Counterfeiting is a wide phenomenon, involving several actors with macro- and micro-economic issues with the trade. It is present in all countries for both its demand and supply; and all industries are concerned.
From a historical perspective, the first testimony of a counterfeit artifact is a Roman amphora that is on display in the Museum of counterfeiting in Paris. This amphora was a container for wine that had imitated the seal of a Roman wine manufacturer. At that time, Roman wines were the best in quality and reputation, hence also the most expensive. Thus, the history of counterfeiting seems intertwined with the history of luxury consumption.
It is then not surprising to see that luxury brands are the ones being most counterfeited, on a large scale and in all countries. Data from the World Customs Organization presented the ten most counterfeited brands (based on the number of cases). Among them, four are luxury goods: Rolex ranks #3, Louis Vuitton #6, Chanel #7 and Gucci #10! Overall, the business of counterfeit products would represent around 10% of total global trade.
The impact on IP (Intellectual Property) holders seems two-pronged: 1. impact on the brand image and, 2. impact on the brand turnover. There is actually an ongoing debate on whether counterfeiting would harm or be beneficial to the brand, from both branding and financial perspectives. Researchers who state that it is financially positive assume that luxury- and counterfeit-buyers are two different groups of people.
However, this is not empirically true. In Western countries, postmodern consumption has allowed consumers to handle inconsistent behaviors depending on the context they are in (polytheism of values)iv. For instance, a French woman could not even imagine buying a fake Louis Vuitton bag on the Champs Elysées in Paris, but has no issue doing it in San Remo (Franco-Italian boundary) or in Shanghai.
The key question thus remains, whether she would have bought the real item at a real Louis Vuitton store in the first place. If she would, that would turn into a financial loss for the company. If not, one can question the financial harm actually done to the IP holder.
Even for those consumers who cannot afford real products, the same researchers take only a snapshot view on their income. While in reality and a more time-dynamic fashion, we may find that their earnings/income/lifestyle could evolve and hence allow them to start buying accessible luxury at some point in their life.
Therefore, it is worth questioning what could make consumers of counterfeit products switch to the consumption of the real thing. This is the topic addressed in a recent published paper, which posits that the solution for counterfeited brands might be to actually counterfeit the counterfeiters! Of course, this research only deals with non-deceptive consumers, meaning the consumers who actually know that the items they are buying are fake ones and therefore do it in a volitional way.
How do consumers of non-deceptive luxury counterfeits perceive the worlds of luxury and of counterfeiting?
What makes them stay away from luxury houses? How could marketers and retailers use such knowledge to capture these consumers? In the research, we identify three necessary conditions that, if met, would eventually allow consumers of non-deceptive counterfeits to switch to the purchase of real goods.
(1) an exigency of quality, both in terms of product and of sales force’s competencies;
(2) a retail environment “smelling luxury” (from a quote of one consumer);
(3) a flawless service experience.
Interestingly, such features should be no surprise in the luxury retail environment, but in some way, consumers of counterfeits perceive them as deficient. While these should be a given, it seems like there is room for improvement there.
From the various verbatims and observations collected during the research, more practical and specific recommendations emerge. Why, as a manager, are you not inspired by counterfeiters? Even if you do not believe counterfeit consumers are important to you, such improvements cannot harm your business and can only make you refocus on your initial business: manufacturing and selling luxury goods.
Some practical takeaways from the research include:
1. Counterfeit consumers oppose the felt freedom that they have when buying a fake to the felt constraints imposed to them in a real store, both from the choice experience perspective and from the interaction that they get with the respective sellers. Restoring the feeling a ‘being actor of my purchase’ seems fundamental.
There are several ways to achieve this, for instance relying upon digital devices to gather more information or explore the history of the product to the actual offered customisation of the product. Some luxury companies already offer it on a small scale, and make it available in specific retail strategies such as online. For instance, on the Louis Vuitton’s website clients can choose to engrave their initials on a bag.
Extending that sort of strategies in real-settings as well could be an additional way going forward for luxury companies, and re-capture these consumers of fakes.
2. Instead of being a cheap alternative to an expensive product, price is perceived as a side component, only enabling the recognition of a counterfeit good. Counterfeit consumers are actually more sensitive to buy real very expensive products than cheaper ones.
That is consistent with the mental associations they hold with the World of Luxury in general, close to arts and collectibles. Therefore, instead of decreasing prices (with lower-versions of the brand), luxury brands should actually play on this high-price/piece of art aspect.
This is true for the sales associates’ discourses, but even more for the price display. Like any piece of art, the price should not be too visible, but may be listed on a piece of paper for instance (as in an art fair).
3. Salespeople’ attitudes and behaviours appear as strong deterrents from stepping-in luxury stores for counterfeit consumers. They actually feel that they are not considered as relevant consumers, treated differently from the more traditional consumers. At the same time, they oppose the customised experience delivered by the counterfeit sellers to the more standardised one that they imagine they would get in the real store.
This is affecting their perception of value/price ratio, hence motivating them to purchase the proxy of the product, i.e. the fake. Therefore, employees should pay special attention at acting like ‘normal’ for such consumers, as if the visitor was a regular consumer in the store, and letting him think that he deserves extra and special care.
In summary, we can conclude as follows:
Firstly, there is no obvious reason for marketers to get depressed by the fact that they share some consumers with counterfeiters.
Even if this is unfair competition, it is still competition, which in the end should let them rethink the way they conduct their business and consider their consumers.
Secondly, listening to not only one’s actual consumers but also deterrents might be valuable in a way to re-invent how you practically market your goods.
Third, think about how good counterfeit sellers are and why. There must be something clever and magical in what they are doing. This could be a great source of inspiration for you.
The writer is Anne-Flore Maman Larraufie, Ph.D., ESSEC Business School