Effects of Counterfeit Products on Luxury Brands: A Case Study of Louis Vuitton

DISSERTATION

Contents
Title..................................................................................................................................................1
1 ACTION RESEARCH PROJECT REPORT...............................................................................1
1.1 Entrepreneurial Opportunity..................................................................................................1
1.2 Research methodology...........................................................................................................3
1.3 Community of Practice..........................................................................................................6
1.4 Use of Literature / Sources....................................................................................................7
1.5 Analysis of the entrepreneurial opportunity / challenge......................................................10
1.6 Conclusions & Recommendations.......................................................................................14
REFERENCES..............................................................................................................................19

Title
An investigation on the effects of counterfeit products on luxury brands: a case study of Louis
Vuitton
1 ACTION RESEARCH PROJECT REPORT
1.1 Entrepreneurial Opportunity
In recent times, there are has been rise in competition in market in retail sector. It is due to
rise in number of businesses entering into it and they are offering similar products. But in luxury
industry there are various businesses that is offering counterfeit products. Thus, it has resulted in
decrease in brand image of luxury companies. Alongside, different new firms are manufacturing
same products and offering at low price in market (Moon and et.al., 2018). Due to that, it has
resulted in increase in competition as well. Besides that, customers are also highly attracted
towards these counterfeit products. Therefore, it has provided an Entrepreneurial opportunity to
enter into this industry. hence, by copying such type of original products it has enabled in rise in
sales and profits. The businesses are highly emerging in present market. Generally, people love
luxury brand because it offers high and premium quality products that is not offered by other
brands. Besides, customer gets highly satisfied by purchasing product from luxury brand.
However, it requires a lot of hard efforts and effective strategy to establish a strong brand name
in market. In addition to that, as already customer base of companies operating in luxury market
segment is small. But profit margin on product earned is high as compared to other firms. So,
counterfeit products result in breaking customer base. Companies are able to charge premium
prices of the products for high quality of materials and the brand reputation that has been created
through years. This has assisted firm in growing and also their brand reputation is being
increased by this. Counterfeit products basically means to imitate the original products, in order
to steal, destroy or replace the original goods and services. It has been evaluated that Louis
Vuitton sales is been suffering because of there are so many duplicate products who are using
their name and selling these goods and services (Fallis and Mathiesen, 2019). This has caused
negative impact to sales transactions of company. The main objective of research is to analyse
the concept related to counterfeit product. Research will also evaluate the impact of counterfeit
product on luxury brands. It will also recommend solution for the challenge in order to improve
brand performance. Sales of company has been affected because of the rise in sales of counterfeit
products. Louis Vuitton are selling their goods and services at premium price. They are only
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targeting luxurious consumers. Only upper class rich people can afford products of Louis
Vuitton. So, more and more consumers are involved in purchasing the counterfeit products so
that they can look classier. It has also been evaluated that here entrepreneurs need to think of
strategy which can assist them in overcoming this issue.
It is also being analysed that This topic is really important and need to be discussed as
counterfeit products are severely impacting performance level of company and also brand value
of luxury company is also affecting (Moon and et.al., 2018). Consumers who are purchasing
duplicate products are getting lower quality goods and services. They are not getting value for
money. Counterfeit products have negative impact on innovation and company’s sales and
productivity lowers down because of it. It also lowers down brand value of original organisation.
Besides sales of counterfeit products has become global concern. Research says that while the
growth of world is 2 to 3%, whereas counterfeit products have a growth of about 150%.
Manufacturers also says that counterfeit of luxury brand do not require much efforts to be sold
and also they are being easily manufactured. It has also been evaluated that because of
counterfeit products, sales of so many companies are being affecting. It has also laid impact on
profitability and revenue. It has been analysed that because of counterfeit products company has
to deal with damaged brand reputation. In this the company also loses trust which they have
created with their consumers. They need to deal with fallouts of counterfeit. In this brand value
