MIT Sloan professor finds counterfeits don't necessarily hurt legitimate brands

Renée Richardson GoslineRenée Richardson Gosline

CAMBRIDGE, Mass., Oct. 26, 2009 — Counterfeit products have become increasingly common in recent years, representing 7% of worldwide trade. However, despite the pervasiveness of the problem, MIT Sloan School of Management Professor Renée Richardson Gosline says that counterfeits don’t hurt the legitimate brands so long as consumers feel confident in their ability to distinguish between the real and the fake.

In “Rethinking Brand Contamination: How Consumers Maintain Distinction When Symbolic Boundaries are Breached,” Gosline examined how consumers respond to imitators. “I was surprised to find that they can co-exist,” she said, noting that the presence of “wannabes” can even verify the desirability of the brand. She also found that counterfeits are not viewed as substitutes for the real thing. Instead, they are often used as trial versions with 40% of consumers subsequently purchasing the real brand.

Gosline uncovered these findings in her 2.5-year-long study of counterfeit consumers in social networks and at “purse parties.” To determine the impact of counterfeits on how consumers value the real brand, Gosline constructed experiments where she showed consumers pictures of products against neutral backgrounds and asked if they could distinguish between the counterfeits and the legitimate items and if they would be willing to buy the products. Under those circumstances, consumers’ confidence in determining the “real” products decreased as did their willingness to purchase them. However, when she showed pictures of people actually using the products, consumers’ confidence in their ability to identify the real versus the fake increased as did their willingness to pay for the real brands.

“Counterfeit products are usually covered in logos and the users’ outfits don’t come together in a high-end, luxury way. It’s not about wearing Louis Vuitton from head to toe, but mixing high and low end together like ‘omnivores’ – it’s a skill set that sets high-end consumers apart from those that would typically purchase the counterfeits,” she explained, adding that another visual cue is that the knockoffs are often a season behind the real thing.

Given these findings, Gosline maintained that store managers would be wise to empower consumers to identify the real brands and help create these means of differentiation. For example, they can hold special events where they invite clusters of friends to a store event to make the high-end consumers feel special while also providing them with unique expertise about the brand that the average person wouldn’t get from buying a copy off the street. “The brand becomes an experience rather than just a logo,” she said.

The greatest risk of counterfeits is that they will alienate legitimate consumers. However, Gosline’s results indicate that “luxury brands can preserve their status as long as consumers feel that they can be distinguished by their consumption practices and not just their brands.… Authenticity is not necessarily a property of the product itself, but rather, a property of the consumers’ connection/tie to the product, as embedded in a culture of consumption, defined partly by the brand and partly by the consumers themselves,” she wrote.

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