Knockoffs Decrease Sales. Really?

Authors Kal Raustiala and Chris Sprigman have a new book out, The Knockoff Economy, exploring the effects of imitation on innovation and on profitability.

Common sense would say that when imitations (knockoffs) of products appear on the market, the sales of that product will be negatively impacted.  But is this really the case?

The studies the authors conducted show that as long as users can distinguish between the originals and knockoffs, the availability of knockoffs have several positive effects:

• There is free advertising for the brand of the original product

• There are increased sales in the long run, when customers that use the knockoffs products are able to transition into the originals, or in other words, when they can afford them.

A short excerpt from the book:

"In short, copies of branded goods—counterfeits—can have a counter intuitive effect on originals. While these copies can steal away some would-be buyers of the original, they also can help create new buyers through the advertising effect. Some counterfeit buyers “graduate” to the real thing, whereas others who never buy a counterfeit become buyers of the original because the counterfeits serve as advertising."

In conclusion, imitations of your product may actually be good for your company.

At the end, if you are continuously the best in your category, everything will work fine, no matter how many try to imitate you.

Are you the best in what you intend to do?