Research On The Pricing Strategy Of Fashion Luxury Products Considering Counterfeiters

With the continuous growth of Chinese residents' income,consumers' desire for conspicuous consumption is becoming more and more intense.Fashion luxuries are symbols of identity and status,which accords with the psychological characteristics of conspicuous consumption of contemporary consumers.Therefore,fashion luxuries are becoming more and more popular and the market is gradually expanding.However,the price of luxury goods is very high,especially for some consumers who live in first-tier cities but are not rich and those who live in second and third-tier cities,the price of fashion luxury goods is still out of reach.However,the price of counterfeit luxuries is relatively "low",for within the limited range of disposable income of ordinary consumers,counterfeit luxuries usually become a better alternative to luxuries.Despite a large number of counterfeit goods in China's luxury market,the luxury industry has achieved rapid development.Industry leader Patrizio Bertelli also pointed out that Prada does not want to be a brand that no one wants to emulate.Thus,for luxury goods,the existence of counterfeits is not necessarily a bad thing.In view of the prevalence of counterfeit goods in the fashion luxury industry,this paper intends to study the positive impact of counterfeit goods on the operation of the luxury industry.Firstly,this paper studies the consumer behavior of luxury goods.According to the characteristics of conspicuous consumption of luxury goods,the total utility of consumers is divided into two types.One is the intrinsic consumption utility of buying luxury goods,and the other is the status utility brought by buying luxury goods.On this basis,the behavior of consumers' intention to purchase non-deceptive counterfeits in the fashion luxury industry is taken as the research background,and a two-cycle fashion luxury sales model is established to contrastive analyze the impact of counterfeits on luxury pricing strategy.This paper focuses on the entry of the non-counterfeiters into the luxury market and the entry of the counterfeiters into the luxury market,and studies the impact of the entry of counterfeiters into the luxury market on the operation of the luxury industry by calculating and analyzing the pricing and equilibrium profit of the luxury goods.This paper finds that when non-counterfeiters enter the luxury market,the sales price and equilibrium profit of luxury products in the second cycle are lower than those in the first cycle.When counterfeiters enter the market,luxury goods in the second cycle are,in most cases,sold at lower prices than they were in the first cycle.Equilibrium profits for luxury goods in the second cycle are still lower than in the first.At the same time,when counterfeiters enter the luxury market,the sales price and equilibrium profit of luxury products in the second cycle are higher than those without counterfeiters.This is mainly due to the interaction between consumer consumption utility and status utility in luxury goods.For a consumer who has already purchased luxuries in the first cycle,the premise that he will continue to purchase new products in the second cycle is that the total utility he gets from purchasing new products is greater than the status utility of holding old products.When counterfeiters enter the market,the price of luxuries will drop in the first cycle,which will stimulate consumers who shrink back from the genuine luxuries to choose to buy the counterfeit ones,thus greatly reducing the scarcity of genuine luxuries.Therefore,consumers who purchase genuine luxury goods in the first cycle will have a greatly reduced sense of satisfaction(i.e.,status utility),which further stimulates their motivation to purchase new products in the second cycle.Our research shows that the existence of counterfeit goods is not a bad thing to a certain extent for the long-term operation of luxury goods.Therefore,in the management of luxury brands,it is necessary to formulate policies based on local conditions for counterfeit products,and it is not necessarily the best strategy to completely drive counterfeit products out of the market.This is also the view of Prada CEO Patrizio Bertelli provides a reasonable explanation.