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The Customer Attitudes Toward Counterfeits Marketing Essay

Abstract

Purpose –

The aim of the paper is to suggest and test a model that combines the main predictors of customers’ attitude and behavioral intentions toward imitators. It will also help companies in understanding the key factors influencing customer behavior toward counterfeits and help create successful strategies that will reduce piracy.

Methodology –

An integrated representation is proposed subsequent the studies by Ang et al & Huang et al. A study with 400

customers was conduct in the Brazilian marketplace and stated Structural Equation Modeling method was used to experiment the hypothesized associations.

Findings –

The main input of the document is to show so as to customer intention to buy counterfeited goods are reliant on the attitude they have toward counterfeit, which in twirl are more prejudiced by perceived danger, whether customers have bought a counterfeit before, subjective norm,

integrity, price-quality inference and personal gratification. The paper reinforces the mediator role of attitude in the relationship between these

antecedents and behavioral intentions. Moreover, previous experience with counterfeits consumption does not have a direct effect on behavioral

intentions, but only an indirect effect through attitude.

Practical implications –

The paper contributes to inform policy makers and managers of brands about the main predictors of customer’s attitudes

toward counterfeits. In this way, ads intended to discourage consumption of counterfeits could use the perceived risk as the main message appeal.

Originality/value –

This paper investigates the key antecedents and consequences of customer attitudes toward counterfeits by integrating and

testing two recent models dealing with this subject in the marketing literature.

Introduction

Counterfeiting is a significant and growing problem worldwide, occurring both in less and well developed countries. In the USA economy, the cost of counterfeiting is estimated to be up to $200 billion per year (Chaudhry et al.,2005). Considering the countries worldwide, almost 5 percent of all products are counterfeit, according to the International Anticounterfeiting Coalition (IACC, 2005) and the International Intellectual Property Institute (IIPI, 2003).

A number of definitions have been used for product counterfeiting. In this paper, we use the one given by Cordell et al. (1996) and also used by Chaudhry et al. (2005): “any unauthorized manufacturing of goods whose special characteristics are protected as intellectual property rights (trademarks, patents and copyrights) constitutes product

counterfeiting.”

Actions to limit counterfeits can arise from both supply and demand side, considering the tactics companies employ to deter counterfeits (Chaudhry et al., 2005) and the motivations

that make a counterfeit an interesting option for some customers (Huang et al., 2004; Ang et al., 2001). Because research addressing counterfeit purchasing from the customer’s perspective is still incipient, especially considering the antecedents of the construct “attitudes

toward counterfeits”, this study focuses on the demand side. The aim is to propose and to test a model that deals with the main predictors of customer attitudes toward counterfeits and their intentions to buy such products, integrating the main findings existing in the literature.

The article is presented in five parts. First, a brief review of the main antecedents and consequences of the customer attitudes toward counterfeits were examined, resulting in a

conceptual model to be tested. Second, valid scales for the constructs considered in the model were identified in the literature. Third, the conceptual model was tested by means of the structural equation modeling. Fourth, a discussion of the main results is presented, comparing findings with previous studies. Finally, the conclusions are presented, including the main contribution of the study and strategies managers can use in order to reduce customer attitudes toward counterfeits.

Theoretical background and conceptual model

Customer attitude toward counterfeits

“Attitude” is a learned predilection to act in a consistently positive or unfavorable mode with respect to the given object” . Indeed, as according to Bagozzi et al , the the majority widely accepted description of attitude conceive of it as the evaluation, for eg: “a psychological inclination that is uttered by evaluating a meticulous entity with some scale of favor or disapproval.”

Attitude is measured to be highly linked with one’s intention, which is rather a rational predictor of conduct. In the stated authors’ rationale , not just the attitude that one has

towards an object will definitely affect his or her intention toward it, but as also what influence one receive from his reference set will be significant, namely the skewed norms. In summary, intention to perform a conduct will be influenced by individual & interpersonal level factor. In the context of this study, customer evaluation of counterfeits shall be a significant predictor of his intention to buy the counterfeit, along with this how much conformity about this conduct he or she receives from his or her orientation group. In such way, what issues influences customer evaluation of the counterfeit becomes a focus of the examination. Based on the prose review, the main speculators are presented below.

