An Investigation of Factors Contributing to Consumer Brand Confusion

An Investigation of Factors Contributing to Consumer Brand Confusion A quick glance at the shelves of grocery and drug stores shows that many consumer goods companies are employing what has been referred to as an "imitation strategy. " Imitation strategies involve any or all of the marketing mix elements, including price, product, distribution, and promotion, and they occur along a continuum of physical and strategic similarity, with one end of the continuum being complete similarity of product and marketing strategy and the other end completely different product and strategy. Thus a series of increasingly imitative strategies is envisioned, e.g., legally permissible emulation of an established brand to emulation of an established brand exceeding legal limits (infringement) to brand counterfeiting. The aim of the creators of imitator brands is to position the new product next to a better known (often market leader) brand. One simple means of achieving this objective is to emulate the package design of the well-known market leader. Such emulation may include not only package shape and size, but also label print style and layout, as well as package color or other distinctive marks (see Diamond 1981 for examples of imitation strategies that have been used). One potential result of brand imitation is consumer brand confusion, where consumers buy the imitator brand thinking it is the original (Loken, Ross, and Hinkle 1986). (1) Brand imitation is not a minor problem. In 1987 alone, the courts dealt with brand imitation cases involving automobiles, fraternities, sportswear, travel companies, professional sports associations, petroleum products, limousine services, fast food restaurants, insurance companies, casinos, pharmaceuticals, wristwatches, and food products, to mention only a few (Fletcher and Wald 1987). Imitation strategies beyond a certain point can have harmful consequences for both firms and consumers. Two occasions for potential harm to firms occur when a consumer unknowingly purchases an imitator brand. First, the consumer may be dissatisfied with the product purchased and attribute his or her dissatisfaction to the original brand, never realizing that the brand consumed was an imitator. Second, the consumer may be satisfied with the imitator brand, become aware that it is not the original brand, and switch brand preferences in favor of the imitator brand. Competitor imitation strategies and resultant confusion can thus harm firms by reducing the number of consumers who become repeat or loyal purchasers. The Lanham Act of 1946 was passed to protect originating firms from this type of harm from imitators (Burgunder 1985). Under this act, hundreds of trademark infringement cases have been litigated in recent years (Fletcher and Wald 1987; Leeds and St. Landau 1987). Imitation costs U.S. firms both time and money: one firm (the Walt Disney Company) has filed fifteen infringement suits against 3,000 individual defendants since 1986 alone, and counterfeiting is estimated to have cost U.S. manufacturers $20 billion in sales annually (New york Times 1988; Roberts 1985). The likelihood of consumer confusion is a key element the courts use in such cases to decide whether or not trademark infringement has occurred (Boal 1983; E.I. Du Pont 1951). Unfortunately, there has been little consensus to date regarding the nature of consumer brand confusion or the extent to which consumers must be confused before courts should rule in favor of the original brand. While the courts focus on consumer confusion in enforcing the Lanham Act, they do so only from the point of view of how such confusion might harm original firms. However, confusion clearly can also harm consumers themselves. Confused consumers may suffer physical harm when they unknowingly buy a product other than the one they intend to buy (Fletcher and Wald 1987). Imitator or counterfeit brands may contain different (and inferior) ingredients from original brands, and unknowing exposure to these ingredients can threaten a consumer's health. …