Manuel Perea

While the recognizability of a brand name is a key strength of an established company, it is also the factor that makes the brand name particularly vulnerable to counterfeits.

Brand names serve as a unique and key element of firms, acting as potent symbols of trust, quality, and identity. They capture a company's reputation and values, as well as their core theme and associations, making them challenging for marketers to create and modify. As such, it is worth asking whether brand names are special words relative to other words and, if so, what sets them apart.

The widespread prevalence of counterfeit brand names, which replace or modify letters (such as “adadis” instead of “adidas”) poses challenges for both businesses and consumers by creating confusion. The ability to distinguish genuine brands from competitors and counterfeit brand names not only enables consumers to access the products and services they seek but also safeguards the integrity and market value of esteemed brands. Therefore, it is important to determine what makes brand names special relative to other words and to understand when and how consumers distinguish genuine brand names from counterfeits.

How are brand names special?

One feature distinguishing brand names from common words is that they are usually presented in the same visual format (e.g., typeface, colour) across all platforms and contexts. For common words, there is a consensus across researchers that visual information is superfluous (e.g., school and SCHOOL). Therefore, visual information is quickly lost when the brain reads a word. For instance, the brain activation produced by viotin and viocin, both derived from violin, is the same despite the higher visual similarity between viotin and violin.

Several recent studies have revealed that brand names are susceptible to visual information. When deciding whether a logotype corresponds to a correctly spelled brand name, it is for example more difficult to distinguish between anazon and amazon, than it is to distinguish between a more visually different misspelling like asazon and amazon. An explanation for this is that, unlike common words, the processing of brand names involves the encoding of other visual elements to speed up their recognition.

This highlights the importance of visual letter similarity when distinguishing brand names and counterfeits. But it is not only the slight letter modifications that can make counterfeit brands successful, the graphical information surrounding the logotypes is also important.

In a recent study, brand names were presented in various formats. Either correctly written or with two letters switching place:

  1. With the original logotype.
  2. In black and white, keeping the design.
  3. In another font but keeping the design.
  4. In plain text with no graphical information.

Readers were quite precise, regardless of format, deciding that misspellings by replacing two letters (e.g., amceon) were not a real brand name. At the same time, readers had more difficulty deciding whether the transposed letter misspelled amzaon was a genuine brand name, especially when the logo looked the same. Importantly, the electrophysiological waves in the brain produced by amzaon are very much the same as those produced by the genuine logotype amazon even after looking at the logo for 600 milliseconds. This indicates that we may often buy counterfeit products without even noticing it.

What can brands do?

Marketers should prioritize maintaining visual consistency in brand presentation across different communication channels. This includes using the same typeface, color scheme, and overall design to enhance brand recognition. Any deviation from this consistency might influence brand recognition. At the same time, this presents a paradox. While the consistency enhances recognition, it also makes the brand name vulnerable to counterfeits.

Brands can address this paradox by incorporating unique visual elements, implementing advanced anti-counterfeiting technologies, educating consumers on authentication methods, regularly updating security features, and collaborating with law enforcement to actively combat counterfeit production and distribution.

Second, when assessing counterfeit brands, it is particularly relevant to assess the graphical similarity with their original counterparts, and to have an understanding of the mechanisms behind how we process correctly and incorrectly written brand names. In legal actions against counterfeits, this understanding may serve as a useful guideline to evaluate the similarities (or differences) between genuine brand names and their potential counterfeits.

For instance, when known brand names are imitated by replacing letters, it is important to pay attention not only to how similar the replaced letter is to the original one but also to elements like the design of the logo. This issue is not only useful as valuable evidence for counterfeit cases, but it may also be relevant when choosing a suitable name for a new company.

While sharing the same fundamental mechanisms, the identification of brand names differs from that of common words. One reason for this is that brand names always are presented in the same visual format and with a unique design. The use of these visual cues speeds up the recognition of the brand name, which is an intended goal. At the same time, the reliance on these visual cues has also created its own prison: their mental representations are less precise than those of common words, thus making them more susceptible to counterfeiting.

Published 30. November 2023

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