If imitation is the sincerest form of flattery, can counterfeiting do good to brands? How can brands exploit the malevolent practice of piracy to their advantage?

World Customs Organizations data states that approximately 10% of the global trade is of counterfeit goods worth $500 USD billion; annually. Many companies in North America and EU off-shore their operations to Asian countries. Here, anti-counterfeiting laws are not very strong; generally. Brands are imitated at these places, as profits are more, and even if they come under legal issues, the resulting penalties are mild. Habitually, a local label is added to the faked goods to give it an impression of the original product. Manufacturers have to bear the result of these masquerades, as they are very inferior in quality and do not live up to the standards of the originals.

A third dimension on counterfeiting:

Almost 80% of the confiscated pirated goods owe their origin to the Asian countries. International countries outsource their operations to companies in Asia with a view to taking advantage of cheap labor and inexpensive manufacturing operations.

Despite all the arguments against the practice, still, a positive viewpoint states that counterfeiting is not always negative, and if brands are vigilant enough, then the same can be manipulated to leverage the growth of the brand image. Piracy can give new and stronger market access to brands. They provide a benchmark about the health of the brand by compelling the manufacturer of the original brand to protect and bring out new innovations regarding his product.

Counterfeited items create brand awareness for the product:

Most of the people who buy counterfeited items have a proper understanding of what they are buying and still go for it because they are not able to pay the premium price of the originals. Availability of fake items for a particular product in the black and grey market creates awareness about the product among the mass. From the mass, there is a clear-cut possibility of a small percentage of the population, who after using the fake item might switch on to buy the branded product, even at a relatively higher cost. The original brand acquired this segment of consumers only through the awareness created by the pirated items.


Consumer gets to know the quality of the branded item by experiencing with a fake:

Most of the consumers buy counterfeited goods with the understanding that it is a fake. This implies their desire to posses a branded item, to project the same image the brand is attempting to create through promotions, and publicity. This confirms a positive brand value for the product. Furthermore, as the purchasing consumer is well aware that it is a fake, will not expect the same standard and performance from the fake. Once the consumer has experienced using a fake product, he is likely to understand the actual value of the original branded item, and this, in a positive note, steals the brand image of the product even more. Thus counterfeited goods, though damages the reputation of the brand in one way, it also helps to build publicity for the products among the consumers who have purchased a fake, knowing it is one.

Indicators of Brand Health:

Counterfeited products serve as an indicator of the brands image and reputation in the market. Brands those are not capable enough to stimulate the consumers interest and create a demand, has less or no possibilities to be pirated. Consumers of today are much aware of this. Their decision to go for a branded product partially depends on the availability of imitated goods of that specific brand available in the grey market. Thus, if counterfeited items of a particular product are available more in the market, manufacturers can be optimistic regarding the attention, interest, and desire, the product has created among the customers. Thus in a way counterfeited products serve as indicators to the manufacturers of the actual brand.

For instance, Louis Vuitton is the most counterfeited brand in the fashion segment. A total of 21, 454 Louis Vuitton fakes were confiscated during 2009. Does this affect the sale of the premium brand? Sales figures indicate that the company recorded a 14% rise in 2009. Louis Vuitton recorded$14.8 million sales in 2009, which is higher comparatively over the $10.56 million in 2008.

It is generally believed that brands are cultivated and nurtured over a period of time, and counterfeiters misuse the existing brand values. But counterfeiting presents a significant opportunity for market expansion of the product. What matters in the end is how the manufacturers show off the brands.

References:


intangiblebusiness.com

retail.franchiseindia.com

brandchannel.com