Keywords

Counterfeit Products, Consumer Decision Making, Internal Factors, External Factors.

Introduction and Literature Review

In recent years, counterfeit product purchase became a global concern due to its threat to the global economy, brand name and reputation as well as social and cultural aspect. While there have been several studies on the purchase of counterfeit products (Li et al., 2018; Quoquab et al., 2017; Tang et al., 2014; Sharma & Chan, 2016), to the best of our knowledge, only one review on this area (Eisend & Schuchert-Güler, 2006). However, it did not discuss factors underlying counterfeit products’ purchase. There is an increasing demand to understand factors underlying the purchase of counterfeit products (Toklu & Baran, 2017). The goal of this article is to provide a holistic review of factors underlying the purchase of counterfeit products.

Counterfeiting of Luxury Brands

A luxury brand is defined as a product purchased for its psychological, rather than its functional or economic value (Doss & Robinson, 2013). According to Penz & Stottinger (2012), consumers buy luxury brands for their physical attributes and/or status signified by the brand/logo (Yann, 2010; Qin et al., 2018). Consumers who focus on aesthetic features of a product are more likely to purchase counterfeit of that product. Counterfeiting can be defined as producing fake goods that are identical to the legitimate ones in packaging, trademarks, and labelling (Staake et al., 2012; Bian et al., 2016). Customers purchase counterfeit products to obtain value and status without paying more for it (Chen et al., 2019; Truong et al., 2009; Truong, 2010).

Counterfeiting has been incredibly increasing over the years and is considering as a significant global economic problem. Counterfeiting often involves breaches of law, although the penalty is not always enforced and varies from a country to another. The production of counterfeit products is more profitable and less risky than drug trafficking (Penz & Stottinger, 2012), which explains why it is a widespread practice. Consumers purchase counterfeits of luxury brands, as they represent value (Wong et al., 2019).

The purchase of counterfeit products is not limited only to developing countries, as many developed countries also has some counterfeit products, such as Australia, Europe, and USA (Gentry et al., 2006). Perez et al. (2010) highlighted that in spite of their financial status, consumers purchase counterfeit products to show an image of wealth and of belonging to a specific social class. While many of the studies on the purchase of counterfeit products were conducted in China (Yao, 2006), some were done in Kuwait (Riquelme et al., 2012), India (Bikoff et al., 2015), Australia (Phau & Teah, 2009a & b), Mexico (Perez et al., 2010), Brazil (De Matos et al., 2007), Indonesia (Triandewi & Tjiptono, 2013; Purwanto et al., 2019), Pakistan (Husanian & Akhtar, 2015), Bosnia and Herzegovina (Tati?, 2011), and the European Union (Penz & Stottinger, 2008). To our knowledge, there are only few studies that have compared cultural differences in purchasing counterfeit products. One study has compared counterfeiting in USA, Australia, and Hong Kong (Xiao et al., 2018).

Furthermore, much of the production of counterfeit products is done in China, (Sonmez et al., 2013; Yao & Lee, 2009), which then increase the amount of counterfeit products in the market, and increase the purchase of counterfeit products in China. In addition, some production of counterfeit products is also done in Taiwan, South Korea, and South America (Ritson, 2007). Producers of counterfeit goods prefer to make products that carry a high brand image and require a simple technology (Penz & Stottinger, 2008). Many companies and governments see counterfeiting as problematic to industry and market dynamics (Cordeiro, 2007), as represents a significant threat to luxury brands, damaging their reputation, reducing demand for original products, entailing additional costs to protect against infringement, and resulting in lower business revenues (Kapferer & Michaut-Denizeau, 2014; Chaudhry et al., 2005). For example, one study found exposure to counterfeit products lead to a reduction in the valuation of originals of the same category (Amar et al., 2018). Amar et al. (2018) found that the exposure to counterfeit products leads to moral disgust, which, in turn, lead individuals to avoid buying the original of these products. However, not all studies believe that the production of counterfeit products damage the originals. For example, Romani et al. (2012) argue that the widespread prevalence of counterfeit products can benefit original luxury brands. Other studies also found that counterfeiting has a mixed effect on original brands (Baghi et al., 2016).

