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The Upside of Counterfeiting? (Market Intelligence and Opportunity)

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Sterne, Kessler, Goldstein & Fox

It is hard to find something positive to say about counterfeiting. It costs businesses billions of dollars in lost sales and eroded goodwill every year. It poses a real threat to consumer health and safety. And it funds criminal organizations and even terrorism.

However, counterfeiting can sometimes provide more accurate, real-world data about your market, your brand, your consumers, and your business strategy than even the most sophisticated marketing models. Counterfeiters are businesses too, and ones that exploit your weaknesses or white spaces to survive. So, how can counterfeiters help your brand strategy?

1. Geographic Interest — first, counterfeiters often exploit geographic markets in which a brand is not yet sold, but may already be known. Sales in new territories can provide information as to the appeal of the brand outside its current market, provide insight on possible distribution channels, and provide a wakeup call as to the necessity of taking brand protection steps outside of the current market.

2. New Product Categories — second, counterfeiters don’t always sell products that are exact replicas of the brand’s offerings; instead they may sell branded ancillary merchandise that appears to be related to the brand—common targets are clothing and electronics accessories. Counterfeiters are also known to offer different flavorings or styles of products that may be appealing or culturally attuned to a new market.

This type of information can be invaluable from a marketing and product development perspective. Even if a brand doesn’t have the capacity to expand into new categories at a certain time, the brand could explore capturing this market (and revenue) via licensing or partnerships with local entities. This information can also provide important intelligence on new categories of offerings to protect via trademarks and other forms of IP.

3. Purchaser Behavior —finally, counterfeiters can provide insight as to how consumers like to engage with your brand. A few years back, “purse party” fundraisers were all the rage with the private school set; these events took place in private homes, and the host sold counterfeit designer purses to raise money for the local school (seriously!). In any event, a savvy brand who gets wind of such activities may consider marketing a line of their product directed to such fund raising activities. Similarly, some people prefer to do all of their shopping online, via a certain platform. Working with that platform to ensure it only offers authentic products can help direct genuine products to your consumers, helping to starve out the demand for counterfeits.

In short, counterfeiting is absolutely a threat to innovation, productivity, and even health and safety. However, while taking all possible steps to protect your brand from counterfeiters, also think about what the counterfeiters are doing from a business perspective. Perhaps there is a way to beat them at their own game.


This article appeared in the May 2018 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.