Asia Pacific Journal of Marketing and LogisticsUnderstanding counterfeit consumptionFelix Tang Vane-Ing Tian Judy Zaichkowsky

Article information:To cite this document:Felix Tang Vane-Ing Tian Judy Zaichkowsky , (2014),"Understanding counterfeit consumption", Asia PacificJournal of Marketing and Logistics, Vol. 26 Iss 1 pp. 4 - 20Permanent link to this document:http://dx.doi.org/10.1108/APJML-11-2012-0121

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Understanding counterfeitconsumption

Felix TangDepartment of Marketing and Management,

Hang Seng Management College, Shatin, Hong Kong

Vane-Ing TianSchool of Business and Administration,

The Open University of Hong Kong, Kowloon, Hong Kong, and

Judy ZaichkowskyBeedie School of Business, Simon Faser University, Vancouver, Canada

Abstract

Purpose The purpose of this paper is to create a framework for broadly understanding categoriesand motivations behind purchasing different counterfeit products.

Design/methodology/approach Focus groups provided qualitative data from 509 counterfeitpurchases incidents by 95 informants.

Findings The most frequently mentioned motivation was the utility (35 percent) received from thegood over the genuine article. The second, but negative, motivation was the perceived risk involved inthe purchase (22 percent), whether it is physical or social risk. Social norms, confusion, and ethicalconcerns each represented about 10 percent of the motivations toward the purchase of counterfeititems. The least mentioned motivations to purchase, at less than 4 percent each, were culture, habit,and desire to explore. These factors were evident across a variety of 15 product categories, headed byelectronics, such as DVDs and computer software.

Practical implications Through targeting negative motivations, such as perceived physical andsocial risks, businesses can devise strategies from a demand side perspective to overcome the problemof counterfeit consumption.

Originality/value Qualitative responses, over many product categories, provide a uniqueoverview to the perception of counterfeit consumption. The finding that consumer ethics may dependon whether the activity benefits the society as a whole is worthy of additional discussion. The authorslearn that when consumers thought their counterfeit consumption caused little or no harm, they do notsee much ethical concern in their actions.

Keywords Cultural influences, Perceived risk, Behavioural psychology, Brand confusion,Consumer ethics, Counterfeit

Paper type Research paper

IntroductionPast research on counterfeit consumption has mainly focused on luxury goods(Wilcox et al., 2009; Phau and Teah, 2009; Commuri, 2009) and on pirated counterfeitmedia and software (Shoham et al., 2008). These studies generally try and evaluate theconsumers ethical versus practical motivations to purchase counterfeit articlesthrough surveys (Davis et al., 2012; Chaudhry and Stumpf, 2011). There are fewqualitative studies which look in-depth to accepting or rejecting counterfeit articles,such as Perez et al. (2010) and their study of fake handbag purchases in Mexico.

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1355-5855.htm

Received 22 November 2012Revised 29 July 2013Accepted 29 August 2013

Asia Pacific Journal of Marketing andLogisticsVol. 26 No. 1, 2014pp. 4-20q Emerald Group Publishing Limited1355-5855DOI 10.1108/APJML-11-2012-0121

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What is missing from the literature is a broad understanding of consumersmotivations to purchase such goods, and more importantly were they aware the goodswere counterfeit or did they believe they were purchasing original goods (Fejes andWilson, 2012).

The consumption of fake luxury goods has been repeatedly found to be viewed asfun and harmless by the consumer (Perez et al., 2010; Nia and Zaichkowsky, 2000).An understanding of the other factors that drive the consumption of a broader range offraudulent products would be helpful to international marketers to prevent lostrevenues due to counterfeits by targeting the specific reason or value in the purchase offake goods.

This paper addresses gaps in the literature by investigating the following:. why people purchase and consume counterfeits over a broad range of goods;. what are the major and minor motivations in the purchase decision; and. how can these motivations be targeted to reduce counterfeit purchases.

The goal of this research is to help businesses devise strategies from a demand sideperspective to overcome the problem of counterfeit purchases by consumers.

Selected literature reviewMost consumers do not differentiate among counterfeiting, piracy, and imitation, anduse the term counterfeits loosely to label intellectual property infringing products ingeneral (Hoe et al., 2003). The present research adopts this consumer perspective andthe term counterfeit is used in a broad sense that encompasses copyright, patent, ortrademark infringing products. Furthermore, since the purpose is to examinemotivational issues relating to counterfeit consumption, the research focuses onnon-deceptive counterfeit consumption, where consumers are collaborators of thecounterfeiters and purchase counterfeit goods knowingly (Prendergast et al., 2002).

