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Faking it: Why we hurt the brands we love Add to ...

Lisa Jones doesn't think of herself as materialistic, but she does love her Dolce & Gabbana purse. And her Prada. And her Chanel and Louis Vuitton and Versace and Hermès. Every year, she adds another one to her collection, slinging it over her arm and waiting for the compliments.

"When you have your nice accessories which go with the outfit or the nice bag, or you're in the store and someone says, 'Oh, I love your bag!' you kind of go: 'Yesss!' You know, you feel like it's a little validation."

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Here's where you might get confused, because Ms. Jones is talking about basking in compliments based on a faulty premise. For every one of her handbags is a knockoff, purchased in one of the dozens of notorious back rooms of Canal Street in Manhattan's Chinatown. "Even if I had all the money to buy a real one, I probably wouldn't," she says from London, Ont., where she works in human resources. "But it's fun to have."

She's not the only one who finds it fun to tote a fake. The counterfeit trade is booming: The Washington, D.C.-based International AntiCounterfeiting Coalition estimates the trade is worth more than $650-billion (U.S.) a year, though luxury goods make up only a small slice of that pie. James Moody, a former chief of the FBI's organized crime division, has predicted counterfeiting "will become the crime of the 21st century."



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And you no longer have to travel to Canal Street to buy a knockoff: Hundreds of websites specialize in what they call "replica" goods, from $100 "Fendi" clutches to $139 "Rolexes." (We'd mention a few of the sites by name here, but we wouldn't be able to guarantee they'd still be operating by the time you read this; the courts, spurred by luxury manufacturers, shut down dozens at a time.)

These days, counterfeits take in everything from no-name condoms in branded packaging to Chilean kiwi fruit making its way into a display of superior New Zealand fruits. The trade has a long and dishonourable history. In 27 BC, the story goes that a Gallic vintner operating in Arles (then a Roman town) wanted to pass off his inferior French product as one of the better (and more popular) Italian wines. Recognizing that the only difference in the wines' packaging was the clay stopper at the top of an amphora, he tried to duplicate the Latin markings found on a stopper used by the high-end Roman wine merchant Lassisus. But being illiterate, the poor Gaul rendered only pathetic chicken scratches, thus becoming one of the first in a long line of counterfeiters whose scams are undone by poor spelling.

(In the spirit of honouring the origins of intellectual property, I pilfered this story from a presentation by Peter Fowler, an official with the United States Patent and Trademark Office, who took it from the 2005 book Knockoff: The Deadly Trade in Counterfeit Goods by Tim Phillips.)

A new exhibition at the Royal Ontario Museum, Fakes and Forgeries: Yesterday and Today, tries to make the case that modern-day counterfeits are harmful in a variety of ways: They are manifest theft of intellectual property, may possibly support terrorist activities, are produced under brutal labour conditions (though that's hardly unique to the sector) and sold on the black market, precluding the collection of taxes. Not to mention that they damage brands built with hundreds of millions of dollars.



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"Typically, luxury brands are all about exclusivity," says Bev Tudhope of the Canadian operation of the brand consulting firm Interbrand. "This creates dilution and overexposure, and that's not a good thing for a luxury brand."

Ian Phau, a professor of marketing at Curtin University of Technology in Perth, Australia, isn't so sure. "You hear companies saying, 'Oh, we've lost this much money,' but you don't see sales going down." If anything, he says, many luxury products have held their value. In fact, he adds, counterfeiting may operate as a form of advertising. "You've got all the other modes - print, broadcast, etc. - and this is just another mode."

Prof. Phau says there have been increasing whispers in recent years that genuine luxury brands, aware they can't quash counterfeiters, are themselves manufacturing fakes and throwing them into the marketplace.

But why do consumers buy counterfeits in the first place? Sure, luxury goods are called status symbols, but what does that really mean? A study last year in the Journal of Marketing Research suggests there are two separate motivations for buying such goods: not just social definition - making a bid for a certain level of status within a group - but also self-definition. That is, we use these goods both to tell others who we are, and to tell ourselves who we are. Depending on which motivation is stronger, this may hold some promise for reducing demand for counterfeit goods.

The paper, by Keith Wilcox, Hyeong Min Kim, and Sankar Sen, suggests marketers try altering both their products and their marketing by emphasizing them as tools of self-definition rather than as symbols of power or status wielded in a social context.

"The conspicuousness of the luxury brand determines the ability of both its counterfeit and its genuine versions to serve the social goals of self-expression and self-presentation," they write. Reducing oversized logos, which silently broadcast the identity of a bag or watch or pair of sunglasses to other people, would make the brand less conspicuous. While that might make it more challenging to market the product, it could blunt the desire for counterfeits. And by emphasizing instead how the product can be used for expressing personal values, different advertising would also make it far less likely for consumers concerned about the ethical issues presented by counterfeits to buy such products.

At least that's the idea. "We've actually talked to one or two brand managers," Prof. Wilcox says. "They're clearly hesitant about it. They've said, 'It's great in theory, but in reality, we're not going to change the way we go about marketing our products.'"

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