Extreme regulation, such as the removal of branding from consumer products to discourage their use, not only takes away the consumer’s right to quality products but also detroys company value, jobs and most importantly, does not work in changing consumer behaviour.

This is according to speakers at the 2016 Speaker Dialogues panel discussion at GIBS today. The topic was: A ban on brands: is extreme regulation a danger to the value of brands, and will it solve the problems it’s meant to address?

The panelists came together to discuss the impact of a raft of contentious regulatory and legislative initiatives impacting brands currently being mooted by the Department of Health.

Along with the ban of pictures of babies and children on infact formula packaging, which was promulgated in late 2012, the Department of Health has proposed warning labels on energy drinks, a ban on daytime advertising for fast foods and a complete removal of all branding on cigarette packs.

Brand guru and founder of Interbrand in Africa, Jeremy Sampson explained that brands invest many billions of rands to ensure their product is underpinned by a promise of quality and good governance and that by removing a brands’ identification, consumer trust and confidence in the quality and authenticity of the product is undermined.

“The intellectual property inherent in a brand cannot be ignored and brands are significant business assets with some worth billions of dollars. Tamper with this at your peril,” says Sampson.

Sampson used the example of Australia’s introduction of ‘plain packaging’ for tobacco products in 2012, which required the removal of all branding, brand markers and logos from packaging. ‘Plain packaging’ only allows for the name of the product in a uniform font and size, as dictated by the state. The packaging is also covered with extreme large picture warnings.

“Packaging is an important part of brand value. Branding and trademarks offer the consumer a valuable indication of quality and company ethics. This is especially important in South Africa, where there is a deluge of illicit and counterfeit products that enter through our borders every day,” says Sampson.

“Not only would ‘plain packing’ have serious consequences for the industry, it would also harm consumers’ rights and prevent new entrants. Existing companies would have monopoly status and severe market distortion would occur.”

“Alarmingly, our Minister of Health has said he plans introduce such a brand ban for tobacco this year. Such brand bans are likely to be rolled out to other products and industries, such as fast food, soft drinks and alcohol.

“Our message to the Minister today is to ensure that all proper regulatory impact assessments are conducted prior to the development of policy and legislation so that we can avoid unintented consequences that can cost our economy much needed revenue and jobs.”

Honey works better than vinegar

Fellow panellist, Sizakele Marutlulle, brand expert and CEO of agency Moonchild says that fear based interventions or bans on branding or shocking images on consumer products result do not work in changing consumer behaviour.

“Behavioural economics tells us that inducing fear or redicule does not work. Positive reinforcement advertising is more effective than its negative counterpart, especially if you want to change behaviour. During Obama’s 2008 winning campaign his political advertisements were aimed at stirring up hope and pride rather than his opponent’s ads which erred on the side of the negative.

“Social change messages have an even harder time effecting change or impact. Enough work has been done and evidence collected to show that in those cases where brands or movements are asking people to behave differently, the adage of ‘honey working better than vinegar’ applies.”

Marutlulle said that while the intentions for regulation may be good, that regulators need to take a good look at what interventions work in specific markets or cultures.

“Education, combined with positive reinforcement and incentive does work in changing human behaviour. Look at our own HIV/Aids campaign for example; Government did not use fear-based interventions or even extreme regulation, what it did was to create an education campaign that sought to include rather than to distance its audience,” concludes Marutlulle.

Extreme regulation could have dire consequences

The third panellist was Andrew Papadopoulos, a lawyer from intellectual property law firm KISCH IP.

He explained that trademarks serve to distinguish one party’s products from that of other traders, and that in their various forms, these trademarks, as well as the packaging on which they are displayed are a means of conveying messages to consumers.

“Regulation seeking to better inform the public is important and will invariably be in the public interest. Extreme regulation, however, which prohibits a brand owner’s access to or ability to brand its own products could have severe consequences, and therefore invites scrutiny.”

General food labeling provisions, as well as regulation of energy drinks, tobacco and infant formula products provide good examples of the spectrum of regulations in force and envisaged for the future. Regulation seeking to restrict the provision of information to the public and thereby hindering consumers to make informed decisions has the potential to threaten public health and safety.

The most effective custodian of a product’s integrity and reputation is its brand holder. When the brand owner effectively has its brand removed, both the incentive to police and the means to detect counterfeiting of its product, are gravely impaired.

“These regulations also provide for some unintended consequences which need to be properly weighed up against the set objectives for the policy. The objectives for regulating a specific industry should be clearly defined and credible evidence needs to support the realisation of such outcomes. In the case of ‘plain packaging’, it does not seem to do so.”

Are we in danger of proceeding along the slippery slope to a nanny state?

Panel moderator and MD of Ignite Strategies, Paul Bannister, said, “It was, in hindsight, a great pity that the first business sector to be tackled through ‘extreme regulation of brands’ was tobacco. While it seemed easy to support a health-driven initiative, which appeared to be beneficial to society, unfortunately nobody stopped to consider the implications of the precedent that was being established and the direction in which it could proceed.

“Nobody denies that there is a need for guidance in helping consumers make the right choices in the products and services that they acquire or require, and the possible dangers of use and abuse of those products or services.

“However, the ‘unintended consequences’ of extreme Government regulation need to be carefully analysed and each case, sector or category handled on its own merits. There simply cannot be a ‘one-size fits all’ approach and the interests of society, the economy and the general public need to be carefully considered. The ultimate test for brand regulation should be: Do the regulations help consumers make their own decisions? If not, we are in danger of proceeding along the slippery slope into a nanny state.”