Price quality inference

As it is the two main differences that customers perceive between the counterfeit and an unique product are the given lower prices & the poorer guaranties, the price and the risk constructs are so likely to be significant factors related to the attitude toward the counterfeits. In fact, as previous study have shown that the price dissimilarity is a significant variable while choosing a counterfeit. The Inference of the quality by the given price level is a regular belief among customers and a significant factor in customer behavior. So in this sense, customers’ tendency to consider that high (low) prices means that high (low) quality become even more significant when there is very few information about the stated product quality or the customer

is not able to check the quality of the product.

As proposed by Huang et al, bearing in mind that counterfeits are generally sold at lesser prices, the higher the connection price-quality for the customer, the lower his or her perception of the quality for counterfeits. For the above stated reason, it is that is why expected that:

H1. A customer who more strongly believe in the price and quality inference has a extra negative attitude towards counterfeits.

Risk averseness and perceived risk in counterfeits purchasing

Risk averseness is defined as the propensity to avoid taking risks and is generally considered a personality variable

(Bonoma and Johnston, 1979; Zinkhan and Karande, 1990). This psychological customer trait is an important

characteristic for discriminating between buyers and nonbuyers of a product category, especially a risky one (e.g.

Internet shoppers and non-shoppers, Donthu and Garcia, 1999). In the context of counterfeits, Huang et al. (2004)

found a significant inverse relationship between risk averseness and attitude. Following these authors’ rationale,

we expected that:

H2. Customers who are more (less) risk averse will have

unfavorable (favorable) attitude toward counterfeits.

As stated in H2, customers believe that counterfeits are sold with lower prices and poorer guaranties. Because of this, the

risk variable is as important as the price-quality inference. The concept of perceived risk more often used in marketing

literature defines risk in terms of the customer’s perceptions of the uncertainty and adverse consequences of buying a

product or service (Dowling and Staelin, 1994). Hence, customers judge what are the chances that a problem might

occur and also what will be the negative consequences of such problem, and this judgment will influence every stage of the

customer decision-making process. As the nature of these problems vary, the risk might include different components,

such as performance, financial, safety, social, psychological, and time/opportunity dimensions (Havlena and DeSarbo,

1991).

Albers-Miller (1999) found a significant role of the risk factor on the purchasing of counterfeits. In this context, a

customer may consider that:

. the product will not perform as well as an original item and there will be no warranty from the seller;

. choosing a counterfeit will not bring the best possible monetary gain;

. the product may not be as safe the original one

. the selection of a counterfeit will affect in a negative way how others perceive them; and

. he/she will waste time, lose convenience or waste effort in having to repeat a purchase. In this sense, it is

hypothesized that:

H3. Customers who perceive more (less) risk in counterfeits will have unfavorable (favorable) attitude

toward counterfeits.

Integrity

Customer purchase of a counterfeit is not a criminal act, but as customer participation in a counterfeit transaction

supports illegal activity (i.e. counterfeit selling), customer’s respect for lawfulness might explain how much engagement

he/she will have in buying counterfeits. Indeed, research shows that customers’ willingness to purchase counterfeit

products is negatively related to attitudes toward lawfulness (Cordell et al., 1996). In this sense, those customers who

have lower ethical standards are expected to feel less guilty when buying a counterfeit (Ang et al., 2001). Rather, they

rationalize their behavior in a way to reduce the cognitive dissonance of an unethical behavior. Using this rationale, we

expect that:

H4. Customers who attribute more (less) integrity to themselves will have unfavorable (favorable) attitude

toward counterfeits.

Personal gratification

Personal gratification concerns the need for a sense of accomplishment, social recognition, and to enjoy the finer

things in life (Ang et al., 2001). There are conflicting results in this aspect in the literature because Bloch et al. (1993) suggest that customers choosing a counterfeit see themselves as less well off financially, less confident, less successful and lower

status than counterfeit non-buyers; on the other hand, result found by Ang et al. (2001) showed no significant influence of

personal gratification on customer attitudes toward counterfeits. Because of this, we do not hypothesize the

direction of the relationship, but only that:

H5. Customers’ sense of accomplishment will affect their

attitude toward counterfeits.

