Bloomberg.com links to two fascinating studies, both authored by Renne Richardson Gosline who teaches marketing at MIT’s Sloan School of Management, that investigated a number of issues related to luxury goods and knock-offs.
The first study, “Rethinking Brand Contamination” (link to PDF), examined to what extent consumers can spot counterfeit or knock-off versions of luxury goods. The data suggested that when knock-off goods were displayed by the owner without additional cues or context, observers were less likely to differentiate between authentic and knock-off luxury goods:
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.
In an earlier post I hypothesized that the ability to differentiate between a premium and low-cost brand was key to the premium brand’s ability to extract a higher price in the market. The relationship should be the same for premium brands and knock-off products. This study would seem to confirm that idea–if consumers can’t tell the difference between the real and knock-off products, why pay the premium for the real product when you can seemingly send the same signal for for less money? Continue reading