1. Kodak Security Solutions Tales from the Trenches!
AIIM On Demand 2007 Press Conference
Kodak’s Graphic Communications Group
Kodak Security Solutions Tales from the Trenches!
Dennis Kercher
Kodak Security Solutions
Eastman Kodak Company

2. Kodak Security Solutions – Tales from the Trenches
Counterfeiting is an intentionally organized crime
You need an intentionally organized plan of action to combat it.
Counterfeiters attack your competitors and peers
Joining organizations like AAFA helps you to work with your peers to be more effective in the fight.
Work your anti-counterfeiting strategy into your brand products
Budget for anti-counterfeiting technology to be included in all brand products.
Effectively communicate your fight
Counterfeiters will go where they believe they can have the best results with the least resistance.
Eastman Kodak Company

3. Case Study: Liz Claiborne – A Brand Worth Protecting
Founded in 1976
Established at a time when women were entering the workforce in large numbers
Transformed the way women dressed and ultimately, how they shopped
The first company founded by a woman to be listed in the Fortune 500
Emphasize that the brand has value, value that has been built over decades both nationally and domestically, and the importance of protecting it. Talking points:
Founded in 1976 by Liz Claiborne herself and three partners
– Revolutionized the fashion industry. Development of mixed and matched separates permanently changed the way women dressed for work and changed the way clothes were sold at retail
One of the first successful brands named for a personality
One of the first apparel companies to go public
Any other impressive company stats
Eastman Kodak Company

4. Liz Claiborne Cosmetics
Established in 1986
Internally developed and licensed
brands
Worldwide manufacturer and distributor
Several fragrance collections
Bath, body and grooming products
Again, consider discussing the strategy behind the development of the Liz Claiborne cosmetics division and the popularity of the brands underneath it as a way to emphasize the value of the Liz Claiborne brand
Established in 1986 with the launch of its signature brand Liz Claiborne followed by Realities in 1990, the company has pursued a strategy of profitable growth with the launch of internally developed and licensed brands aimed at the contemporary consumer.
Liz Claiborne fragrance brands for Men and Women include Curve, Realities and Sweet Desire. Licensed brands include Juicy Couture and Usher. Each of the brands expresses a lifestyle positioning those appeals to consumers from young and hip to sophisticated.
Aggressive sales and marketing programs designed to stimulate consumer demand support the Liz Claiborne brands.
Eastman Kodak Company

5. Brand Assault - Counterfeiting
Serious issue, especially overseas
Not a largely detected problem with Liz Claiborne Cosmetics products to date
Canal Street
Feb 2008, $1 million in knockoff accessories and fragrances bearing some of the fashion industry's best-known labels, including: Prada Fendi Coach Rolex Gucci Dolce & Gabbana Burberry Calvin Klein and even Dora the Explorer*
Emphasize the problems that counterfeiting can cause to a company and consumers – can put customers in danger, can cost a company millions in sales and in lawsuits, liability claims, can erode a brand. While the problem is not prevalent with Liz Claiborne products currently, it does happen and is on the rise.
* Women’s Wear Daily, Feb 27, 2008
Eastman Kodak Company

6. Brand Assault – Grey Market Diversion: What is it?
Manufacturer strikes deal with distributor
Distributor agrees to markup and forecasts purchase of product from manufacturer. Distributor is authorized to sell product at markup agreed upon based on marketing, tariff responsibilities
Unauthorized distributor comes in and sells retailers same product at a greatly reduced cost
Consumers purchase product from unauthorized retailers
Legitimate distributors and retailers lose sales and profits
More typical problem faced by brand owners in fragrance and cosmetic industry
Involves goods flowing through unauthorized distribution channels with no relationship to the manufacturer
Not necessarily illegal, but harms legitimate channels of distribution
More prevalent in international markets
Price points and discounts differ for international customers
Markups typically higher in the U.S. vs. overseas because the manufacturer is responsible for marketing costs in the U.S., whereas the retailer is responsible for marketing cost overseas
Differences between markups can be as much as 25%
Authorized distributor does not purchase products as forecasted
Manufacturer loses sales and profits
Brand is eroded due to lack of exclusivity; becomes commodity
Eastman Kodak Company

7. Grey Market Diversion: A True Story
“ABC Perfumes” agreement
Forecasts $10 million in Liz Claiborne perfume in 2007
40% markup
Emphasize that this really happened. Talk in detail about the forecast and explain the wholesale price points. Wholesale price point is set at 40%.
Eastman Kodak Company

8. Grey Market Diversion: A True Story
“ABC Perfumes” agreement
Forecast not met
Forecasts $10 million in Liz Claiborne perfume in 2007
40% markup
Red flag goes up
Include explanation of forecast from ABC Perfumes and why they’re not buying at the rate they promised.
Eastman Kodak Company

9. Grey Market Diversion: A True Story
“ABC Perfumes” agreement
Forecast not met
Products being diverted
Forecasts $10 million in Liz Claiborne perfume in 2007
40% markup
Red flag goes up
Another distributor selling Liz Claiborne fragrances into ABC Perfume’s territory at a much lower price
Distributor gets 10% markup
Expand upon the fact that Canada was not agreed upon territory for this LA distributor; expand on the 10% markup difference, and describe why this distributor is making a profit, at the detriment of the Liz Claiborne brand
Eastman Kodak Company

10. Combating Counterfeiting and Grey Market Diversion – Liz Claiborne’s Approach
Need to proactively protect brand
Need security systems in place to combat both counterfeit and gray market diversion
Combination of overt and covert security technology
Goal is to protect the brand and secure the supply chain at every level.
Eastman Kodak Company

11. Working Together To Counter Counterfeiting
“Beware of Dog”
Communicating is critical. Let your customers and the counterfeiters know you are taking countermeasures
Eastman Kodak Company

12. Case Study: Donruss Playoff LLP
National Treasures – highly collectable game day cards
As players performance improves, their “Brand” increases and the value of cards increase exponentially
Leading to fraud and counterfeiting, devaluing the Donruss brand.
Goal is to protect the brand and secure the supply chain at every level.
Eastman Kodak Company

13. Case Study: Donruss Playoff LLP
Goal is to protect the brand and secure the supply chain at every level.
Eastman Kodak Company

14. Kodak Security Solutions – Voice the Fight!
Eastman Kodak Company

15. Kodak Security Solutions – Voice the Fight
Kodak Security Solutions – Voice the Fight! Harpers Bazaar – Anti Counterfeiting Summit May 13, Fakes are Never in Fashion!
Goal is to protect the brand and secure the supply chain at every level.
Eastman Kodak Company

16. Working Together To Counter Counterfeiting
Collaborative Counter-Insurgency
Align with other industry participants to raise public awareness, drive policy and share resources
Eastman Kodak Company

17. traceless@kodak.com www.graphics.kodak.com Eastman Kodak Company
©Kodak, Kodak, Digimaster, NexPress and Traceless are trademarks of Kodak.
Eastman Kodak Company