A deeper look at counterfeit consumptionThe literature on counterfeit consumption suggests that while consumers buycounterfeits for different reasons, the overwhelming factor that influences purchase isdistinct price advantage over their genuine counterparts (Moores and Dhaliwal, 2004;Wang, 2005). Even those who preferred to buy legitimate products found the low pricesof counterfeit goods attractive (Tom et al., 1998). However, consumers might also lookbeyond the immediate economic benefits of lower price when deciding to purchasecounterfeits. These factors include ability (e.g. tech-savyness in pirating music;Shanahan and Hyman, 2010); cultural values (e.g. materialism; Cheung andPrendergast, 2006); brand personality (e.g. competence, excitement; Bian andMoutinho, 2011); attitudes towards the brand/corporation (Penz and Stottinger, 2008;Wang, 2005); attitude towards the act of counterfeiting/piracy (Taylor et al., 2009;Wee et al., 1995); and social norms (Chiou et al., 2005).

While it is interesting to identify what makes consumer choose to engage incounterfeit consumption, it is even more important to take a deeper look atunderstanding the factors that reduce/lower counterfeit consumption since a majorobjective of research in this area is to solve the problem of intellectual propertyinfringement from a demand perspective. Perceived risk and perceived ethicality are

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two factors consistently found to be influential in lowering consumer intention toengage in counterfeit consumption.

Perceived risks. There are two types of perceived risk involved in purchasingcounterfeit items. One is the belief that the product as it is made or is consumed haspotentially negative physical consequences. An example of physical risk may be thedanger of leaking batteries from electrical equipment. The other is social risk, wherethe consumption or purchase of the counterfeit will cause the individual to lose socialcapital from peers or society. When risk is activated consumers are more motivated toavoid negative consequences, whether social or physical, than to maximize utility(Mandel, 2003).

Some consumers purchase counterfeit luxury brands for their social-adjustivefunction (e.g. to express themselves and/or to fit in) (Wilcox et al., 2009). Thus, if thesocial group the consumer aspires to disapprove of such consumption, the perceivedsocial risk involved in the purchase of counterfeit product lowers consumer intention topurchase counterfeits (Miyazaki et al., 2009). However, Sinha and Mandel (2008) foundthat increasing social risks and/or consequences of such consumption may not workfor consumers who have high tolerance for risk (i.e. high optimal stimulation level).

Perceived ethicality. Ethicality is an important concept in society and mostindividuals are taught to behave ethically, as ethical individuals are praised andunethical individuals are publicly condemned and chastised. Vitell and his colleagues(Vitell and Muncy, 2005; Vitell, 2003) suggested several criteria that consumers use toevaluate whether a consumption behavior is ethical or not:

. actively/passively benefiting from illegal activities;

. benefiting from deceptive (or questionable, but legal) practices; and

. perceived harm caused.

Empirical evidence finds consumers who purchase counterfeits do not feel guilty andlegally accountable for buying or possessing knockoffs or counterfeits for domesticconsumption (Ang et al., 2001; Phau and Teah, 2009).

Consumers may even hold a double standard in that they think selling counterfeitsand knockoffs is unacceptable (thus it is the seller who is at fault), but buying them isperfectly social and morally legal (Zaichkowsky, 2006). Consumers may reduce theirfeeling of guilt and deflect the locus of fault to the counterfeiters for the sales or to thegenuine business for the high price charged for originals (Cordell et al., 1996), orinconvenience of shopping locations (Wee et al., 1995). Ang et al. (2001) found thatconsumers rationalize their purchase of pirated CDs because the entertainers still earnhigh incomes. Nunes et al. (2004) found that the cost structure of the product (such asthose with high fixed cost but low variable cost) influence consumers purchaseintention of pirated software.

Despite a seemingly large pool of research on counterfeit consumption, manyresearchers note that the most important work needing to be done is to gain an in-depthunderstanding of the consumer behavior behind the consumption and purchase ofcounterfeit products (Penz et al., 2009; Chaudhry and Stumpf, 2011). Suchunderstanding may not be achieved by surveys alone. Qualitative methods are animportant consideration. The extant literature on counterfeit consumption is currentlydominated by survey-based quantitative studies with some exceptions (Hoe et al., 2003;Eisend and Schuchert-Guler, 2006; Bian and Moutinho, 2011). Furthermore, previous

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studies examined only a few antecedents of counterfeit consumption in specificcontexts:, e.g. Hoe et al. (2003) on fashion counterfeits; Cheung and Prendergast (2006)on materialism and conformity; and Bian and Moutinho (2011) focused brand influence.Instead of focusing on specific contexts, this paper aims to provide qualitative supportof current antecedents and to generate new insights of counterfeit consumption withina common framework to provide a comprehensive understanding of the phenomena.

