Literature Review

Literature Review Product Counterfeiting: Motivations of Consumers When Purchasing Non Deceptive Counterfeit Goods Nowadays, luxury brands have become even more prevalent especially in developing countries where economies are starting to emerge. “Traditionally, luxury goods or status goods are defined as goods for which the mere use or display of a particular branded product brings prestige on the owner, apart from any functional utility”. (Grossman & Shapiro, 1988a) Long ago, luxury goods were mostly meant for the highly affluent individuals.

Today, when we try to walk into a middle class shopping mall, the first thing we will notice are people carrying luxury brands in the form of handbags, gadgets, pens, and so on. As more people aspire to have these luxury brands, but cannot afford or are unwilling to pay for high prices to get one, the next option that comes into mind is purchasing a counterfeit version of the product. Therefore, the desire of consumers to own luxury branded items even though they cannot afford or are unwilling to pay for premium prices lead the proliferation of counterfeit goods.

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The primary objective of this literature review is to examine why consumers continue to purchase counterfeit goods and understand why there is demand for such products. So that luxury brand retailers would be able to come up with new strategies to further differentiate themselves from imitators and new strategies to reshape consumer perception towards counterfeits. As a result, they would be able to lessen the detrimental effects caused by imitators. “Counterfeits are reproductions of a trademarked brand, which are closely similar or identical to genuine articles. ” (Cordell, Wongtada,& Kieschnick, 1996)

The act of counterfeiting encompasses various aspects such asthe utilization of packaging, labelling, andtrademarks, to intentionally pass off as the original product(Kay, 1990; Ang, Cheng, Lim, & Tambyah. , 2001; Chow, 2000). According to Trott & Hoecht (2007), the value of counterfeit products marketed annually in the world is estimatedto be over US$1 Trillion. Considering the countries worldwide, almost 5 percentof all products are counterfeit, according to the InternationalAnti-counterfeiting Coalition (2005) and theInternational Intellectual Property Institute (2003).

Thus, counterfeiting is increasingly becoming a serious threat to luxury brands, as legitimate brands that are spending on extensive research and development activities to come up with new designs and other innovations will only end up being copied by imitators. Even though counterfeiting has become an area of great concern worldwide, there is still very limited research on the area. In addition, there were only a few studies conducted on consumer attitudes or intentions when purchasing counterfeit goods. Since 1980’s, most studies on product counterfeiting have focused on the adverse impacts of counterfeit goods to those legitimate brands.

Furthermore, previous studies on counterfeiting placed emphasis on anti-counterfeiting strategies that will help legitimate luxury brands battle out imitators (Bamossy & Scammon 1985; Bush, Bloch, & Dawson, 1989; Chaudhry & Walsh, 1996; Olsen & Granzin, 1992). Nia and Zaichkowsky (2000) cautioned that readers should take note of the two types of counterfeiting which include deceptive and non deceptive. Grossman and Shapiro (1988b)identified deceptive counterfeiting as a situation in which the consumers arenot aware of purchasing a counterfeit product at the time of the purchase.

But since most of the time, consumers knowingly engage in non deceptive counterfeiting, we will try to concentrate on non deceptive counterfeiting, as consumers would tend to have clearer intentions when they are strongly aware that what they are going to purchase is not a genuine product. While most researchers on counterfeit goods focused on the most evident motivation to purchase counterfeit goods which is price. Wee, Tan, and Cheok (1995) took on a different approach and conducted a more comprehensive research on the non-price determinants of consumer intentions to purchase counterfeit products.

Wee et al. (1995) categorized non price determinants into three variables including psychographic (attitude, brand status, materialism, novelty seeking, and risk taking), product attribute (durability, image, physical appearance, purpose, quality, and perceived fashion content), and demographic (age, educational attainment, and household income). Wee et al (1995) believes that generally one’s age, educational attainment, and household income can have effects on the tendency of consumersto purchase counterfeit goods.

