Living in Peru : your everyday companion

Courtesy of

DOING BUSINESS IN
AND WITH) PERU

(By Claudia Fernandini, Clarke & Modet Asociados)
 
While we celebrate the growth in our exports, we must also reflect on the fact that most of our exports are still basic products, raw materials, and natural products that have little or no value added. In this context, collective brands can become an effective tool for harnessing additional export value.


There will always be emerging economies with cheaper manual labor in the international markets, which is why we must compete through differentiation, thus adding value to our exports. One adds value to products and services through innovations, the application of technology, improvements in quality and the application of the knowledge.

Collective brands are one of the tools that Peru has available to give value added to its exports. Other similar measures are the development of guarantees of authenticity and brand certifications, and investment in research and development.

A collective brand is a shared brand in the sense that, although it belongs to an association, it is used by several people or companies that make up the association. It therefore transmits to the consumer a characteristic common to all products or services that carry that collective brand.

While collective brands are commonly used to distinguish among agro-exports, as a result of the increasing consumption of "natural products," this designation can be used to promote almost any type of product or service.

The enormous potential of the collective brand comes from its transmission of the origin or another common characteristic of the products or services from among the wide variety of product or service characteristics that could be transmitted. Naturally, it only makes sense to transmit a characteristic if it is appreciated and valued by the market to the extent that the consumer is willing to pay a higher price for a product with this characteristic, or at least that it will prefer it under otherwise equal conditions.

The first characteristic valued by the consumer is quality. A quality product is one that fulfills certain norms, is free of impurities, has good finishing touches, etc.

Another element that differentiates products is the geographic origin, the place, zone, city, town where the product comes from, and in this sense a collective brand resembles a guarantee of authenticity.

The way the product has been elaborated can be identified. To mention some examples, we can speak of a product as “organic," “ecological," "100% natural" or "handmade.”

Finally, one can also recognize products or services through those who have elaborated or rendered it (for example, small craftsmen or farmers, women farmers, etc.)

In Peru there are 74 registered collective brands; of these, there are 9 Peruvian ones in effect, and 3 of these belong to associations from Cajamarca.

Some errors have been committed in the use of collective brands. The first is that some collective brands are not registered in INDECOPI (for example, the collective brand “MY POTATO” exists with a strict regulation of its use) though the brand registry is already legally constituted. Secondly, collective brands are mistakenly registered as simple brands, an error in categorization that could have repercussions in the credibility and scope of its effective protection.

The collective brands must register before INDECOPI, and if the product or service is destined for export, the brand must also be protected in those international markets.

A peculiar fact is that the first 73 of the 74 collective brands registered in Peru appeared throughout numerous years, with the last one, number 73, being registered in 2002. Then not a single collective brand appeared during the following 3 years. In 2005, a brand “Association of Bakers from Cajamarca” appeared. What happened during those 3 years? The explanation may be that there was a lack of promotion and explanation of the idea.

What steps must be followed in order to develop and protect a collective brand?

First is to become associated. A group of producers may be able to achieve what independent producers could not possibly obtain. The collective brand “CHIRIMOYA CUMBE,” for example, belongs to the town of Santo Toribio de Cumbe, which understood that to originate from CUMBE is a value added and perceived by the consumer as an indicator of quality.

Secondly, one has to identify what the market values and which characteristics of its product or service have special value for the market where it is aimed.

In a following stage, one must establish how to produce, sell, to control the quality and quantity, and to establish the rules for administering the collective brand.

Later, the collective brand and its rules must be registered; in Peru, before INDECOPI as well as in the main markets where one is going to export.

Following the registration of the collective brand, special care must be made in its promotion, and especially, to assure fulfillment of what it offers in order to avoid losing its credibility.

Difference with appellation of origin Like the collective brands, the appellation of origin also identify a geographic zone where the product originates. The major difference is in the holder; the holder of the collective brand is an association; the guarantee of authenticity corresponds to the State. The collective brand is simpler to register and to administer, but the guarantee of authenticity has greater acceptance and greater value for the consumers because it carries the implicit guarantee of the State. What are the advantages of the collective brand? Upon becoming associated, the producers face the market together, sharing a strategy, costs and a single image.It is a way to promote regional development. What are the advantages of the collective brand? • Upon becoming associated, the producers face the market together, sharing a strategy, costs and a single image. • It is a way to promote regional development. • It permits establishment of uniform quality and other characteristics, as well as an increase in the quantity offered for export. • More resources are available for advertising. • It constitutes a way to differentiate the product or service from its competition.

In the effort to incorporate greater value added into the country’s growing exports, collective brands can be a tool that incorporates intangible elements for which the consumer, under otherwise equal conditions, is willing to pay a higher price or at least display a brand preference.

tags : Peru USA business economy brands agriculture Import Export

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