Some studies show that there is an increasing demand for the purchase of counterfeit products. Nia & Zaichkowsky (2000) found that approximately 70% of their participants purchase counterfeit products. Some counterfeit consumers believe that fake products have the same quality and are not inferior to the originals (Tom et al., 1998), although some do not (Penz & Stottinger, 2012). It is estimated that more than 3 million individuals a year purchase counterfeit products (Howie, 2010). It is estimated that more than 20% of products sold in the Chinese and Indian (Pasricha et al., 2018) market are counterfeit. Some individuals purchase counterfeit as they feel brand companies overcharge for their products (Wang & Song, 2013). In this review, we discuss both consumer- and product-related factors underlying the purchase of counterfeit goods.

Methodology

In this study, we have conducted a review on internal (personality) and external (product-related) factors related to purchasing counterfeit products (see Figures 1 and 2). Our search strategy included the following combination of two key words from two sets. The first set included counterfeit, fake, or counterfeit products, and so on. The second set included factors, personality, product-related, quality, age, education, socioeconomic status, and other related variables. We have conducted our search using these terminologies in Google Scholar, Western Sydney University library, and also Google. Further, we have examined each paper carefully to make sure the goal of the study is related to consumer behaviour. We divided the studies we found into two classes: internal vs. external factors.

Internal (Consumer-Related) Factors

Internal factors include consumer-related factors, such as belief and personality characteristics. Risk perceptions play a serious role in consumers’ counterfeit purchasing decisions (Koay, 2018; Miyamoto et al., 2017). Purchasing and wearing counterfeit products is risky (Ting et al., 2016; Pueschel et al., 2017) discussed different kinds of risk including social, legal, physical, performance and psychological risks that affect consumers’ purchase of counterfeit products. Social risk relates to feeling ashamed if others realized that the products are counterfeit (Sharma & Chan, 2016). Legal risk is related to the legal consequences that consumers may face if caught with fake products. (Al Ramahi, 2017). Physical risk is related to health problems that may be caused by using counterfeit products (Martinez & Jaeger, 2016). Performance risk is related to the durability of the counterfeit product (Riquelme et al., 2012). Psychological risk is related to the feeling of guilt due to the purchase of counterfeit items (Liao et al., 2010; Viot et al., 2014; Elsantil & Hamza, 2019). While the feeling of guilt due to purchasing of counterfeit products is connected to the psychological risk (Viot et al., 2014; Elsantil & Hamza, 2019).

Some have argued that moral values play a role in purchasing counterfeit products. For example, morality may inhibit consumers from buying counterfeit products (Nagar & Singh, 2019). Some consumers will not purchase counterfeit products as this is unethical behaviour. However, the purchase of a counterfeit is often not considered as a crime, consumers who buy counterfeit products believe that they are implicitly endorsing an illegal activity. On the other side, Riquelme et al. (2012) asserted that many consumers do not consider the purchase of a counterfeit as unethical. They buy counterfeit products, due to their anti-big-business ideologies (Wang & Song, 2013). Further, some individuals practice moral decoupling to solve the dilemma of choosing between buying an illegal counterfeit product vs. status and money saving, and end up purchasing counterfeit products (Orth et al., 2019). However, one study conducted in Kuwait found that many counterfeit consumers did not perceive themselves as unethical (Riquelme et al., 2012), suggesting that engaging in moral decoupling in possibly culture-specific.

Several studies have investigated the impact of demographic and personality factors in relation to purchasing counterfeit products such as age, religiosity, morality, educational level, and social class (Pratt & Zeng, 2019; Viot et al., 2014; Kwong et al., 2003 & 2009; Swami et al., 2009; Eisend & Schuchert-Güler, 2006).

