Counterfeiters pose a severe threat to legitimate businesses, yet far too many people are unaware of the entire magnitude of counterfeit goods’ impact on brands. We’ve discussed the five most severe repercussions of counterfeiting in this blog.
The Major Consequences of Counterfeiting are as Follows,
- Undercutting prices to steal sales
- Endangering the reputation of genuine brands
- Leaving businesses to deal with the consequences of counterfeiting
- Endangering the long-term trust that has been built up with business partners
- Forcing companies to spend time and money battling counterfeits
First, if you are selling a product and a counterfeiter competes with you by offering customers a lower-cost duplicate of your product, you will lose some sales to these lower-cost items.
Customers used to be better at recognising fakes and knowing what they got when presented with counterfeits. The distinction between natural and fraudulent is less evident in the online world. Counterfeiters can operate efficiently online by copying a company’s designs and branding and combining their knockoff goods with online product reviews.
The product images used are occasionally the brand owner’s real photos, leaving the customer guessing what is real and fake.
Attacks the Company’s Reputation
Because many customers are ignorant that the object they are holding is a knockoff. They will blame the genuine company if the knockoff item fails to perform appropriately, comes apart rapidly, or fails to satisfy their expectations.
As we all know, word of mouth is one of the most effective ways of marketing. As a result, if these customers obtain subpar duplicates of a product, word will spread that the genuine product isn’t up to par.
Customers will also post unfavourable reviews online, adding to the new reputation issue and reinforcing the perception that the authentic brand produces low-quality goods. For example, on Amazon, this does twice the damage since, thanks to their combined listings method, a customer may buy a knockoff from the official listing and then return to the same page to share bad reviews. Because these internet reviews are utilised as public indications of brand excellence, their influence can be felt far and wide.
Genuine Businesses Ends Dealing With Consequences of Counterfeiters
Customers search for a product and then purchase a knockoff, which they are appropriately dissatisfied with. They demand compensation, either in a refund or a new product, and they seek it out directly from the legitimate company. Many affected businesses may find themselves in a scenario where they are dealing with an unhappy customer who is complaining about the poor quality of their item, and the customer care representative is unaware that the item in question is a counterfeit.
Returns are also a significant source of frustration for businesses. They get faulty copies of their products that have nothing to do with the goods they create and aren’t covered by their warranty.
Effects the Transparency Between the Businesses and Customers
The harm caused by counterfeiters extends beyond customer relationships. Because of the behaviour of counterfeiters, distributors, retailers, and other business partners frequently lose faith in legitimate enterprises.
When a corporation has a price agreement with distributors or retailers and finds listings on online platforms offering the goods at a lower price, their initial impulse is to believe the company is ripping them off. Why would a distributor acquire a product in bulk from a brand that appears to be undercutting them on price?
Exclusivity agreements can exacerbate this; a distributor with exclusive rights to sell in a specific territory can feel deceived if the brand appears to be in direct rivalry with them. These consequences might jeopardise long-term business partnerships founded on mutual trust and cooperation.
Fighting counterfeiters costs time and money.
When a corporation realises counterfeiters are targeting it, it is natural for them to want to strike back. However, this is time-consuming and can be rather costly. Resources are diverted away from product development, promotion, and everything else the firm would be pleased to invest in to pay for lawyers and lawsuits to defend their intellectual property and copyrights. Legitimate businesses have to spend hundreds of thousands of dollars each year to combat a flood of counterfeit goods sold in public spaces.
Counterfeit items profoundly influence a company and might have long-term consequences. When the problem gets widespread, counterfeiters will be able to undercut price brands, resulting in a sales drop for brands.
Consumers will associate their brand with the prospect of purchasing a counterfeit, putting their reputation at risk.