The Effects of Counterfeiting on Consumers

The effects of counterfeiting on consumers

Submitted by: Paige Yoo (301251609)

Professor: Hilary Morden

For Crim 101 (Fall Semester)

November 7, 2014

Word count: 1653

     It is a common moral belief that brand names and designer products represent the person's success, social status, and the quality of life. There have been many researches, with diverse approaches, proving the consumers' attitudes towards counterfeit products, the difference between those who purchase them and those who do not, and the intention of the purchases. Counterfeiters will never stop, as the quality of these fake brand items started to improve due to the evolving technology. This paper will include summaries of some studies done to show different aspects of the new phenomenon – counterfeiting and its effect on the consumers.

     High-end brand names are the biggest targets to the counterfeiters. However, to the consumers of the luxury, non-counterfeit products and to those who own the intellectual property rights (IPR), the brands have a meaningful value (Gentry et al., 2006). $300 billion is the estimated sales of the global counterfeit products, according to the International AntiCounterfeiting Coalition (2003). Today, as much as 20% of the products are estimated to counterfeit in China (Alcock et al., 2003). Although the general belief is that the Western consumers are less familiar with counterfeit products, recent studies illustrate that an enormous amount of counterfeit golf equipments are sold in the US (Swift and Yaegar, 2003). Counterfeit products range from jewellery, clothing, shoes, to gasoline, auto and industrial parts. The continuously developing technology plays a major role in the increase in the production of counterfeit products and the consumers, as the quality has improved greatly. As a result, more consumers find it difficult to differentiate the counterfeit products from the branded goods (Foxman et al., 1992).

     To gain better knowledge of the consumer's attitudes and thoughts on purchasing counterfeit products, interviews have been conducted targeting the international consumers. Most respondents being citizens of Chinese subcultures, many responses were very similar. An idea focusing on the location of the selling and its relations to the genuineness of the products evolved around similar beliefs. Many respondents believed that products sold in department stores or any upper-class shops will be real, compared to products sold in small boutiques and markets. Respondents also suggest the price as a strong indication whether or not the product is real. Commonly, many agreed that counterfeit products are sold at unbelievably discounted prices. For some, buying imitations is the result of the significantly low price of the "real" product. However, to some cultures, the prices are not the primary cue of the genuineness of the product, as said by an Italian respondent. In addition, some informants have stated that it would be much difficult to distinguish between the counterfeit and the original product if both were sold at similar stores with similar prices. In contrary, some stated that they would still be able to tell them apart by looking carefully at the product details such as how the logos are presented or sewed on, misspelled brand names, the seaming surrounding the zippers, and the durability and the quality of the products after a few wears. In conclusion, Gentry et al. (2006) suggest that the quality of these counterfeit products has noticeably improved.

     Compared to more than a decade ago, counterfeit products have become very much common and accessible for the public. This is due to lack of policing structure and legislation against counterfeiting (Vagg and Harris, 2000). As a result, the inefficient penalty of the offence has increased from six months to 10 years as the maximum prison sentence. Vagg and Harris (2000) argue that there are two reasons why the level of counterfeiters is in a rise: lack of penalties posed, and the question of the genuineness of an item being an obstacle to impose a sentence. Even with the increase of the maximum penalty, the actual number of sentences imposed on counterfeiters remains very low. The authors express that despite the generalized negative impression counterfeiting carries, that there are some positive effects of it. For example, one sportswear company has hired an investigator who is knowledgeable about the company products, giving testimony at an expert level. It is extremely rare that companies see anti-counterfeiting as a future investment.

     Mainland China is well known for its counterfeit products. There has been six counterfeit types according to previous studies by Key (1990); Phau & Prendergast (1998); Spink & Moyer (2011). Counterfeit products are the exact copy of the original and are made to trick the consumers to think that they are real. Pirated products extract trendy designs of the genuine brands and are not made to trick consumers; hence, the prices are much lower. Imitation products have similar designs as the original brands – it imitates the taste of the original. Custom-made products are replicas of the genuine luxury brands that are associated with the brand itself. Craftsmen produce them. "Over-run" products are overly produced during manufacturing process to sell more for higher profits. Finally are the crudest imitation, which may only have similar designs or simply just a logo. They are made in poor quality and are sold at a very low price.

     Wang and Song (2013) have also studied the attitudes of Chinese consumers of counterfeit items. However, there is no evidence towards the statements from previous studies. Ang, Cheng, Lim and Tambyah (2011) believe that culture, ethnicity, gender, age, education level and economic standings affect their decision-making skills toward counterfeit of luxury brands. I contrary, Tom et al. (1998) suggest that the gender makes no effect on the behaviour. Although other researchers have biased and conflicting opinions on social class, age, and previous experience on the purchase has an effect towards their decision and behaviours, many agree that individuals with experience of purchasing counterfeit items differ than those who have never bought them. Individuals with no experience showed negative attitudes toward the idea of counterfeit products.

     Chinese consumers believe that counterfeit products decreases the values of the luxury brands; yet, they also think that these counterfeit items will lead to promotion of the brand names and make a positive contribution to the brands (Wang and Song, 2013). A survey was administered for further information from individual consumers. Those who have previously purchased counterfeit products carry stronger beliefs in the education effect, effect in which counterfeit products educate public with luxury brands, and consumers who have never purchased them believed of the opposite. The result of this may be the result due to beliefs in the education effect, or simply to use as an excuse of defending their purchase of counterfeit luxury products.