Copycat business model

In recent study by Horen (2010), the author for the first time touched on a controversial topic of effectiveness of copycat products.

Copycat products are imitations of the original product, in all sorts of ways, as for example, color, design and packaging. They are not counterfeits, as counterfeits are outright copies, which claim to be the originals.

The first thing on everyone’s mind are the legal issues. However, I picked up some figures from the article itself to back up that this business model is not only morally justifiable, but that it is actually popular:

– National survey in US’s supermarkets showed that half of the store products imitate the leading brand package, in at least their color, size or shape (Scott-Mortan, and Zettelmeyer, 2004);
– Outright package imitation occurs in 1/3 of 75 consumer packaged good categories (Sayman, Hoch, and Raju, 2002).

However be aware!:

– Trademark transgression was estimated to be of 512$ billion in 2004 (Zaichkowsky, 2006).

So whats makes a copycat product effective? The findings of the present study point out to the idea that feature based copycats (e.i., logo, brand name or packaging – e.g., cow looking left in Milka) are much more popular (and more legally persecuted) than the theme based copycats (e.i., the general feel of the product – e.g., Mountain freshness of chocolate Milka).

However, in practice, when it comes to choosing products, the consumer is likely identify theme based copycats as more attractive, than feature based copycats, due to general good unidentifiable feeling produced originated from the original product, while not being able to point out the source of that good feeling (due to probable confusion).

Now, theory to the side, how is it relevant for business? Well, everybody says “don’t invent the wheel”, and most of us don’t. This to say, that while we are all creative, we all copy someone’s ideas to a certain extent. This is just a business reality! Good ideas are being picked up and explored all the time. Everyone does it, but my point is to know how to do it “right”.

Reference list:
Horen, F. v. (2010) “Breaking the mould on copycats: what makes product imitation strategies successful?” CentER Distribution Series: Tilburg.
Zaichkowsky, J.L. (2006) “The psychology behind trademark infringement and counterfeiting”. New Jersey: Lawrence Erlbaum Associates, Inc.
Sayman, S., Hoch, S.J., and Raju, J.S. (2002) “Positioning of the store brands.” Marketing Science, 21 (4), 378-397.
Scott-Mortan, F., and Zettelmeyer, F. (2004) “The strategic positioning of the brand in retailer-manufacturer negotiations.” Review of Industrial Organization, 24 (2), 161-194.