Consumer Attitudes Towards Counterfeit Products Essay

Counterfeit products and materials are knock-off, bootleg, pirated or other illegally produced materials that are produced and sold in violation of the Intellectual Property Rights (IPRs) of others or in a manner that fraudulently represent their quality or origin (Porteus, 2002). Despite the various anti-counterfeit efforts of multinationals and international trade organizations, counterfeiting continue to pose a significant and growing threat to businesses, both in developed and developing countries (Vida, 2007; Maldonado and Hume, 2005). Vida (2007) observed that even in the face of technological advancements that facilitates easy recognition of genuine products, and the legal pressures buyers and sellers of counterfeit products, global businesses still lose billions of dollars to counterfeiters annually. The annual cost of counterfeiting is estimated at $200 billion and the international trade in counterfeit products is believed to account for between 3-5% of overall world trade. Most threatening is the fact that several bodies such as the International Anti-counterfeiting Coalition (IACC) and International Intellectual Property Institute (IIPI) agree that international trade in counterfeit product is booming. However, it should be emphasized that the total losses due to counterfeiting, annually, should not be measured in terms of the economic devastation caused to genuine product manufacturers, its effects on hundreds or thousands of jobs worldwide, increase in the cost of marketing genuine products, reduced brand equity and trademark owner reputation. Most importantly, the threat to consumer health and safety that counterfeit product poses cannot be overemphasized (Vida, 2007; Maldonado and Hume, 2005). Although, counterfeiting is a global problem, it appears to have a more significant effect on UAE for a number of reasons. Managing Intellectual Property, an internet magazine on counterfeiting, reports that while UAE is one of the fastest-growing economies in the world, it is also renowned for luxury, tourism, business and rapid development. Particularly, its free trade zone that offers attractive incentives for business, especially due to its location at the centre of the Middle East and the Arab states of the Gulf Cooperation Council (GCC) countries also create the right environments for counterfeiters to market their products. The close proximity of the free trade zone to leading counterfeit producing Asian countries and its status as a transshipment hub also greatly increases the country’s problems with counterfeiting. A recent study carried out by PricewaterhouseCoopers and reported in the magazine stated that counterfeit products make up to 68. 5% of automobile parts in the market, with fake pharmaceuticals, the least hit sector, accounts for 0. 2% of products in the market. It is therefore very critical that all efforts must be directed towards reducing this menace, and obviously, reducing counterfeiting, must involve be from the supply or the demand side. Augusto de Matos, Ituassu & Rossi (2007) rightly contend that actions towards counterfeiting can arise from both supply and demand sides. While acting from the supply side include understanding the incentives, rationale and factors that encourage or influence people to engage in manufacturing counterfeits, the demand angle involves understanding consumer attitudes and willingness to purchase fake products (Vida, 2007). Authors have largely argued that the supply side of counterfeiting has received an undue amount of attention in recent times, with the demand side largely ignored. Also, it is an established economic fact that supply is driven by demand; it is safe to suggest that the increase in global counterfeit trades is partly driven by the increasing consumer demands for cheap, substandard products. For example, the rise in the market for non-deceptive counterfeit products strengthens this argument. Thus, understanding the demand side could be the most important tool in fighting counterfeiting globally. In this regard, this paper, therefore, intends to investigate consumer attitudes or willingness to purchase counterfeit products in Abu Dhabi using a questionnaire approach to unravel the various factors and influences that shape consumer attitudes and behaviors when it comes to purchasing counterfeit products. Theoretical Framework Vida (2007) noted that since the mid 1990s when Elisabeth Hirschman, expressed the need for researchers to explore the ‘dark-side’ of consumer behaviors, literatures investigating and explaining the various factors that influence consumer purchase behaviors, especially with regard to illegal or counterfeit products, have increased considerably. Building on the â€Å"willingness to pay† concept, Vida conceived explored consumers’ willingness to purchase fake products. The author contended that demographic and socio-economic factors like age, gender, education, marital status, income and religiosity shape consumers’ attitude towards counterfeits, innovativeness (desire to be unique) and social