Some studies found that younger consumers are more likely than older individuals to purchase counterfeit product (Cheung & Prendergast, 2006a; Eisend & Schuchert-Güler, 2006). In addition, Craft (2013) highlighted that there is a positive relationship between consumers’ educational level and their ethical behaviour. Therefore, consumers who have a higher level of education may be more unlikely to purchase counterfeit products. Tolkach et al. (2017) asserted that consumers who have bachelor’s degree or higher are more likely to perceive purchasing counterfeit products as unethical.

Related to the gender of consumers, Carpenter & Lear (2011) and Wah-Leung & Prendergast (2006) have found that gender affects the ethical beliefs toward purchasing counterfeiting. More specifically, they have asserted that females are more likely than males to purchase counterfeit goods. However, some other studies reported opposite results (Cheung & Prendergast, 2006b; Moores & Chang, 2006). Being materialistic was also found to be related to purchasing counterfeit products (Davidson et al., 2019; Nagar & Singh, 2019). Some other factors are related to personality and individual differences among individuals. For example, it was found that novelty seeking individuals are more likely to purchase counterfeit products (Phau et al., 2009; Randhawa et al., 2015; Tang et al., 2014). Several studies also found that impulsive individuals are more likely to purchase counterfeit products (Sondhi, 2019; Musnaini et al., 2015), possibly because impulsive individuals will be tempted more by features of the products and will not consider long-term features, such as durability.

In addition, religiosity was found to be related to the purchase of counterfeit products. Studies highlighted that the more consumers are religious, the less likely they purchase counterfeit products (Casidy et al., 2016; Souiden et al., 2018). While, Kidwell et al. (1987) asserted that there is no relationship between religiosity and ethical judgments in business. As for socioeconomic status and income level, some studies suggest that individuals with low income tend to purchase counterfeit products (Viot et al., 2014).), but other studies suggest that individuals with high income (e.g., Kuwait and United Arab Emirates) are more likely to purchase counterfeit products (Cheung & Prendergast, 2006a; Riquelme et al., 2012; Pueschel et al., 2017). For example, individuals with high income in Singapore were found to purchase counterfeit products (Teah & Phau, 2008). Therefore, the purchase of counterfeit products may not be limited to individuals with low socioeconomic background. Several studies also found that past history of purchasing counterfeit products is predictive of engaging in future purchase of counterfeit products, as reported in several countries including China and Korea (Yoo & Lee, 2009).

Studies have also reported a social dimension to the purchase of products in general (Dixit et al., 2019; Hernandez-Ortega, 2019; Kesgin & Murthy, 2019; Serto?lu & Kavak, 2017; Tanford & Montgomery, 2015), including counterfeit products. While social factors may seem to be external factors, they have to do with how the individual perceives social information, and thus we decided to include them in this section. For example, some individuals purchase counterfeit products if their friends wear luxury brands (Jiang & Cova, 2012). Albers-Miller (1999) found that having friends who purchase counterfeit products increases the chance to buy counterfeit products. Ahmed (2016) argued that consumers buy counterfeit products to copy and imitate others. It is also important to know that the desire to appear as belonging to some social class pushes consumers towards buying counterfeit products (Purwanto et al., 2019); so, their focus is often on the brand and less on the quality of the product. In a study conducted in Pakistan, Husnain and Akhtar (2015) found that some consumers purchase counterfeit products in order to appear unique (da Cunha Brandão & Gadekar, 2019). One recent study found that several social factors play a role in the purchase of counterfeit products including social approval, peer influence, and sense of belonging (Quach & Thaichon, 2018).

Many individuals purchase counterfeit products to gain a high status in their social environment (Jiang & Cova, 2012) and signal some social identity (Amaral & Loken, 2016; Berger & Heath, 2008). It is also important to know that the desire to appear as belonging to some social class pushes consumers towards buying counterfeit products (Purwanto et al., 2019); so, their focus is often on the brand and less on the quality of the product. Chan (2008) claimed that individuals “use public symbolic goods to express their location within the social hierarchy.” In a study conducted in Pakistan, Husnain and Akhtar (2015) found that some consumers purchase counterfeit products in order to appear unique (da Cunha Brandão & Gadekar, 2019). One recent study found that several social factors play a role in the purchase of counterfeit products including social approval, peer influence, and sense of belonging (Quach & Thaichon, 2018). In addition, as culture affect persons’ ethical judgments and risks perceptions, it found to have a great influence on consumers’ purchase of counterfeit products (Eisend & Schuchert-Güler, 2006).

