Counterfeit products increase the likelihood for consumers to buy real products in the future

It’s true that millions of fake luxury handbags are sold each year. But very few of them, if any, cannibalize the sales of the real thing. Davenport Lyons reports that in 2006 only 20% of purchasers of fake brands would have bought the genuine article. I suspect even this figure is an exaggeration.

The second flawed argument against fakes is that they harm the brand equity of the luxury brand. Perhaps, but I would argue that for every negative incident in which a fake damages a brand’s reputation, there is an equal number of occasions on which it helps protect the genuine brand.

Let’s say you are walking down Bond Street and a young man of apparently meager income and untidy countenance barges past you with a Gucci bag (the same one you own) slung over his shoulder. You curse him under your breath, but just before you reappraise the great house of Gucci and its fine clientele, you pause and sneer ‘Must be fake’. It is probably not, but sometimes it helps to have genuine brands mistaken for forgeries when brand equity is at stake.

Indeed, counterfeit products may be good for luxury brands. Because they are usually manufactured by lean, market-driven entrepreneurs, they are often the first signal of a luxury brand’s renaissance (when copies appear) or of the final nail in the coffin (when they don’t). As a result, more than one great luxury house uses counterfeit sales to predict demand for its own brand and gauge its overall health.

Fakes are also often the first place where consumers develop an awareness and aspiration for genuine luxury. After all, Davenport Lyons found a third of consumers for fake luxury said they would be more likely to buy the real thing in the future as a result.