Management Practices

Tackling Diversion Head On

July 10, 2011 | 3:20 PM

AT COSMOPROF North America Beauty Week in Las Vegas, Moroccanoil ( announced a groundbreaking, multimillion dollar, high-tech system that will help deter diversion of its exclusive salon and spa products in ways that were previously considered impossible.

Tackling Diversion Head On“Moroccanoil launched a new hair product category that took the beauty world by storm,” says Zohar Paz, CEO of Moroccanoil North America. “Now, to protect our products from diversion, we are launching another innovation—the most comprehensive, sophisticated and far-reaching anti-diversion and anti-counterfeiting system in the history of our industry. We are 100-percent committed to prevent the sale of our products through illicit or unauthorized channels.”

Key elements of the Moroccanoil campaign include:

Proprietary Instant Tracking Technology
The highlight of this program is the revolutionary, proprietary software and tracking technology that allows Moroccanoil to precisely determine which party purchased the product and quickly identify and address the source of diversion. The program places more than 100 invisible matrix encryption codes throughout each label, (both front and back), giving each bottle its own individual tracking ‘DNA’ that cannot be manipulated by diverters in an attempt to evade detection. Products can be tracked even if only 1mm of a label is present.

According to Paz, “The codes can only be read by a high-tech device that we developed expressly for this purpose and have now shared throughout our chain of distribution.”

In-House Legal Force, Detectives and Business Analysts

Underscoring the company’s commitment to zero-diversion, Moroccanoil has formed new in-house departments staffed by highly trained and experienced specialists in law and business analytics and research, who are tasked with the responsibility of taking action against diverters. A full-time dedicated team of detectives reinforces the group. In addition, the company has retained the services of several major law firms with global resources, specializing in intellectual property, diversion, and counterfeiting of products. The legal team already has launched several lawsuits against major retailers known to be involved in diversion and in some cases, product counterfeiting.

Anti-Diversion Contracts Signed by Distributors and Salons
Ironclad, legally-binding contracts have already been signed by all those purchasing and selling Moroccanoil products, including tens of thousands of salons across the U.S. and Canada. The contracts will help ensure that Moroccanoil products are not diverted to unauthorized channels without the offending party being held legally accountable.

Regional Inspectors
Using proprietary, code-reading devices, a team of Moroccanoil inspectors are now monitoring retail stores in territories throughout North America. If diverted, the products will be quickly discovered, every bottle scanned, and the resulting code information immediately reported to corporate so they can be tracked and acted upon.

“We Tip” Program/Product Education
To empower stylists and consumers, Moroccanoil will soon have a comprehensive “We Tip” program in place for whistleblowers that will enable anyone to immediately report diversion via a dedicated hotline, special website, e-mail or text. According to Paz, “Diverters are negatively impacting the integrity of the professional hair industry, salon profitability, and undermining the promise that we have made to our loyal network of distributors and salon professionals: No Diversion.”

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