Brands – the backbone of Fast Moving Consumer Goods (FMCG) valuation
William Shakespeare once said “What’s in a name?”
For FMCG companies, it’s all about the product names that consumers identify from the TV advertisements or trips to the supermarket. It is critical to your business because:
- It’s a marketing tool; brand recall leads to greater sales and profitability
- It strengthens your licensing opportunities and therefore revenue from distributors/partners
- It increases your company’s valuation, leading to greater investments and dividends
Global Brand Valuation 2013 – Fast Moving Consumer Goods (FMCG) Leaders
What would a consumer pay for an Rs.35/- Coke bottle if it didn’t bear the Coke logo, brand name, font and brand colours?
Trademarks – the foundation to Brand Building
Common mistakes FMCG companies make about trademarks:
- Not giving due importance to your brand name / trademarks / logos.
- Choosing descriptive & generic terms (ex. a laundry detergent named “Strong Washing Soap”) which fails to create a distinctive image of your product in the market, rather than selecting fanciful, arbitrary, and suggestive trademarks (example – Colgate & Gillette for consumer goods) which over time can work as a unique differentiator of your product from your competitors.
- Filing trademark applications after usage of the mark in commerce, rather than before.
- Not keeping a watch on your competitors’ use of same or similar trademarks or logos.
FMCG sector is losing about 1.7 Billion INR of revenue annually as a result of trademark counterfeiting.
What should Fast Moving Consumer Goods (FMCG) companies do to protect their brands?
- Conduct trademark searches to assess conflict with competitors before selecting a brand name / trademark / logo.
- File trademark applications prior to use of the mark in commerce.
- Monitor the use, misuse and infringement of your trademarks.
- Pursue those infringing through dialogue, and legal means if necessary.
- Periodically review, audit and assess your trademark portfolio to set priorities for band building.
In the year 2013, ITC’s trademark strategy helped it increase its intangible valuation by 30%.
Authored by Mr. Sanjeeth Hegde