Counterfeiting of Luxury Brands

COUNTERFEITING OF LUXURY BRANDS

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TABLE OF CONTENTS

CONTENT Introduction Scale of counterfeiting Key reasons of counterfeiting growth Exhibit 1: General descriptions of the phenomenon Countries‟ situation and legal authorities Consumers – the demand side Exhibit 2: Social behaviour patterns for goods in Chinese society Manufacturers – Legitimate and Counterfeiters Challenges it poses for brand customer relationship Exhibit 3: Deceptive and non-deceptive counterfeiting Exhibit 4: Dynamic effects of deception in the primary market Conclusion

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Appendices Appendix 1: Key reasons of counterfeiting growth Appendix 2: Summary table of supply and demand drivers Appendix 3: Extra costs related to combating counterfeiting Appendix 4: Summary of principal potential effects of counterfeiting 12 13 14 15

References

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Abstract: In today’s world, where luxury brand owners are spending millions to effectively attract the affluent people towards their brands, these brands are facing a momentous threat from counterfeit goods

manufacturers. The growth rate of counterfeiting has been epochal during the last two decades, posing challenges for the governments, genuine-item manufacturers and consumers as well. This paper identifies the scale with which counterfeiting is growing, the key reasons of its growth and the challenges that it poses for brand-customer relationships.

INTRODUCTION Firms spend their resources and time in building their brands over the period of years to have prominent positions in consumers‟ minds and to build the desired image equivalent to the brand identity. For luxury brand owners, brands are the most valuable – though intangible – assets of the firms; a brand without the brand itself is just another product nowadays. Where brands have been facing the challenges due to a troubling phenomenon: the „democratization of...