MethodThe research investigation resembles a triangulation approach in an exploratorystudy, in that two sets of independent coders were used to verify classifications ofresponses from a large group of individuals. Thirteen focus groups, with six to eightstudents per session, were conducted in a large university in Hong Kong. Hong Kong isa valid context to examine counterfeit consumption because Hong Kong is aninternational city where counterfeit consumption is pervasive (Special 301 Report bythe Office of the United States Trade Representative, 2010). It is a free-port where mostgenuine products are widely available; meanwhile, it is not difficult to find counterfeitproducts. Furthermore, Hong Kongs emerging economics status combines with theinfluence of both western (due to its colonial past) and oriental (particular Chinese)values makes it a unique location to study the phenomenon.

Ninety-five informants (62 percent female) ranging in age from 18 to 24 received acourse credit for their participation. Thirty of the informants were not born in HongKong; they were exchange students from Mainland China studying in Hong Kong forless than one year. Therefore, the groups provided an opportunity to compareresponses from Hong Kong locals and those from Mainland China (Zhejiang et al.).

While the sample is not representative of the population, they do represent activeconsumers of aspirational fashion goods, electronics and fashion accessories, which arefrequently counterfeited. In each session (approximately one-two hours), informantswere motivated and probed by experienced moderators to share their experience ofeveryday consumption and counterfeit consumption, if any. The focus groups werevideotaped and then transcribed, so as to be accurate in the documentation.

We followed the principles in grounded theory and use weft QDA, a tool thatorganized text into thematic groups with character-level coding (i.e. categoriesorganized in a tree structure) to support our coding and analysis. Specifically, twocoders[1] were independently instructed to identify incidents of counterfeitconsumption (i.e. purchase or use of a counterfeit). The resulting incidents ofcounterfeit consumption were classified into the following 15 product categories:computer software (25.2 percent); audio/visual media (21.4 percent); bags/handbags(20.4 percent); clothing/shoes (14.5 percent); books (5.5 percent); daily commodities(3.1 percent); accessories (2.8 percent); toys (2.8 percent); food (2.0 percent); watches(1.4 percent); electronic equipment (1.2 percent); cosmetics; eyewear; medicine; andmusical instruments (all ,1 percent). In total, 509 counterfeit consumption incidentsacross 15 general product categories were identified (Table I).

Then, the two coders discussed and grouped the incidents into motivational factorsbased on the criterion of similarity within factors and dissimilarity between factors.We adopted Strauss and Corbins (1990) process and allowed the data to direct us.Specifically, the authors interpreted the data in each group and labeled each groupindependently to reflect the theories and empirical generalizations that may explain the

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phenomena. We also identified some potential relationship between groups (i.e. axialcoding) and reviewed the full transcripts to propose an integrated frameworkexplaining counterfeit consumption (i.e. selective coding). The process is iterative untilno further insight can be gained. The output was a list of nine motivational factorsassociated with purchasing intellectual property rights infringing products.

Afterward, two new coders (recruited and trained as before), independently recodedthe incidents into the nine factor categories. The Cohens Kappa inter-coder reliabilitywas .91 and inconsistencies in classification were resolved via discussion. Utility(35.2 percent), risk perception (22.0 percent), social influence (12.3 percent), confusion(10.9 percent), and ethical perception (8.6 percent) were the most frequently mentionedfactors that influence the consumption of counterfeits. Habit (1.6 percent), desire forexploration (1.9 percent), local interest (5.3 percent), and cultural influence (4.3 percent)were mentioned less frequently (Table II). These nine factors provide a multi-perspective and overarching framework to understand the consumer motivationsrelated to the consumption of counterfeits.

FindingsUtility (35 percent)The number one reason for knowingly purchasing counterfeit items, especially withprestige and luxury items, was one of utility: The consumer evaluated the benefitsassociated with the consumption and made the purchase when such consumption wasbeneficial to oneself. The counterfeit was a carefully evaluated transaction and theconsumer balanced the perceived benefits against a reference point (i.e. the authenticproduct). This also fits the marketing concepts of acquisition utility and transactionutility (Thaler, 1999).