External (Product-Related) Factors

External factors related to the purchase of counterfeit products, including product-related factors and place of purchase. Several studies considered how product-related characteristics impact purchasing counterfeit products (Brandão et al., 2019; Quach & Thaichon, 2018; Kassim et al., 2013). Studies have found that perceived product quality and perceived durability of products after purchasing them plays a key role in purchasing products in general (Kassim et al., 2013; Phau et al., 2009). As the quality of a counterfeit product increases, it is more justifiable for consumers to increasingly buy more of them (Staake et al., 2009). Importantly, one reason for the increasing demand for counterfeit product is that their quality and perceived use life has been increasing over the years (Nill & Shultz, 1996). For example, because of the tough competition between the quality of counterfeit and original brands, Louis Vuitton has withdrawn from the Italian market, as many consumers opted for purchasing counterfeit products (Shams, 2015).

The difference between the price of the original and counterfeit product were also found to explain preference for purchasing counterfeit products (Kapferer & Laurent, 2016; Hadiwijaya, 2015; Staake et al., 2009). It has been argued that luxury brands should lower their prices to become more attainable (Truong et al., 2009). However, some argue that this may work against luxury brands, as their very expensive prices (prestige-pricing strategy) is argued to be a business strategy to keep them rare and thus more valuable. Studies also found that the more similar the counterfeit product is to the original products; the more likely consumers will purchase it (Yao, 2006; Doss & Robinson, 2013). In short, consumers tend to purchase a counterfeit product if it is very similar, but much cheaper, than original products.

The purchase of counterfeit products is also related to product type and risk associated with them (counterfeit phone vs. jacket). It seems that consumers are willing to purchase counterfeit products, given that they will minimise risk associated with them. For example, a fake phone may stop working in a few days and disrupt communication, but a fake shirt is still functional. The most popular counterfeit market is clothing, watches, and jewellery, respectively (Pasricha et al., 2018). While risk taking is a personality feature, risk taking is related to type of product, which is then considered a product-related feature.

In addition to the above-described product-related factors, there are some other external factors related to the purchase of counterfeit products, including place and time of purchase. According to Office of Strategy, Policy and Plans (2020), and Cademane et al. (2012), consumers surveyed at flea markets and during holidays were likely to buy counterfeit products, but consumers surveyed at malls were less likely to buy original products. The reason consumers buy more counterfeit products during a holiday could be related to less planning and/or positive mood (Eisend & Schuchert-Güler, 2015). Encountering a cheap fake product will then encourage purchasing as during holidays, consumers may not think about use life or durability of the product. Additionally, studies highlighted that the more accessible counterfeit products are, the more people will purchase them (Quach & Thaichon, 2018). This is then similar to other things like food, alcohol, and drugs, as increased accessibility of them lead to more use (Moustafa, 2020, Moustafa et al., 2020). Availability would be the main reason for the heavy online purchase of counterfeit products (Brandão et al., 2019).

Discussion and Implications

The current study aims at review both internal and external factors that affect the purchase of counterfeit products. However, most, if not all, studies did not investigate the interaction between internal and external factors in the context of purchasing counterfeit products. The current study suggests that some internal and external factors may interact and together impact the purchase of counterfeit products. For example, it is possible that novelty seeking and impulsive individuals (internal factors) are more likely to purchase counterfeit products while on holiday (external factors). Similarly, as discussed above, risk taking individuals (internal factors) may still minimize risk and purchase mostly products that confer less risk such as clothes but not devices or phone (external factors). These assumptions should be investigated in future studies.