pressure. These three, in turn, influence consumers’ willingness to purchase counterfeit products. Also, Xuemei and Veloutsou (2005) in their exploratory study, also reports that personal and social factors significantly influence consumers’ purchase behaviors. The authors contended that personal and social factors such as: value consciousness, normality susceptibility, novelty seeking and collectivism, and five attitude measures: reliability of the product in question, functionality of the product, recognized social benefits of purchasing the product, risks of purchasing and legality of purchasing, influence consumer purchase of counterfeit products. The study found that novelty seeking significantly influences consumer purchase of counterfeits products due to the similar or sometimes, superior quality of counterfeit products. Moreover, in a more elaborate study, Augusto de Matos, Ituassu and Rossi (2007) also found that price quality inference and previous experience, among others, significantly increases the chances of consumers purchasing fake products. This study, drawing from the findings of the studies mentioned above, contends that a consumer attitude towards counterfeit product greatly influences their purchase behavior. It also hypotheses that previous experience with safety concerns, quality of counterfeits with respect to the price, and the intention to use counterfeits to test the product before purchasing the genuine brands, shape consumer attitudes towards counterfeit and subsequently, their purchasing of counterfeit products. Augusto de Matos, Ituassu and Rossi (2007) rightly point out that quality and price are two fundamental factors that shape consumer purchase behavior. Traditionally, consumers believe that lower priced products are of lower quality, and this is largely the case with deceptive counterfeit products. However, with non-deceptive counterfeits products, consumers are offered products of similar or superior quality, compared to the genuine products, at lower prices. The combination of low price and high quality is bound to improve consumer attitudes towards counterfeits. For this reason, it is expected that: Counterfeits with superior quality enhances consumers’ perception and attitudes towards counterfeit products. Safety concerns are one of the most important issues with counterfeit products. These products have been known to pose significant threat to consumer health and safety, especially when it concerns medications and household items. However, not all consumers consider counterfeit goods to be unsafe or dangerous. It is expected that: Consumers who consider counterfeit goods to be unsafe and dangerous will have unfavorable attitudes towards counterfeit products, and vice versa. Lastly, novelty seeking can also influence consumer attitude towards counterfeit products. This feeling refers to individuals’ need for a sense of worth or social recognition; people always want to be seen as special and capable of affording material things. The increasing materialism in the world means that people that cannot afford the finer things of life feel unworthy. Since the presence of cheaper and yet quality counterfeit products provide the opportunity to afford these luxuries, individuals in the lower economic range are often willing to purchase such counterfeit products. Thus, it is expected that the sense of novelty influences consumer attitude towards counterfeit products. Method To investigate the influence of the factors discussed above on consumer attitude towards purchasing counterfeit products, this study surveyed a cross section of individuals in the city regarding their perceptions of counterfeit products. The research instrument adopted was questionnaire. The questionnaires, consisting of a hundred direct questions in Likert scale style, varying from 1 (completely disagree) to 7 (completely agree), were distributed to students on campus at several shopping centers. Because the questionnaires, in most cases, were self administered, respondents were encouraged to answer all the questions provided. Due to this, a total of 95 valid and usable questionnaires were collected at the end of the survey. Of the 95, 30 were below 20years old, 45 between 21 and 25 years old, with the rest above 26years old. With respect to education, more than half of the respondent had at least high school certificate, and interestingly, almost all of them (about 80%) had purchased counterfeit product in the past. Results Table I below presents the total number of questionnaires collated and the mean of responses for each of the variables under investigation. As presented in the table, the mean of respondents who rated superior quality, inexpensive trials and novelty as important factors for considering counterfeit products were 4. 4674, 4. 2211 and 4. 0053 respectively; while the respective standard deviation were 1. 16843, 1. 35759, 1. 17881 N Attitude Superior Quality Tryout Novelty Valid 95 92 95 93 Missing 0 3 0 2 Mean 3. 5447 4. 4674 4. 2211 4. 0053 Std Deviation 1. 33188 1. 16843 1. 35759 1. 17881 Minimum 1. 00 1. 00 1. 00 1. 00 Maximum 7. 