Hong Konginformants

(n 65)Mainland

informants(n 30)

All informants(n 95)

Product category No. % No. % No. %

Computer software 92 26.7 36 21.8 128 25.1A/V media 93 26.9 16 9.7 109 21.4Bags/handbags 68 19.7 36 21.8 104 20.4Clothing/shoes 36 10.4 38 23.0 74 14.5Books 20 5.8 8 4.8 28 5.5Daily commodities 4 1.2 12 7.3 16 3.1Accessories 9 2.7 5 3.0 14 2.8Food 4 1.2 6 3.6 10 2.0Toys 7 2.1 2 1.2 9 1.8Watches 6 1.8 1 0.6 7 1.4Electronic equipment 3 0.9 3 1.8 6 1.2Cosmetics 1 0.3 0 0.0 1 0.2Eyewear 1 0.3 0 0.0 1 0.2Medicine 0 0.0 1 0.6 1 0.2Musical instruments 0 0.0 1 0.6 1 0.2Total 344 100 165 100 509 100

Table I.Product category ofcounterfeit consumptionvaries across groups

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Acquisition utility is a measure of the value of the good obtained relative to its price:

I dont buy counterfeits all the time [. . .] After all, a counterfeit is just another product tochoose from [. . .] I buy it because of its superior value relative to price (Male, 24).

Transaction utility is shown when a consumer acquires a product at purchase priceless than his or her reference price:

A genuine Arsenal soccer jerseys cost several hundred (Hong Kong) dollars. Its imitations,which are very similar, are ten times cheaper. I only wear it to play soccer. Why should I buyan expensive one? Its better for me to buy the imitation (Male, 18).

While price was a leading factor contributing to acquisition and transaction utility, theextant literature seems to overestimate its influence and overlook another determinantof utility. It is also not uncommon to find evidence which suggests that money is notthe issue, the authentic ones [referring to some difficult to get collectable Monchhichidolls] were simply not available (Female, 23). Another informant said that:

[. . .] pirated movie often arrived much earlier than the movie in theaters. We have to wait fora long time if we want the authentic ones. As it is faster, people choose the pirated ones(Female, 19).

From a transaction utility perspective, having a counterfeit is better than havingnothing.

Besides price and availability, convenience and personalization were two additionalaspects which emerged from the data to create utility, and drive consumers to purchasecounterfeits. An informant in our focus group commented on the distribution of piratedsoftware that, it is so convenient. There are around 20 or more such shops in onestreet. So it is very easy to buy these products (Female, 18).

Some counterfeiters are willing to customize products for their customers, and suchpersonalization increases the acquisition utility of the counterfeits over the originals.One informant described her experience with tailors who are willing to copy designerclothing, you get to choose the style, the color, and the fabrics [. . .] It has the look of adesigner piece and matches your personal taste perfectly (Female, 26). Anotherinformant said:

Hong Konginformants

(n 65)Mainland

informants(n 30)

All informants(n 95)

Factor No. % No. % No. %

Utility 112 32.6 67 40.6 179 35.2Risk 76 22.1 36 21.8 112 22.0Social influence 42 12.3 22 13.3 64 12.6Confusion 38 10.9 11 6.7 49 9.6Ethicality 37 10.8 7 4.2 44 8.6Local 12 3.5 15 9.1 27 5.3Habit 6 1.6 3 1.8 9 1.8Desire of exploration 6 1.9 1 0.6 7 1.4Cultural difference 15 4.3 3 1.8 18 3.5Total 344 100 165 100 509 100

Table II.Reasons behind

counterfeit consumptionvaries across groups

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[. . .] sometimes, the imitation is even better than the genuine product. I have an imitation bagthat comes with a lot of accessories that allow you to personalize the bags [. . .] The designwas also good, its just too bad that it added the agnes b logo and makes it a counterfeit(Female, 21).

In summary, the data suggests that many counterfeiters offer extra transactional andacquisition utility to their customers beyond the price advantage.

Risk perceptions (22 percent)The consumer evaluated the risks associated with the consumption and made thepurchase when the perceived risk was personally acceptable. In general, risk can ariseduring the purchase of the product and also arise during the consumption of theproduct. For purchasing risks, legal enforcement is the most directly related factor. Forexample, Albers-Miller (1999) found perceived criminal risk reduced the purchase ofillicit goods because fear of a criminal penalty deters aberrant behavior. An informantin our focus groups described his experience of purchasing a pirated game DVD in ashop as following:

When I got inside, I feared of being caught. I dont know what would happen if the inspectorsfrom the Customs and Excise Department suddenly came in. I dont know if I will be on thenews if I get caught (Male, 18).

For consumption risks, the most directly related factor in this category is productquality. One informant in our focus group told us:

My friend bought an MP3 player that imitated IPOD. However, it got electric leakage when hetried to charge it. Thats really too dangerous, I would never buy an imitation electrical device(Female, 21).

