Entry of copycats of luxury brands

We develop a game-theoretic model to examine the entry of copycats and its implications by incorporating two salient features; these features are two product attributes, i.e., physical resemblance and product quality, and two consumer utilities, i.e., consumption utility and status utility. Our equilibrium analysis suggests that copycats with a high physical resemblance but low product quality are more likely to successfully enter the market by defying the deterrence of the incumbent. Furthermore, we show that higher quality can prevent the copycat from successfully entering the market. Finally, we show that the entry of copycats does not always improve consumer surplus and social welfare. In particular, when the quality of the copycat is sufficiently low, the loss in status utility from consumers of the incumbent product overshadows the small gain in consumption utility from buyers of the copycat, leading to an overall decrease in consumer surplus and social welfare. </jats:p

Consumer evaluations of trend imitation: brand equity, consumer attitudes and preference

Purpose This paper aims to uncover consumer evaluations of high-priced traditional retail luxury brands and more affordable neo-mass luxury retail brands when they imitate the innovative designs of one another.Design/methodology/approach Using a scenario inspired by a lawsuit involving admitted copying practices, this study used a one-way (time of product introduction: the traditional luxury brand launches the product design before the neo-mass luxury brand vs the neo-mass luxury brand launches the product design before the traditional luxury brand) between-subjects experimental design to examine the effect of time of product introduction (such that consumers are aware of imitation practices) on brand attitude, brand equity (measured via the dimensions of brand associations, brand image, brand credibility and brand leadership) and brand preference.Findings Results reveal that consumer awareness of imitation practices is important in determining changes in brand equity, brand attitude and brand preference, regardless of luxury brand type. The research also indicates that consumers evaluate traditional luxury brands that engage in imitation practices more negatively than neo-mass luxury brands that do so.Research limitations/implications This research provides a deeper understanding of consumer response to imitation practices, along with managerial insight for luxury brands operating in that sphere. Limitations and future research directions are also offered.Originality/value This study appears to be one of the first to investigate imitation practices by using stimuli inspired by a copycat case, and one of few that assesses consumer evaluations of imitation by existing brands

WILL FAST FASHION GO OUT OF STYLE SOON? HOW COUTURE DESIGNERS, CELEBRITIES, AND LUXURY BRANDS FIGHTING BACK MAY CHANGE THE FUTURE LEGAL LANDSCAPE FOR MASS AFFORDABLE RETAILERS

WILL FAST FASHION GO OUT OF STYLE SOON? HOW COUTURE DESIGNERS, CELEBRITIES, AND LUXURY BRANDS FIGHTING BACK MAY CHANGE THE FUTURE LEGAL LANDSCAPE FOR MASS AFFORDABLE RETAILER

The performance effects of creative imitation on original products: Evidence from lab and field experiments

Research Summary: A market entrant often challenges the incumbent using creative imitation: The entrant creatively combines imitated aspects of the original with its own innovative characteristics to create a distinct offering. Using lab and field experiments to examine creative imitation in China, we find the effects of creative imitations on the originals depend on the creative imitation's quality. We explore the underlying mechanisms, and show that including a low-quality creative imitation in the retail choice set increases satisfaction with and choice of the original, while a moderate-quality creative imitation does the opposite. Moreover, creative imitation affects consumers' satisfaction with the original by influencing whether their experience with the original verifies their expectations. Our paper reveals creative imitation effects to help incumbent firms effectively address them. Managerial Summary: When the incumbent is challenged by an entrant using creative imitation, consumers may react differently to the incumbent, and understanding consumers' reactions allows the incumbent to make better strategic decisions about how to address the challenge. Using lab and field experiments, we investigate creative imitations with two quality levels common in our empirical context, low quality and moderate quality, and examine how and why they differentially affect the originals. We find the presence of a low-quality creative imitation actually increased choice of the original by enhancing consumers' satisfaction with it, while a moderate-quality creative imitation reduced choice of the original by undermining satisfaction with it. Our research suggests the incumbent should address moderate-quality creative imitations' challenges to customer satisfaction, while temporarily tolerating low-quality creative imitations

Exploring the impact of product similarity and price on brand management outcomes of junior imitations and traditional senior luxury brands: the moderating roles of consumer characteristics

Often considered the sincerest form of flattery, imitation has practically always underlain the business sector. Firms mimic the innovations of others in all industries and at varied levels, resulting in a spectrum of copies that range from identical reproductions of the originals to copies with merely subtle resemblances. Intellectual property law generally prohibits the former via patent, copyright, and trademark protection. The retail sector has historically relied on trademark law to prevent imitations that confuse consumers as to the identity of the true manufacturer. However, imitations that do not create such confusion, primarily by copying aspects of another's offering that are unrelated to that firm's trademark (i.e., trend imitations), do not invoke infringement law as counterfeits do. Essentially, trend imitations are legal so long as they do not dilute the equity of the original brand. While a number of researchers have thoroughly examined consumer behavior associated with counterfeits, a much smaller sect has investigated the consumer response to trend imitations. Therefore, the purpose of the current marketing research was to uncover the effects of such trend imitation on both a luxury brand that imitates another (defined as the junior brand), as well as the luxury brand that is mimicked (defined as the senior brand). Specifically, the study employed a 3 x 2 between-subjects experimental design to examine the effects of appearance similarity and price on both junior and senior brand management outcomes (brand attitude, brand equity, and brand preference). The research was also aimed at exploring the relationships among these variables, as well the moderating effects of the consumer characteristics (ethics, prestige sensitivity, and fashion leadership) on said outcomes. Data were collected from a convenience sample of undergraduate students, with the final sample consisting of 340 participants. Of these, approximately 53% were Caucasians and approximately 90% of participants ranged from 18-22 years old. Multivariate analysis of variance was employed to test the main effects of appearance similarity and price point and the moderating effects of the consumer characteristics, while a series of regressions were performed to test the relationships between the brand management outcomes. Results revealed that similarity of juniors to seniors in terms of appearance (low, moderate, and high) and price point (at versus below) affect junior brand management outcomes, yet not those of well-known seniors. The results also reveal that consumer ethics moderate the effect of appearance similarity and price point on both junior and senior brand management outcomes, while fashion leadership moderates that effect only with respect to the senior brand. The findings further support the existence of relationships between the brand management outcomes of brand attitude, brand equity, and brand preference for both junior and senior brands. The research reveals a deeper conceptualization of consumer response to retail imitation practices, and provides managerial insight to both junior and senior brands involved in imitation practices. Limitations and future research directions are also offered

Entry, reputation and intellectual property rights enforcement

We examine how reputation concerns induce a multinational to partly withhold its entry into a developing country under weak intellectual property rights (IPR) enforcement. Equilibrium IPR violations are shown to arise only in the presence of such concerns. Holding constant a multinational's incentive to innovate, better IPR enforcement encourages entry but reduces social welfare. The multinational's incentive to innovate may be inversely U-shaped in the strength of IPR enforcement. If timed properly, however, stronger IPR enforcement can foster innovation without compromising social welfare. Testable implications concerning observable IPR violations are derived.postprin

Towards balancing innovation and imitation practices in the value creation process

Numerous studies challenge the ultimately advantageous position of innovators and indicate that imitation, in the whole spectrum of its diverse forms, generates a considerable potential for enhancing the competitiveness of the followers and shaping the path for effective surpassing the innovators. The emerging literature suggest strategic integration of innovative and imitative practices in order to achieve above average profits. Therefore, in this article imitation is considered on par with innovation as an alternative strategic option for successful business performance. The article presents the fundamental conditions affecting the managerial decision on the model of value creation for particular project or its modules