By Jeff Hilton
Regardless of your vantage point, there is no question that we are collectively at a critical juncture in the evolution of the natural products industry. The political environment is volatile and DSHEA is under attack. The media continues its daily assault on our products. Customer loyalty is on the decline. And suppliers are under growing price and quality pressure from inferior foreign sources. So, how will this industry continue to thrive and expand under these conditions? The answer of course is multi-faceted and complex. But I am confident that a key component of our future success lies in the continued funding and cultivation of intellectual property (IP). Whether it takes the form of patents, trademarks, logos, trade dress or proprietary science, this industry was built on IP and will rise or fall based on the same.
One need only look around at the business and marketing environment we work in to see the signs. We are competing in an era of expanding “commoditization” where products in most major market segments are becoming increasingly similar and without unique features or benefits. Soft drinks. Clothing. Electronics. Appliances. Automobiles. Innovations are quickly copied and the competitive gap is rapidly closed. Technology is both a friend and a foe to industry generally. On the one hand, it allows us to innovate and improve products and services. On the other, it allows our competition to catch up at light speed.
The unique and undeniable power of IP is that it allows companies to differentiate their brands in the marketplace, and to add perceived value to those brands in the eyes of their customers. Jack Trout, a popular marketing guru, wrote a book called “Differentiate or Die.” His basic premise is that companies that fail to set their brands apart in the marketplace will die an untimely death at the hands of their competition. And he cites plenty of examples, from Coca Cola to Xerox to Pizza Hut.
And how does this apply to the healthy lifestyles business? Let’s consider the average natural products consumer. Female. 35 years old. Educated. Available disposable income. Informed. Skeptical. Lots of options and channels to choose from. In short, she is in control. It’s our job to sell to her on her terms. The critical role of IP is to help create differentiated brands that offer the consumer a compelling value proposition; that is, unique emotional and rational reasons to purchase. Without IP, brands quickly become commodities. And commodity purchases are price-driven and non-considered. Trust me, that is not where you want to be as a serious contender in any market segment.
So, why don’t all brands invest in IP development? Two principle reasons. First, amassing IP is expensive and a long-term strategy that doesn’t fit everyone’s business plan. Second, IP infringement is rampant and the cost of protecting IP is daunting. When a company’s IP is threatened, it has two options: fight or roll over. Frankly, it’s a sad choice to have to make. Most companies would choose to defend their brand, but not all are able. Policing IP infringement is an emotional and protracted battleground. And companies who vigorously police their brands are often viewed as bullies, as if they picked the fight to begin with. It’s really a ridiculous paradigm. And so as a result, many companies elect to carefully pick their battles, and let the rest go.
Which brings us back to industry growth and prosperity. Despite the risks and expense involved, it is my fervent hope that companies will continue to invest in building a strong portfolio of intellectual property. It is also my hope, and frankly my expectation, that companies will respect the intellectual property of others, particularly their competitors. In an industry founded on entrepreneurism and personal integrity, it is tragic to see brands “borrowing” –read stealing-- science and hard-earned IP from other brands. This kind of activity is both morally wrong and ethically unprofessional. As an industry, we must do all we can to create and sustain an environment of zero tolerance for this practice. It’s amazing what peer pressure can accomplish, and the more we can shine a collective light on those who abuse the IP of others, the easier it will be for media and associations and individual companies in this industry to protect their brands and enforce their rights.
Intellectual property rights are violated every day. Those violations undermine the future growth and prosperity of this industry. It impacts all of us, not just the victims. There is strength in numbers. Please do your part.
President and Co-Founder
Integrated Marketing Group