Do counterfeits benefit its genuine brands?

Do counterfeits benefit its genuine brands?

Counterfeit goods are everywhere; we can see them all the time. It’s so common that people don’t even try to hide it anymore. There’s even an entire scene online talking about best “dupes” and where to purchase high quality fakes.

Counterfeiting is the copying of trademarked products, including the structure, logo, packaging, labelling and any other significant features. Counterfeiters target a variety of branded products, most of which are conspicuously consumed luxury items, such as designer clothes, jewellery, watches, and shoes.

In the intellectual property world, we always encourage companies to trademark their brands and protect their rights. So, why aren’t these rich, giant brands who know so much about intellectual property law more vigilant in sweeping every single fake item out there? They surely can afford it. Is there perhaps an indirect benefit?

Common reasons why people buy counterfeits

Reason 1: They are cheaper than originals

Counterfeits offers a price advantage compared to that of genuine products. For example, a

Louis Vuitton Speedy 30 is USD1020, whereas you can pick up a copycat one for as little as a couple of dollars. Therefore, people who cannot afford it will choose to purchase the lesser priced version.

Youtuber Erica recommends the best LV Dupe for under $100
Source: YouTube

Reason 2: Societal pressure to buy into the latest trends

This pressure has accelerated with the advent of social media, which often promotes a lifestyle filled with luxury goods and the latest trends. A Deloitte study found that 47% of all Millennial consumers use social media during their shopping journey. Buyers believe that buying fake goods is a way to obtain something “everyone else seems to have”.

Reason 3: For novelty, curiosity, and playfulness

A lot of people whk buy fake goods don’t mind that they’re fake. In fact, to some buyers of fakes, the lack of authenticity may be a reason they choose to buy the fake in the first place! They may justify their purchase of fake goods by saying something like, “Why pay $10,000 for a bag from a multi-billion dollar corporation that has enough money already, when I could pay $10 for it?” It seems that if a consumer seeks pleasure from a novelty item, buys it for the fun of it, and tries first before making a commitment, she or he will choose the counterfeit over the genuine item.

Reason 4: Genuinely don’t know they are buying fake goods

This happens because the counterfeit goods available at some online and brick and mortar stores can be very convincing. Only upon receiving the goods that they realize they were duped. Most are unaware of duplicate products as they look 90% similar to the original ones, with their convincing quality and looks.

Can you tell the difference between these two Supreme tags?
Source: LegitGrails

So, why do people still prefer genuine over counterfeit?

Reason 1: Quality

Consumers are more likely to prefer genuine items to counterfeit items to reduce the risks related to counterfeits. For example, the quality and materials of counterfeits are inferior to those of genuine items in most cases. Counterfeits are unlikely to be as durable and reliable as genuine items because they are not subject to the required safety standards and responsibilities, and they are usually made of low-grade materials. They also lack certain minor details and usually have inferior packaging.

How to Spot Fake Crocs

Here is an example of Crocs. The main thing that makes authentic Crocs superior to the fakes is their material. Crocs are made of a type of foam called Croslite. Crocs’ marketing boasts that this material is revolutionary and credits it for making their shoes ever so light, cushy, long-lasting, flexible, and slip-resistant. Fake Crocs tend to be made of rubber, which can be heavy and slippery on wet surfaces. If the shoes smell of rubber, they’re not true Crocs. This can bring risks to its users’ as it might cause serious implications to a consumer if they are not careful on rainy days.

Reason 2: Social status

By consuming a counterfeit product, one risks social status. Publicly self-conscious consumers are concerned about their impression on others and are sensitive to interpersonal rejection. Therefore, a serious consumer will choose a genuine item over a counterfeit to reduce risks involved with the consumption of counterfeits.

Reason 3: Reliable brand name

Consumers are more likely to prefer genuine items to counterfeits because of the strength associated with the brand. The value added to a product by its brand name and can only be earned through long-term marketing investments into the brand. Brand name, as an important extrinsic cue for quality, makes it easy for consumers to process the information, reduce search efforts, and make a purchase decision. When the brand is of high brand-name value, consumers tend to blindly rely on the brand name to judge objective product quality, which is the power of brand equity.

Duplicate bags are not sold together with the exquisite Chanel dust bags
Source:  ShopG

Reason 4: Positive brand association

Because consumers know that they are buying a counterfeit, it is hard for them to transfer specific and positive brand associations to the counterfeit. Personal associations with a brand, a major brand equity component, are usually built through long-term personal experiences. But when the consumer considers the counterfeit to be different from the genuine item, she or he will not feel the product association for the counterfeit. Certain high-end counterfeits may have really identical physical quality, but even in that situation the genuine item will be preferred because it owns the authenticity, the originality, and the uniqueness that counterfeits, due to their illegitimacy, can never possess.

How do counterfeits amplify the sale of genuine brands?

Studies show that once consumers have experienced a counterfeit item, they will purchase more of both counterfeits and genuine items, compared to consumers who have no such experience. In other words, consumers of counterfeits simultaneously develop a preference for counterfeits as well as genuine items rather than reduce their preference for one type of product and increase their preference for the other kind. Both counterfeits and genuines will accordingly have more revenue gains than losses.

Therefore, firms need not be eager to eradicate counterfeiting. Instead, they may welcome and capitalize on counterfeits because counterfeit items function as an indirect promotion for genuine items, and this way, counterfeit items take the role of the cheapest way of promotion.


The positive effects of counterfeits on high-end shoes
Source:  Counterfeiters: Foes or Friends? How Counterfeits Affect Sales by Product Quality Tier

Consumers tend to not consider counterfeits to be serious and ultimate purchases, but instead, view it as a prelude or “tester” to the purchase of genuine items. Knowing counterfeits are an inferior version of a product, they try counterfeits to experiment as part of an ongoing information search for the high-priced genuine items. Most consumers, once having experimented with counterfeits, would become highly likely to consider buying the genuine items.

In addition, consumers of counterfeits are likely to find that counterfeits do not perform as well as the genuine item, which their designs are not as perfect as the genuine item. In cases of product defects and dissatisfaction, counterfeits provide no consumer protection such as refunds, free repairs, and warranty programs. This results in consumers being highly motivated to move forward with genuine products.

Overall, counterfeits are not evaluated as better than genuine items in every major evaluative criterion except for price and fun. Thus, consumers will show greater preference for genuine items than counterfeits, no matter what product experiences they have.

Ultimately, consumers will show stronger intention to buy genuine items than to buy counterfeits.


Are you a brand trying to make a presence in the local scene?

Instead of trying to compete in your market based on just being the lower-priced option, consider marketing yourself as a luxury brand. In Malaysia, there are very little luxury local brands so there is plenty of room to grow and dominate. Our neighbours in Singapore, Thailand, and Philippines are huge consumers of designer goods as well, allowing easier market penetration.

Before anything, always register your trademark first. This protects you right off the bat. You would have full rights to decide how to manage counterfeits or copycats, should you happen to face that problem in future. Intellect can offer you our advice, connections, and experience so that your brand has the best chance at succeeding and growing. Take the first step in putting your brand out in the market today.