Subjective norm

It’s a social factor which refers to the alleged social pressure to perform or not to perform a given behavior. When others such as the relatives or friends of customers try to influence their choices say for example when 1 doesn’t know the product category the customers may be informationally liable. They can also be vulnerable at times when they are more interested in making a good impression to others.

Depending upon how much behavior is approved relatives & friends may act as inhibitors or contributors to the consumption when referred for counterfeits.

Therefore, it is expected that:

H6: Those customers who perceive that their friends approve or do not approve their behaviour of buying a

counterfeit will have favorable or unfavorable attitude towards counterfeits.

Previous experience

the study shows that counterfeits consumers are different from non-buyers. The difference lies behind in their thinking. They consider these products as less risky. Their trust in stores selling counterfeit is also the other reason. Moreover, they do not consider these purchases as unethical.

Therefore, in this study, it is expected that:

H7 A: Customers who have already bought a counterfeit have more favorable attitude toward counterfeits.

H7 B: Customers who have already bought a counterfeit have more favorable behavioral intentions toward counterfeits.

H8: Customers with more favorable attitudes toward counterfeits will have more favorable behavioral intentions toward these products.

Conceptual model

Based on the above study, Figure 1 shows the proposed model.

Method

A survey was conducted among customers in two big Brazilian cities. They were interviewed in the streets close to

the points where counterfeited products were being sold Interviewers were trained by the authors in administrating the

survey instrument and were instructed to include in the sample people with different profile, considering age, gender,

education and income. A question concerning whether participant had already bought a counterfeited product was

also included in the instrument. Data collection was performed both on week and weekend days. A total of 400

individuals answered the survey instrument and were used in the data analysis.

Based on the literature, the authors built the survey instrument, using scales that were already validated in

previous research. Table I summarizes the items used for each construct, as well as the authors used as reference.

Participants answered these items using Likert scales varying from 1 (completely disagree) to 7 (completely agree). Only

the scale of behavioral intentions used a different format, with anchors varying from 1 (very unlikely) to 7 (very likely). In

this study it was not specified any counterfeited product in particular. Questions considered the expression

“counterfeited products” in general because the aim at this moment was to assess customer attitudes toward

counterfeited products overall.

After data collection, the analysis followed these steps:

. descriptive statistics for the scale items and for the demographic variables;

. missing values and outliers detection;

. linearity between the scale items;

. dimensionality using Exploratory Factor Analysis (EFA);

. reliability and validity of the scale items using internal consistency coefficient (Cronbach’s alpha), as well as composite reliability and average variance extracted as suggested in the measurement literature (Fornell and Larcker, 1981; Gerbing and Anderson, 1988); and

. estimation of model parameters and interpretation.

Results

Descriptive analysis

The following profile was found among the participants: 230 (57.6 percent) were female, 74 (18.5 percent) were 20 years

old or less, 86 (21.5 percent) were between 21 and 25 years, 47 (11.8 percent) between 26 and 30 years, 86 (21.6 percent)

were between 30 and 40 years and 106 (26.6 percent) had 41 years or more. In terms of education, 208 (52 percent) had

already completed high school, followed by those who had not, 120 (30 percent). Concerning personal income, the

majority (171 or 43 percent) said they received monthly up to R$500.00 (equivalent to US$230.00), followed by 149 (37

percent) in the range between R$500.00 and R$1,000 (149 or 37 percent) and 79 (20 percent) with more than R$1,000 by

month. Most of the participants (279 or 70 percent) affirmed that they had already bought a counterfeit.

The scale items presented means varying from 2.15 (item “I like shopping for gray market goods”) to 6.88 (item “I admire

responsible people”). In general, the scale means indicate that respondents manifested unfavorable attitudes toward

counterfeited products and low behavioral intentions toward them.

Comparing the scores of the scales with the demographic variables, no significant differences were found between man

and women, neither between different ranges of age, education nor income.

Due to the data collection process (i.e. personal interview), questionnaires did not present missing values because interviewers were instructed to collect all the information from each participant. These data were submitted to the outliers analysis suggested by Hair et al. (1998, p. 69), namely computing the Mahalanobis distance and excluding cases with significant high values. Using this procedure, 17 cases were identified and excluded from the data set. These cases were characterized as having lower means in the items referring to perceived risk and higher values in the propensity to buy counterfeited products, when compared to the rest of the sample. Analysis of variance showed significant differences in these means ( p , 0.05).