As discussed above, the consumption of counterfeit product is increasing over time in both developing and developed countries (Kapferer & Michaut, 2014). Accordingly, governments and businesses alike seek to minimize the production of purchase of counterfeit products. Based on the review of literature on counterfeit products, the current study reveals a number of suggestions to reduce the purchase of counterfeit products. Studies suggest that managers should focus more on highlighting risk associated with the purchase of counterfeit products, such as other consumers may know clothes are counterfeit (social risk), counterfeit clothes lead to health problems (physical risk), or clothes do not last long (performance risk). Managers should stress the dangerous of these variables when promoting for original brands. In addition, managers should emphasize the psychological dangers that buyers may face if they buy counterfeit products, such as the possibility of becoming ashamed if their friends and family discover them. Managers should also highlight the idea that purchasing counterfeit products is illegal and morally wrong. Moreover, governments should enforce new laws that penalize the production and purchasing of counterfeit products. The current review also revealed that reducing the price of original products may encourage individuals to buy them. The small price difference between counterfeit and original products would deter potential buyers from taking a chance when buying counterfeit products. It is argued that doing so will increase the purchase of original products (De Matos et al., 2007; Tangn et al., 2014).

One other important aspect that businesses can capitalize on is relationship marketing (Sharifi & Esfidani, 2014), which is related to building and keeping a relationship between businesses and consumers (Xiao & Nicholson, 2010). Given that the production of counterfeit products is illegal, companies should highlight that counterfeiters cannot build relationships with consumers, unlike original brands do. Such techniques can increase the purchase of original products. For example, allowing consumers to return a product is an advantage of purchasing original products, as consumers may experience regret when they purchase a fake product that does not last long. Allowing the return of products prevent consumers from experiencing regret (Al-Adamat & Al-Adamat, 2019; Elsantil, 2020). Using relationship with consumers, businesses should stress original products’ use life and quality, as these may increase their consumption, and importantly these are not key features of counterfeit products. Along these lines, one recent study suggests that making consumers aware of their own value lead to reduction in purchasing counterfeit products (Wang et al., 2020). As discussed above, individuals who purchase counterfeit products do not think about use life as this is not a conspicuous feature. They may perhaps focus more on product similarity to original and low price. Advertisements by original brands should stress the importance of life use, and not only the looks of their products.

By using relationship marketing, it is recommended that managers consider the psychological factors that lead to purchasing counterfeit products. Managers should study the prevalence of purchasing counterfeit products as well as if consumers are satisfied with price, quality of original products, relationship with the company, or factors why they purchase original products. Mangers should also investigate if consumers of both counterfeit and original products experience cognitive dissonance. As cognitive dissonance occurs more with the purchase of counterfeit products (Sharma & Chan, 2016; Eisend & Schuchert-Güler, 2015), managers should use these factors to suggest the importance of original products. For example, if a customer experiences cognitive dissonance related to low price but low use life of a counterfeit product, then managers should stress the importance of high use life of original products, which are likely not to lead to cognitive dissonance.

Some other studies suggest that managers should focus more on highlighting risk associated with the purchase of counterfeit products, such as other consumers may know clothes are counterfeit (social risk), counterfeit clothes lead to health problems (physical risk), or clothes do not last long (performance risk). Along these lines, Poddar et al. (2012) also found that the company’s obligations towards the community and consumers increases consumers purchasing their products and do not buy counterfeit products of their brands. This suggests that companies should participate more in building connections with the communities and not only individuals. These relationships will likely increase the purchase of original products and decrease the purchase of counterfeit products.

Future Directions

Future research should discuss whether relationship marketing methods can decrease the purchase of counterfeit products as well as increase brand loyalty. As mentioned above, research should investigate whether advertisements that target life use and quality of a product (and do not only focus on the status signified by the brand/logo) (Silverstein & Fiske, 2003; Yann, 2010; Qin et al., 2018) would decrease the purchase of counterfeit products and increase brand loyalty. Further, future research should also investigate whether allowing or improving return policies would increase the purchase of original products. Further, providing additional information may increase the purchase of original products. In sum, companies can capitalise on relationship marketing techniques to highlight feature of original products, including return policies, life use, key information about the product. By highlighting these features, consumers will be able to differentiate between original and counterfeit products.

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