If you don't already look rich, then carrying a knock-off luxury handbag isn't going to fool most people, says Renee Richardson Gosline, an assistant professor of marketing at Massachusetts Institute of Technology’s Sloan School of Management. In a recent study she conducted, Gosline found that social cues, such as expensive clothes or that ineffable "aura" that exudes from the well-heeled set, help people determine whether or not a handbag is fake or the real thing.
But the risk of being exposed as a fraud isn't strong enough to stop buyers from trying to fake their way up the status ladder with ersatz merchandise. According to Gosline (a former brand manager for LVMH Moet Hennessey Louis Vuitton), counterfeit products account for 7 percent of global trade, or $600 billion a year. People are willing to pay twice as much for a product if "they can use it to send cues about wealth and taste," she said.
One of the more surprising findings from the study revealed that buyers of knock-off products develop a brand-attachment to the items and become more likely to shell out for the real thing a couple of years later.
I'm curious whether or not knock-off goods have devalued luxury brands. Whenever I see a Louis Vuitton bag, I assume it's phony no matter how rich its owner looks. In fact, I suspect that that everything a Louis Vuitton bag owner is wearing is fake.