Linearity analysis was performed by checking the correlations between all items used in the questionnaire. Considering items from the same construct, the higher value found was 0.76 (i.e. items bi1-bi2 from Table I), suggesting there was no problem of multicollinearity in the data (see Tables II and III). Asymmetry was found in all variables when analyzing the normality graphs for each of them. Nevertheless, data were not submitted to transformations. Rather, the authors used different methods for estimating the parameters, when testing the conceptual model, and compared the stability of the results.

Discussion

Even though gray market has grown across the globe, exploration from a demand outlook remains limited. In order to overcome this problem, this paper aimed to investigate the key qualifications of customer attitudes toward imitators, as well as the affect of this attitude on the behavioral intentions toward these products.

This paper combines two conceptual models, one proposed by Huang and the other by Ang et. Al. The former considers price-quality inference, price-consciousness and risk awareness as qualifications of customer attitudes. The latter considers social and personality factors as qualifications of customer attitudes.

When comparing the above models the constructs are analogous in content: price and value consciousness, meaning the concern for paying lower prices, subject to some quality constraint. Finally Ang et. al. concluded that customers who were more value conscious had a more positive attitude towards piracy than less value conscious customers.

While Huang on the other hand, found that the price-consciousness construct was not significant. In the current research, this construct was not included. It remains, however, as an interesting relationship to be tested in future research.

In order to better explain the risk component a new construct was included in the model, which was the risk customers see when they purchase a counterfeit. This was not considered in either of the two models presented above. Risk averseness is less specific than Perceived risk because the latter deals with how much risk customer observe when anyone buys a counterfeit while the former indicates only the customer tendency to take risks.

Though some constructs had a comparative small average variance extracted and some of the indexes obtained in the model only approximate the desired level.

Only the construct risk averseness didn’t have a significant influence on attitudes. This finding is interesting if

one considers that perceived risk was the most important forecaster. A possible explanation is the difference in meaning

between them. This difference, however, should be considered in future investigations.

Since the previous research reviewed didn’t reveal the direct effect of qualifications of attitudes on behavioral intentions, 1 important contribution of the paper is also to show that the significant predictors of attitudes

presented above do not have a direct influence on customer’s

behavioral intentions. This is an evidence of the mediator role of attitude, which in turn affect behavioral intentions.

The importance of these predictors can also contribute to the policy makers of international brands who should use the apparent risk as the main appeal in the messages. The important point is that those customers who have bought a counterfeit have more favorable attitudes when compared to those who have not. For the original brands, this is a real threat. From the above results, we can conclude that this experience does not have a direct effect on behavioral intentions.

By this way, customers attitudes toward counterfeits can be influenced. Say for example, by manipulating the (negative) perceived social acceptance customer will have when buying a

counterfeit. This would be the practical suggestion of the major effect of the construct subjective norm. Another alternative could be trying to influence customer personality. The study showed that the customers who had a sense of accomplishment had more favorable attitude toward counterfiets. For more salient electronic products and also for experimenting counterfeits as an opportunity these counterfeits may be consumed. For low-income customers this could be more significant which can be investigated in future research.

From the above study we found that the customers:

do not use price as a reference of quality;

consider that the reference groups approve their decision to buy counterfeits

are not afraid that the counterfeit will not work properly.

Conclusions and suggestions:

This paper contributes to the existing literature by

extending and testing the key qualifications of the customer

attitudes toward counterfeits. It also identifies the relative

importance of each antecedent in predicting attitudes. It is

argued that these attitudes act as mediator in the relation

between the constructs considered and the behavioral

intentions. Another contribution is related to the practical

implications of this paper, when it considers the strategies

managers can use for dealing with the problem of customers

loosing loyalty in the brands and turning into counterfeits.

As suggestions for future research, one could test the model

presented here in different product categories (e.g. CDs,

DVDs, clothes, toys etc) and check for possible differences. It

is also recommended that new important variables be

included in the model, which can be done by searching for

moderators and boundary conditions. This might be the case

of customer involvement with the product, for instance. It

should be expected that when customers are more involved

with the product, he/she should be more worried about the

buying decision and have a higher risk aversion.


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