1.  Fendi: Fixing the Counterfeit Problem Luxury Consulting Group: Effie Koukoulis, Harveer Singh, Jonathan Etheart, and Frankie Xiaopan MAR 620- Consumer and Organization Buying Behavior Professor Gertner

2. Agenda I. What’s the Situation? II. How do Customer’s Perceive the Fendi Brand? III. Description of Brand Customers I. Values Fendi Customers seek II. Values Counterfeit Customers seek IV. Recommendations

3. What’s the Situation?  Fendi is a very popular luxury brand with a reputation for high quality and top notch craftsmanship.  A market for counterfeit Fendi bags came due to this overwhelming popularity.  Consumers willingly and unwillingly buy counterfeit Fendi bags.  This tarnishes the brand image because of the poor quality of some of the counterfeit bags.

4. Issues with Infringement  Burlington Coat Factory  $10.1 million settlement for selling counterfeit Fendi bags in stores.  Filene’s Basement  $2.5 million for trademark infringement.  Wal-mart  Confidential settlement agreement (2007)

5. How Counterfeiters are Enticing Consumers  “It's time for you to enjoy the elegance and quality of cheap genuine designer handbags. With incomparable styling, this exacting replica is identical in every aspect to the original-only you will know! Exquisite craftsmanship with maximum attention to detail. Highest quality materials including the most supple leathers and decadent features. Our site owns the best replica handbags available anywhere in the world. We guarantee the affordable fashion and superior excellence is finally yours.”  www.knockoffonline.com www.knockoffonline.com

6. What Do People Think of Fendi?  Fendi is known to have items that possess traditional and modern features, giving them a classy style.  Fendi ranks as the #9 luxury brand in the world.  Brand is valued at over $3.2 billion.  Many Fendi customers say that Fendi bags are part of their “Extended Self”.  Status Symbol: “Having a Fendi bag helps you become somebody, it’s part of growing up and becoming a professional”.

7. Who are Fendi’s Customers?  Typical Fendi Customer: Women looking for “a great day-to-day handbag”.  “Our customers don’t need us for simple.”  Fendi CEO Michael Burke  Fendi customers want an everyday handbag that stands out from the crowd.

8. Who’s Buying Authentic Fendi?  Instrumental Values:  Goal Oriented  Hard Working  Independence  Terminal Values:  Sense of Accomplishment  Internal Happiness  Social Recognition  Maturity  Success Traits & Values that Embody Fendi Customers  Traits:  Self-rewarding  Not Flashy  Interested in Long- Lasting Quality

9. Who’s Buying Knock-offs?  Instrumental Values  Superiority  Ambition  Frugality  Confidence  Terminal Values  Social Recognition  Happiness/Respect  Comfortable Life  Inner Harmony Traits & Values of Those Who Buy Counterfeit Fendi Bags  Traits:  Attention Seeking  Vanity  Saving Money over Quality Products

10. Interview Conclusions  Internal Values:  Customers who purchase authentic Fendi products are seeking mainly Internal Values.  These consumers want to make themselves happy first and foremost. “Having a Fendi bag makes ME feel good about myself, and by feeling good about myself, I can continue to do better in life”.

11. Interview Conclusion Cont.  External Values:  Consumers who purchase counterfeit Fendi products are seeking to fulfill External Values.  These consumers are interested in portraying a certain image to people they encounter. “Having a Fendi bag, fake or not makes me feel good and accepted. You feel respected, and it is important in life to feel accepted and respected in order to get ahead in life.”

12. How Should Fendi Fix This Issue? I. Make Fendi bags more Recognizable & Exclusive II. Decrease Fendi bags at discount stores III. Strengthen relationships with retailers IV. Increase Brand Value I. Post-Purchase Services II. Fendi Loyalty Clubs V. Create a Mid-Tier Line Our Recommendations

13. Questions