Is a peddler selling you a Louis Vuitton bag on the beach allied with the prestigious French brand?
Counterfeit cigarettes dealt on the market are enemies of tobacco multinationals? Are these inconvenient questions? Maybe.
Products of big fashion and design brands are renowned for the excellence of production as far as product quality, originality, design creativity and also communication are concerned. Thanks to communication, luxury is today above all an immaterial attribute of the product, bound to symbolic and emotive qualities. Luxury brands have a huge power to propose products and innovations valued and often purchased by a public willing to invest on the trust in the brand. For this reason, they are always innovative in production and are economically strong. Customers trust the proposals of the brand and they buy, even when these proposals are non consolidated innovations.
Before purchasing an innovative product, the public generally waits that others have bought it, unless it is proposed by a well-established brand.
Such levels of trust between public and brand are reached after years of sensible, qualitative and excellent proposals, and thanks to a clear and effective communication.
Purchasing a luxury product without paying for the immaterial value is a bit like getting on the tram without paying the ticket. Being on the tram means being part of a privileged, wealthy, always on the go society.
Three Italian university professors (Gistri, Pace and Romani, 2010) led a research among their students which revealed that, if the product is counterfeit and the consumer knows about it, in some cases he could be more inclined to buy such original product. Knowing that a brand is being counterfeit can increase its allure.
A phenomenon such as counterfeiting contributes to define luxury as if it was a sort of shadowfeature.
Therefore, big brands that communicate their customers to have started a plan of action against counterfeiting reach two goals: 1) they contrast counterfeiting and 2) they show their customers to be part of a niche market.
Generally speaking, fake products that cause a relevant damage to a company are those bought by customers who are aware that they are fake – as in the case of Louis Vuitton bags -, but a major damage derives from counterfeited products that are purchased as if they were the authentic ones.
Here things are slightly different.
It is interesting to visit the website “Around the World in Eighty (false) Brands” (Corriere della Sera, May 2013). False labels are similar to the original ones and thus they mislead consumers: you think to buy an original product while in fact you are buying a fake one, the reputation of the company is damaged and the consumer is fraud both from an economical and a safety point of view, as of course fake food products are not submitted to any type of control. And if they are, it is
certainly different from that applied to original products.
Apart from the undeniable risks for the consumer’s health and for the economic status of the company, which invests in innovation and production of quality products, let’s focus on the risk for the reputation of the company.
When speaking about fakes in food and pharmaceutical industries, the risk of harm to the image of the company is extremely high, thus the fight against counterfeiting is a key element among the branding activities carried on by the company. There is no active brand on the market which doesn’t fight its fakes.
In regards to counterfeit cigarettes, Francesco Calderoni (Università Cattolica del Sacro Cuore and Transcrime, Milan) affirms that “in the last few years the number of factories producing counterfeit cigarettes has increased a lot. For the most part these companies are based in Central and Eastern European countries”.
Illicit production of cigarettes (not only counterfeit cigarettes) is a relatively low budget activity. In only a few months of activity, start-up costs of production can be covered. Machineries are often purchased second-hand, thanks also to reorganization and concentration/delocalization of production plants.
“The developing of print and packaging technologies allows to reproduce fakes which are very similar to the original products” adds Calderoni, “often, it is possible to distinguish a counterfeit product only by using technologies of digital identification or lab analysis. In fact, the possibility to recognize a fake product by the consumer is very low”.
Even big tobacco companies have a lot to loose from counterfeiting and very little to win. While in fact the purchaser of the fake bag represents a portion of potential consumers who would never be able to buy the original product (due to the enormous price difference), in the tobacco market the frequent perception is that illicit and licit products can almost be replaceable one another.
Hence, counterfeiting of cigarettes is certainly a damage for producers and possible earnings are insignificant.
In general terms, fake products are only rarely allied with the company. In luxury industry, they can be a lever for communication. But in food, pharmaceutical and also other sectors they represent a risk for the health of the consumers and for the income statements of big production companies.
Counterfeiting does not only concern false copies of films and CDs, bags, pharma products and high end fashion garments. Even fake taps, mechanical components and spare parts are put on the market. Risks are high. Think about what the malfunctioning of a (fake) small mechanical part can mean within a highly advanced and complex system.
by Mirko Nesurini, CEO GWH Swiss SA