Thus, studying the intentions of consumers based on demographic variables may produce diverse results. Cordell et al’s. (1996) discoveries are in line with Wee et al’s. (1995) findings that the status symbol that comes along with brands is one of the motivators for consumers to purchase counterfeit goods. Furthermore, the other two motivators identified by Cordell et al (1996) are the retailer’s channel of distribution and the price of the counterfeit products. Phau and Teah (2009) also listed status consumption as one of the key motivators to purchase.

Eastman, Fredenberger, Campbell, and Calvert(1997) thinks that status consumption is for consumers who are seeking to satisfy themselves as well as to display their prestige and status to surrounding others usually through visible proof. However, an important thing to take note of is that the assumption that onlythe wealthy are inclined to status consumption is inaccurate (Freedman, 1991; Miller, 1991; Eastman et al. , 1997; Shipman, 2004). Phau and Teah (2009) agreed with Wee et al. (1995) that novelty seeking is one of the intentions of consumers in purchasing counterfeit products.

Novelty seeking is said to be the curiosity of individuals to seek varietyand difference (Hawkins et al. , 1980; Wang et al. , 2005). When consumers are willing and open to try new products, they may have the tendency to try out counterfeit products as well. Wee et al. (1995) stated that the low cost ofcounterfeit products is very suitable to satisfying the consumer’s curiosityand the need for experimentation. Greenberg, Sherman, and Schiman (1983) supports the view of Wee et al. (1995) that consumers pay more attention to product attributes such as durability and reliability in making decisions to purchase products.

In addition, appearance and visibility are potentially more relevant attributes for fashion or other symbolic products. Ang et al (2001) added that another purchase intention is personal gratification which concerns the need for a sense ofaccomplishment, social recognition, and to enjoy the finerthings in life. By purchasing even the counterfeit versions of luxury goods, some may feel that they will be recognized or considered by others to belong to a specific social class, which gives them the confidence and satisfaction among themselves.

Bloch, Bush, and Campbell (1993) arguedthat consumers who choose counterfeits see themselves as lesswell off financially, less confident, less successful, and lowerstatus than non-buyers of counterfeit products. In contrast, Ang et al. (2001) came up with contradictory findings which showed no significant influence ofpersonal gratification on consumer attitudes towards counterfeits. In Matos, Ituassu, and Rossi’s (2007) recent study, they noticed and identified another motivation that drives consumers into counterfeit purchases which is subjective norm.

Ajzen (1991) defined subjective norm as a social factor that refers to the perceived social pressure to perform or not to perform a given behaviour. Some consumers tend to behave in a way that pleases others. This is to gain approval from other people, be it friends, family, schoolmates, officemates, and so on. Thus, social or reference groups of consumers may have impacts on whether they will patronize counterfeits or not. Conclusion The literatures suggest that motivations of consumers could come from product attribute variables, psychographic variables, or demographic variables.

The study on personal gratification as a motivator is still not clear, as there are debates going on whether it does or does not have any impacts on consumer attitudes towards counterfeits. Product attributes like durability and reliability are considerably important, but physical aspects and visibility of products weighs more on high status goods. The consumer’s openness to try a new variety of things could influence their acceptance to purchase counterfeit goods. Lastly, most research supported that price and being associated to the social status of a brand motivates consumers to purchase counterfeit goods.

Furthermore, a consumer’s desire to please and get approval of others may have effects on their attitude towards counterfeit goods. Since research in this area is very limited, further research on consumer attitudes towards counterfeit goods could greatly contribute to a better understanding of why consumers continue to buy counterfeit goods. So far, there were only a few literatures on the area of counterfeiting. Thus, there are still many interesting and relevant areas that could be studied. For instance, among the very few literatures available, most of it focused on the attitudes of buyers of counterfeit goods.

Therefore, further research on counterfeiting could focus on the perceptions or attitudes of existing users of original luxury branded products. This will be more valuable to luxury brands, as studying the perceptions and attitudes of these consumers could lead to the discoveries of purchasing trends of individuals who are actually contributing to their profitability. While counterfeiting remains a significant problem worldwide, more people would focus their research towards it and other discoveries may arise.

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