of firm is also been hampered. It has also been evaluated that main reason of this is as consumers
are not being aware about the fact which is original and which is duplicate. They get easily
confused and manipulated. This has led to lowering down of brand value of company. It has also
led to lowering down of sales of company. In such situation consumers can also leave negative
review on online websites. This can further lead to lowering down of sales and also revenue of
firm can suffer. It has also been evaluated cases like this can break down consumers trust.
Customers looks out for product and they feel unhappy because of buying counterfeit products.
They demand refund from authentic firms and also tell them that next time they will not buy
products from them. It usually affects brand value and sales of company (Quoquab and et.al.,
2017). Firm will also not have been able to grow. Long term trust between business are also
affected. Brand reputation is negatively affected and it reduces down profit of firm. It has also
been evaluated that counterfeit products also affects growth of company. Firm also loss time and
money because of fighting counterfeit.
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It is a time consuming process and also lots of cost of company can be involved in this
while fighting from consumer. It has also been evaluated that Consumers who are purchasing
duplicate products are getting lower quality goods and services. They are not getting value for
money. It has also been evaluated that firm needs to think of various strategies so that they can
overcome this counterfeit issue. It will assist company in growing and also because of this they
are better able to achieve objectives. Counterfeit products possess threat to global fashion
industry. It has been analysed that counterfeit products can also lower down brand reputation of
firm. There sales and profitability can be lower down and also firms brand value can be reduced.
By this they will not able to achieve their target sales and objectives. It has also been analysed
that counterfeit and pirated products can also affect economy. In this it has also been evaluated
that counterfeit products have a negative impact on the sales of original products. Consumers get
betrayed by purchasing the first copy products as they are not aware about the fact that it is not
original. counterfeiting can lead to uninsurable risk, which has a harmful effect on the reputation.
It has also been evaluated that luxurious brand reputation can be lower down because of first
copy products. This can lead to the losing their consumer loyalty and also because of these
customers can be victim of fraud. It is also being evaluated that in order to overcome from this
company needs to implement different strategies so that the sales of these products can be lower
down and also this will assist firm in increasing their profitability as well as revenue. It is also
being analysed that buying of counterfeit parts are social adjusted in nature. Consumers purchase
this as they wanted to have experience of luxury brand and also they have no knowledge related
to which product is original and which one is fake. This leads to lowering down of sales of the
original goods and services and also their productivity is being affected because of this. It has
also been evaluated that Counterfeit products have negative impact on innovation and company’s
sales and productivity lowers down because of it. Present report will discuss about research
methods which is being used to achieve the set target and objectives. It will focus on analysis of
literature of review based on the topic selected.
Project plan:
Project task Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week
8
Planning
related to
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project
Recruitment of
team
Review of
Literature
Session of
training
Implementation
Evaluation of
performance
1.2 Research methodology
It is necessary to select particular research methods in conducting study so that it becomes
easy to do it in systematic way. As there are various methods available so it has to be selected as
per subject or topic given. It is being used in order to critically evaluate validity of study. There
are various types of research methods which is being used in order to achieve set target and
objectives. It includes the following:
Data type: There are two type of data one is qualitative and another one is quantitative.
Qualitative research is being expressed in words. In this it is being used in order to analyse
concepts, thoughts and experiences. This type of data collection is being used in order to gain in-
depth knowledge of subject matter. There is various type of qualitative data like for example
open ended questionnaire, interview. In this type of data there are only theoretical concepts and
basis which are being used. This type of research focuses on exploring the ideas and helping in
formulating the theory (Arthur and et.al., 2017). This is being mainly expressed in form of
words. In this type of research only few respondents are being needed. This type of research is
basically subjective in nature. The other one is quantitative. In this type of research, the main
focus is on testing theories and hypothesis. It is mainly expressed in terms of number and graphs.
Statistical analysis is also being done in this type of research. In present research qualitative
method is been used. This is being done and used as qualitative research is easier to understand
and reliable authentic results are being taken out from this type of research.
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