00 7. 00 7. 00 7. 00 Table I To further measure the influence of these variables on consumer attitude towards counterfeit products, correlation coefficient was calculated for the variables. The result indicated that all three variables significantly influenced consumer attitudes, with superior quality presenting the most significant influence. For superior quality, r = . 668, r = . 395 for counterfeit products as tryouts, r = . 653 for novelty (correlation is significant at the 0. 01 level for all variables . ) As obvious from the three scatter diagrams above, this study found a significant correlation between the superior quality of counterfeit products and consumers’ favorable attitude towards purchasing such goods. Also, the study showed that consumers see cheap counterfeit goods as an opportunity to tryout products before purchasing them or in other cases, as a better opportunity to own products they, otherwise, will not be able to purchase. Discussion and Recommendations Counterfeiting is a growing global menace resulting in the loss of several billions of dollars annually. In finding the right tool to fight this menace, researchers and policy makers have focused on either the supply side or demand side of the problem, although, there seem to be more attention on the supply side. This paper argued that demand is a major driver of supply and that by understanding the reasons and factors that encourage demand for counterfeits, the fight against counterfeiters will take a different and better dimension. In truth to this assertion, several authors have investigated the personal and social factors that influence demand for counterfeit products. In contribution, this study investigated the influence of three variables: superior quality of counterfeit products, using counterfeit goods as inexpensive trials before purchasing genuine ones, and novelty seeking impulses. The result of this study established the hypotheses proposed earlier that these variables significantly influence demand for counterfeit products. It is an established fact that price and quality are two major determinants of consumer purchase behavior. However, by presenting consumers with superior quality products at lower prices, the tendency to purchase these counterfeits products will be considerably higher than the genuine product, because in doing so; the individuals will be receiving higher value for lesser money than if they have purchased the original. It, thus, becomes easier for consumers to rationalize their actions. The case is also similar for the two other variables, counterfeit products offer consumers the chance of buying products they, ordinarily, will not be able to afford, or the opportunity to try the product before purchasing the original. In both cases, consumers are saving money and achieving their objectives. Recommendations It is apparent that, among other things, price and quality significantly drive demand for counterfeit products. Manufacturers of genuine should strive to provide consumers with products of similar or even quality, compared to fakes, at reasonable prices. Manufacturers should also stress the fact that by purchasing fakes, consumers are increasing the cost of genuine products and destroying the jobs of several others. For as Xuemei and Veloutsou (2005) pointed out, consumers are also influenced by the desire to be accepted by significant others, by emphasizing the moral aspect of purchasing fakes, manufacturers can significantly discourage consumers from purchasing counterfeit products. Conclusion Although, counterfeiting is a serious global problem, very little is known about why consumers choose to patronize such fake products. This study has shown that the superior quality of some fake products, their lower price, which enable consumers to try them out before buying genuine ones or to own products they would not have been able to afford, greatly improve consumer attitudes towards counterfeit products. It is recommended that manufacturers should strive to meet the quality and price of counterfeits to reduce the demand for fake products. References Augusto de Matos, C. , Ituassu, C. T. and Rossi, C. A. V. (2007), Consumer attitudes toward counterfeits: a review and extension, Journal of Consumer Marketing, Vol. 24 No. 1 pp. 36-47. Maldonado, C. and Hume, E. (2005), Attitudes toward counterfeit products: an ethical perspective, Journal of Legal, Ethical and Regulatory Issues, Jan-July. Managing Intellectual Property (2008), How to tackle fakes in the UAE, Available at http://www. managingip. com/Article/1940730/How-to-tackle-fakes-in-the-UAE. html (Dec 13 2008). Porteous, S. D. (1998), Organized Crime Impact Study Highlights, Paper Prepared for Public Works and Government Services of Canada, Cat. No. JS42-83/1998. Xuemei, B. and Veloutsou, C. (2005), Consumers’ attitudes regarding non-deceptive counterfeit brands in the UK & China, Brand Management, Vol. 14, No. 1, pp. 211-222. Vida, I. (2007), Determinants of Consumer Willingness to Purchase Non-Deceptive Counterfeit Products, Managing Global Transitions, Vol. 5, No. 3, pp. 253–270.