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When counterfeits raise the appeal of luxury brands

Abstract

Counterfeiting is a widespread practice throughout the world. The conventional wisdom is that it affects branded goods negatively. In this paper, however, we suggest that counterfeiting may actually benefit certain luxury brands. By means of two studies, we show how the market presence of luxury counterfeit items can increase consumers’ willingness to pay for original brands. In Study 1, we show that the presence of luxury counterfeits can increase consumers’ willingness to pay for well-known original brands, but not for lesser-known ones. Brand awareness plays a moderating role in the positive relationship between counterfeiting and willingness to pay (WTP). In Study 2, we address the psychological mechanisms that explain this increased willingness to pay. The results show that consumers’ (a) pleasure at being envied, (b) pleasure in distinguishing themselves, and (c) perception of the quality of the original goods fully mediate the relation between the presence of counterfeit in the market and consumers’ WTP for originals. We subsequently discuss the theoretical and managerial implications of the two study results.

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Fig. 1

Notes

  1. The basic assumption that underlies the following theoretical discussion is that fakes are “imperfect” imitations of the original items. This consent not to violate the prescription of the “rarity principle” (Veblen 1899) underlies conspicuous consumption.

  2. Counterfeiting for lesser-known luxury handbags is a rare phenomenon. As reported by Han et al. (2010) counterfeiters tend to copy loud well-known luxury handbags. However here this tendency is mainly cited for theoretical reasons; it highlights a specific condition affecting the relationship between the presence of counterfeits in the market and consumers’ WTP.

  3. A review of the literature suggested these constructs as relevant for our analyses. In addition, a qualitative study based on an online qualitative survey with 79 consumers integrated this review. Analyses of the texts resulted in support for the three constructs identified. Two additional minor themes emerged (consumers’ pleasure in rewarding the company that produces the genuine goods and consumers’ positive feelings for behaving fairly) cited by a limited number of respondents. These themes have not received particular attention in the counterfeit literature and we decided not to consider them for further analyses. Details on the qualitative study are available from the authors upon request.

  4. This approach measures consumers’ hypothetical rather than actual WTP and can thus generate hypothetical bias, which the economic literature has defined as the bias induced by a task’s hypothetical nature (Harrison and Rutstrom 2008). Approaches that can elicit actual WTP (see, e.g., Wertenbroch and Skiera 2002) were difficult to use with the present design. In addition, as recently reported by Miller et al. (2011) hypothetical approaches can generate mean WTP estimates that are not significantly different from actual WTP. However, it is important to acknowledge that an actual or hypothetical WTP generated with these methods may not always be accurate because it may differ from the WTP shown in real consumer purchases. We will discuss this issue again in the limitations.

  5. The measure for skewness for this variable (+1.3) was acceptable for psychometric purposes and, consequently, we did not transform this measure.

  6. The main effect of brand awareness was significant in the analyses—F (1, 97) = 29.15, p = .000, ω 2 = .11—but not the main effect of market availability of counterfeits—F (1, 97) = .58, ns, ω 2 = .001. It should not be surprising that there are relatively small effect sizes in theory testing experimental research as this was also noted by Fern and Monroe (1996, p. 98). We have to specifically take into consideration that the dependent variable is multiply determined and, consequently, the effect of any single cause is limited. Further studies could investigate other relevant factors at work here.

  7. Both the covariates were significantly related to the consumers’ willingness to pay: F(1, 97) = 24.79, p < .000 for expertise with the luxury market and F(1, 97) = 4.37, p < .05 for subjective SES.

  8. The greater willingness to pay in Study 2 than in Study 1 could be justified given the different samples used (non-student respondents in Study 2 vs. student respondents in Study 1).

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Acknowledgements

The authors would like to thank the editor and the three anonymous reviewers for their useful comments and suggestions. Finally, the authors gratefully acknowledge the financial support of the MIUR Grant PRIN 2008N579SS.

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Correspondence to Giacomo Gistri.

Appendices

Appendix 1—Scenarios for experimental manipulation

Gucci: world premiere of the new autumn-winter collection in Italy

Florence –

The Italian Gucci, one of the groups in the luxury sector in recent years that has a good rate of growth despite the crisis, today announced its launch schedule of the new line of accessories preview (bags, belts, sunglasses etc.) in the U.S. and Italian markets.

