Our discussion last recitation about Zara got me thinking about imitation products. How is it that designs and products, so blatantly copied, are allowed to exist in a country such as the USA (the land of trademarks and home of patents)? Despite all the hoopla over of Zara pulling designs straight off designer runways, its actions are at the very least defensible to the extent that Zara does not compete directly with the luxury lines it draws inspiration from. By offering imitation designs at a significantly lower price and quality, Zara targets segments that scarcely overlap with that of the likes of Gucci and Prada.
The true controversy lies with those products that attack with a double edged sword: imitation and direct competition. One of the most striking examples of this that I have noticed in my day-to-day life is the CVS Pharmacy brand, which offers generic versions of an array of brand name products sold in CVS stores. Not only does CVS imitate products based on their attributes, to almost an identical extent including packing and product description, it also enforces direct competition and strategically places its in-store brand adjacent to their brand name equivalents. The only notable different between the CVS Pharmacy products and the original brand name products is that the former has relatively lower price points, making them more competitive within the same market segments.
Ultimately it comes down to a question of fairness. Should stores such as CVS be able to piggyback off the marketing efforts of brand name companies? Is it fair that brands spend millions cultivating specific brand inferences and communicating messages to their consumers only to have the success of their efforts shared by a generic brand that can offer an all too similar good for a lower price because it did not have to invest nearly as much on marketing itself? Perhaps more importantly, does this tactic even work on consumers? Would you buy a CVS Pharmacy product over its brand name counterpart? Do you even notice this counterfeit marketing?
Why can’t CVS piggyback? I mean, imitation is but a most useful strategic decision by a corporation (not to mention flattery as well). Companies that are pioneers are first-movers; people who will charge a premium for a product that in reality may not be worth its cost to consumers. While companies that are not, are late-movers; people who will imitate a product’s best features, and then sell a comparable one for a lower cost. Without market competition such as this, we would be charge exorbitant prices that would be damaging to our financial well being. Imagine a pharmaceutical company that could indefinitely charge a high price for a life saving drug. The reason we have patent laws are both to protect the creator so that he may benefit for a limited time from his genius and to protect the society, so that all of us can benefit from its use in the long-term.
ReplyDeleteI disagree, CVS is not piggyback. It is preventing the oligopoly of pharmaceuticals who would charge high prices for even the most common of drugs. Many a pharmaceutical has entered markets in lower developing economies and exploited the citizens by pricing exorbitantly high on drugs that people have a high level of reliance for, sometimes with the support of NGO's. Pharma and its research does our society well, but some of their practices are unjust. Without a CVS to step in to produce generic brands, particularly for drugs with limited prescription as sanctioned by managed care organizations, even the simple tylenol would be too much to purchase.
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