In the framework of luxury marketing, counterfeits have been constructed as a constant threat – an irritating presence and a hostile intruder (Bian & Mouthinho, 2008; Keller, 2009). However, there now exists a minor but growing body of literature that has found counterfeits as potentially non-threatening or even beneficial for luxury brands (e.g., Barnett, 2005; Romani, Gistri & Pace, 2012). Building on this emerging stream of evidence, the goal of this conceptual paper is to explore how counterfeits act as advertising for luxury brands and how luxury brands could benefit from this.
To understand the communicative potential of counterfeits, we construct our argument around Veblen’s (1899/1994) foundational notion of how the conspicuous consumption of luxury revolves around the creation of new styles by/for the elite consumers and the efforts of the masses to emulate them. In doing so, we differentiate the effects based on whether they contribute to the emergence of new luxury goods targeted to elite consumers or the diffusion of luxury to the masses.
The emergence of luxury stems from the desire of elite consumers to distinguish themselves from the masses through conspicuous consumption (Veblen, 1899/1994). Counterfeits contribute to this phenomenon by accelerating the snob effect (Leibenstein, 1950) as counterfeits destroy snob premium of goods and drives elite consumers to seek new ways to distinguish themselves (Barnett, 2005). Counterfeits also accelerate the fashion cycle that luxury companies depend on (see also Sproles, 1981). They do so by induced obsolescence that destroys the status value of product designs when they are copied and by anchoring trends to design features that accelerate their diffusion and subsequent replacement (Raustiala & Sprigman, 2006; 2009).
Another key component of conspicuous consumption relates to the diffusion of luxury to the greater public (Veblen, 1899/1994). Therein counterfeits can generate aspiration effect when non-elite consumers imitate elite consumers by consuming counterfeits and in so doing generate brand awareness and exposure among other non-elite consumers (Barnett, 2005; Shultz & Saporito, 1996) at early stages of diffusion. During latter stages of diffusion counterfeits can generate bandwagon effect (Leibenstein, 1950) as they confer the desirability of certain luxury goods and brands over others (Barnett, 2005;Bekir, El Harbi & Grolleau, 2008). Finally, counterfeits can generate herding effect as they signal which to consumers which goods are desirable and appreciated or ‘trendy’ at a certain point in time (De Castro, Balkin & Shepherd 2008).

• Antti Sihvonen(Aalto University School of Business, Finland)
• Joel Hietanen(Stockholm Business School, Sweden)
• Henrikki Tikkanen(Aalto University School of Business, Finland)
• Pekka Mattila(Aalto University School of Business, Finland)