The line reflects the history and tradition of the fashion house and accentuates some particulars that made the fortune of its founder. From the production point of view, it wanted to maintain a highly crafted vocation, regarding attention to detail and selection of fabrics, while expanding the production scale because of the increasing appreciation of the market. So far it is the line of accessories (bags, belts etc.) that represents the real strength of the company. For the big launch, it has already been scheduled that new Gucci stores in Milan, Rome, Florence and Venice will be opened soon.

At the end of the text indicated above, as manipulation, we added the following:

  1. 1.

    Control condition

In a recent interview reported in the magazine, Vogue, Gucci’s CEO has declared that he is very proud of this new collection and he believes it will contribute to the brand plans to double their sales to €3.2 billion by the end of 2011.

  1. 2.

    Counterfeit condition

Meanwhile, on the sidewalks of large cities, close to the Gucci-owned shops, vendors have already appeared who sell fakes of Gucci’s new collection and they display them on sheets laid on the ground. However, in a recent interview reported in Vogue, Gucci’s CEO was quoted as saying that even consumers less experienced in luxury products are able to recognize the difference between fakes and the original products.

  1. 3.

    No counterfeit condition

Asked if he is worried about the danger of counterfeiting the brand, in a recent interview reported in Vogue, Gucci’s CEO stated that the products of the new collection have not yet been affected.

Appendix 2—Multi-item measures used in the study

  1. 1.

    General expertise (regarding luxury market)—measured on four seven-point semantic differential items (Adapted from Mishra et al. 1993).

    1. a.

      Know very little about/know very much about

    2. b.

      Inexperienced/experienced

    3. c.

      Uninformed/informed

    4. d.

      Novice buyer/expert buyer

Study 1: M = 3.71; SD = 1.15, Cronbach alpha = .95

Study 2: M = 3.61; SD = 1.31, AVE = .85; Cronbach alpha = .92; correlations (general expertise/quality perception) = .23 (p < .01); (general expertise/consumers’ pleasure at being envied) = .30 (p < .01); (general expertise/consumers’ pleasure in distinguishing themselves) = .33 (p < .01).

  1. 2.

    Quality perception—measured on three seven-point semantic differential items (adapted from Sprott and Shimp, 2004).

    1. a.

      All things considered, I would say this product has:

      poor overall quality/excellent overall quality

    2. b.

      This product has:

      very poor quality/very good quality

    3. c.

      Overall, this product is:

      poor/excellent

Study 2: M = 4.75; SD = 1.22, AVE = .85; Cronbach alpha = .94; correlations (quality perception/consumers’ pleasure at being envied) = .24 (p < .01); (quality perception/consumers’ pleasure in distinguishing themselves) = .41 (p < .01).

  1. 3.

    Consumers’ pleasure at being envied—measured on seven-point scale anchored by 1 = strongly disagree and 7 = strongly agree (adapted from Rodriguez Mosquera et al. 2010).

    1. a.

      To own this genuine Gucci handbag makes me feel very good because I know that other people would like to have it but they cannot because of its high price.

    2. b.

      To purchase this genuine Gucci handbag makes me feel the positive sensation of being envied by other people that cannot afford it.

    3. c.

      To purchase the genuine Gucci handbag gives me the pleasure of being envied by other people who love luxury products but cannot afford them.

Study 2: M = 3.02; SD = 1.74, AVE = .76; Cronbach alpha = .94; correlations (consumers’ pleasure at being envied/consumers’ pleasure in distinguishing themselves) = .65 (p < .01).

  1. 4.

    Consumers’ pleasure in distinguishing themselves—measured on seven-point scale anchored by 1 = strongly disagree and 7 = strongly agree.

    1. a.

      Owning a genuine Gucci handbag distinguishes me from others who, while they desire one, will never possess one.

    2. b.

      Purchasing a genuine Gucci handbag gives me the positive sensation of belonging to a high social status.

    3. c.

      Owning an original Gucci handbag gives me the pleasure of distinguishing myself from other people who love luxury products but cannot afford them.

    4. d.

      Owning this original Gucci handbag satisfies my desire to stand out from the mainstream.

Study 2: M = 3.75; SD = 1.45, AVE = .77; Cronbach alpha = .94.

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Romani, S., Gistri, G. & Pace, S. When counterfeits raise the appeal of luxury brands. Mark Lett 23, 807–824 (2012). https://doi.org/10.1007/s11002-012-9190-5

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Keywords

  • Fashion luxury goods
  • Consumer behavior
  • Counterfeiting
  • Brand awareness
  • Willingness to pay