Using counterfeits to refine Distribution Strategies

Counterfeits and fakes are the bane of the luxury goods industry. However in this post lets look at how its existence (or lack of it) can influence the distribution strategy:

• Counterfeits flooding market



 Bags on sale - time to set up a proper shop?



This typically indicates a deep desire and "want" for the product in the market. Besides taking manufacturers and purveyors of fake goods to court, communication of the genuine goods, drumming up public support against counterfeiting, we would need to relook at distribution and the availability of the brand in local markets.  For instance counterfeits could indicate that the distribution is too restricted and unavailable (or too tedious to purchase) for genuine buyers. Introduction of more retail points and Internet sales in case the market does not have infrastructure to support too many retail outlets would be good options.

• Absence of Counterfeits in the market

In markets where IP and trade mark protection is lax, the complete absence of fakes/counterfeits reveals a more fundamental problem - a lack of demand or desire for the luxury product. This could be due to the unsuitability of the product to local culture/needs or lack of awareness of the product. For the latter, a good communications and marketing investment would be needed. However the distribution will need to be controlled and muted, perhaps targeting only a small percentage of high income globe trotters in the market or tourists/foreigners. Fewer retail outlets located in five star hotels catering to visitors might be an option

• Good quality counterfeits in the market

The presence of near identical counterfeits of good quality and which is difficult to distinguish between the original may require further investigation. Licensing brands or sub-contractors in local markets might be deviating from contractual terms and allowing products to flow into the grey market. Distribution is such markets should normally be kept inhouse and subcontracting avoided, else a cast in stone contract drawn out with regular audits conducted in the market