Stack counterfeits against original products and most consumers would not be able to tell them apart in the first instance. Counterfeit goods are fake goods made from cheap quality material imitating superior quality products of high end brands. These are illegally sold under a brand’s name without the authorization of the brand owner and are made to look exactly like original products but they greatly differ in terms of performance, durability and reliability. The closet imitation is commonly called a first copy.
Counterfeiting and Counterfeit Market
Counterfeiting is a form of consumer fraud, a product is sold purporting to be something that it is not while deception is a form of manipulating information with the purpose to influence the behavior of a customer a potential customer, by misrepresenting a product.[1] Counterfeit and deception go hand in hand and as such the Counterfeit market gets segmented into two parts, Deceptive market and Non-deceptive market.
In deceptive markets, counterfeit products are often indistinguishable from original products and while the packaging and costs are often identical with the authentic product the quality is unsafe, harmful and deadly. Here customers are often uninformed and not familiar with the product which makes it hard to distinguish between fake and genuine goods and leads to the purchase of a fake product by accident. This type of market applies to food, water, electrical goods, household items etc. The customer thus becomes a victim of counterfeiting.
In non deceptive markets, customers can easily differentiate fake products from genuine based on quality, packaging, price and the location where they are sold for example a high quality expensive electrical accessory being sold on the street side or by local vendors. This type of market applies to high-end luxury goods such as apparel, footwear etc. Here customers are accomplices rather than victims.
One of the best examples of Non Deceptive market is some of the age-old famous markets of Delhi such as Palika Bazaar. We all have been guilty of visiting Sarojini Nagar market and Palika Bazaar on a lazy weekend and stacking up first copy or counterfeits of our favorite brands. While we know these products are ‘first or second copy’, we still prefer it as the product and packaging look somewhat similar. A large number of customers get instantly attracted to these markets and products greatly because of cheap prices. Counterfeits and first copy are made from inferior quality material and as such are one-tenth of the genuine product price.
Effects on Companies and Consumers
Counterfeits not only affect a brand’s sales but the impact runs deeply and can cause long-lasting damage. Not only counterfeits cause a brand to lose customers but they also damage the brand reputation. Once a customer has bought a fake, if they don't realize the nature of the product, many will return to the authentic brand for a solution. This leaves the brand in a situation of cleaning up a counterfeiter's mess, for no reward.
The actions of counterfeiters can also damage a brand's value in the eyes of distributors and other partners. Exclusivity deals can essentially be voided by the actions of criminals and can leave legitimate businesses on each side of an agreement dissatisfied.
Thus, companies lose sales and trust of the customers. The reputation also takes a hit which in turn causes shareholders to lose money and trust in the company. Many times brands came up with various measures to protect their credibility and gain customer trust for example Maggi’s “Har peela packet Maggi nhi hota” campaign which aimed at making customers aware and protect from fake Maggi present in the market.
Impact on Economy and People
The world of fake merchandise has slowly risen over the years. The latest report by CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy), released on September 26 2019, highlights that the twin evils have caused a loss of Rs 1.17 lakh crore[2] to the Indian economy in 2017-18 in five key industries - textiles, readymade garments, tobacco products, capital goods (machinery and parts), and consumer durables (electronics). Titled ‘Invisible Enemy: Impact of Smuggling on Indian Economy and Employment’, the report also estimates that about 16.36 lakh jobs were lost in these five sectors due to counterfeiting in 2017-18. Capital goods suffered the most, with a Rs 52,511 crore loss that rendered 6.12 lakh workers jobless. The Automotive Component Manufacturing Association of India (AMCA) estimates thirty-five percent of auto parts in the market are fake. Consumer durables were next with Rs 21,452 crore losses. The Authentication Solution Providers’ Association (ASPA), (formerly known as Hologram Manufacturers Association of India) claims a total loss of Rs 1 trillion due to counterfeiting in India. [2]
Who are the victims?
While the government and the company both suffer a huge amount of loss, it’s the customer who is the real victim. Consumers pay huge prices to acquire these branded products only to receive fake and harmful goods in place of genuine and authentic goods from their favorite brand. Not only do they lose their hard-earned money but using sensitive fake goods proves to be deadly and harmful thus impacting their well-being as well. In cases of agriculture counterfeit seeds and such other products, customers are drastically impacted as the fakes prove to be spurious and destroy the crops. Moreover, in 90% of the cases, if a customer has unknowingly acquired a fake product in place of the original one, they do not get a refund or are not compensated by the manufacture of the fake or the original product and lose their money.
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