For some product categories, such as pharmaceutical products, product quality is veryimportant and the risk of consuming a substandard knockoff drug can be lifethreatening. I would never use a counterfeit cosmetic knowingly. Have you watchedthe news report? Some (samples of counterfeit cosmetic) have mercury content severalthousand times over the safety standard (Female, 22). However, for other productcategories, such as clothing, consumption risk is much lower because the productquality of the imitator is either not important or perceived to be similar to the genuineproduct. I only wear it [a counterfeit soccer jersey] once a while; I should be fine(Male, 24).

Social risk is another kind of consumption risk associated with reference groups. Ifthe reference group does not approve of the consumption of imitation products, theusers run the risk of being ostracized. An informant in our focus group said that:

For clothes and bags, you use the brand for your own pride. If you bought an imitation,people will think that you had no money but want the pride. They will then laugh at you(Female, 21).

Another informants precaution behavior is even more extreme:

I dont want my friends to know the handbag is a fake [. . .] I use it only when we go outat night. You know, it is more difficult to spot out it is a fake [. . .] My strategy works(Female, 21).

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In summary, consumers consider the risks associated with the purchase andconsumption of counterfeit products. If perceived risk related to the imitation productis high, consumers are likely to forgo buying the product and discontinue using it.These risks include health and safety, social embarrassment, criminal association, andthe risk of product loss.

Social influence (13 percent)The consumer was influenced by the opinion of peers, family, and perceived acceptedbehavior on the consumption. When deciding whether to consume counterfeits or not,many consumers look beyond the immediate benefit and consider the social ideals andstandards imposed by others (Bearden et al., 1989). I dont photocopy textbooks [. . .]What would the professor think if he found out that I am using pirated textbook?(Male, 20).

Consumers are more likely to act in accordance with the social norm when in publicthan when alone (Chan et al., 1998). Evidence of relaxation of ethical standards whenalone was expressed by several informants:

I think it is okay to use pirated software because we just use them at home. Its not like usingimitation bags. You will be judged by many people on the street about whether you are usinga genuine one or an imitation bag. For pirated software, you dont need to worry about beingjudged (Female, 20).

However, research on compliance, obedience, and conformity suggests that socialinfluence can lead people to break rules as well as follow them (Conger, 1980):

I bought the genuine Microsoft Office software for around HK$400 [. . .] Many classmates saidthat I am stupid. They said I could have just bought a pirated version instead. They thinkthat it is acceptable to buy pirated computer software and only stupid people will buy thegenuine ones [. . .] I used pirated software since then (Female, 19).

Confusion (10 percent)The consumer was confused or unsure about the true identity of the product duringpurchase and had difficulty in distinguishing the genuine product from thecounterfeit. I was confused by the counterfeit at the time of the purchase; it was verysimilar to the authentic one (Female, 23) represents a common response from theinformants across the groups to the question of why they purchased counterfeits.Several informants echoed that brand confusion occurred When the genuine one isnot available for direct comparison, it is sometimes difficult to spot the counterfeits(Male, 23).

Even knowledgeable consumers may be confused with the origin of products. Manyinformants complained that it is difficult to tell the authenticity of a product:

Some visual/audio shops claimed that they are selling genuine products. Some shelves insidethe shops seemed to be selling genuine products. However, some other seemed to be sellingpirated ones [. . .] As most products are genuine but some are pirated, they look similar andpriced the same, you cant tell [which one is counterfeit] most of the time (Female, 19).

Another informant told the group that some so-called international editions are reallycounterfeits; the contents are the same but of lower quality. I didnt think those wereunauthorized copies when I bought them (Female 20).

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The underlying reason of why product similarity leads to brand confusion washinted at by the experience of two informants. The shops looked normal, price wasaverage, the design seemed okay, so I thought it must be a real one (Male, 21). Anotheradded:

I know the brand very well, but I dont look at the brand name and check it letter by letter(referring to the misspelled but confusingly similar brand name) [. . .] it would be soembarrassing [if I check the brand name letter by letter] (Male, 22).

This observation suggested that consumers rely on a few heuristics and situationalcues to judge the authenticity of a product: for example, if the product itself and thesurroundings were similar or looked right, consumers did not question the origin ofthe product.

Ethical perceptions (9 percent)The consumer made an ethical judgment and made the purchase when suchconsumption was perceived as not unethical. Purchasers of counterfeits and knockoffsblamed the original manufacturers for making the originals unavailable (due to limiteddistribution channel) or unaffordable (due to premium pricing strategy). You [theoriginal manufacturer] dont make it [the genuine product] available [. . .] I dont think itis unethical to buy the counterfeit (Male, 23). One informant accused Microsoft tojustify the purchase of pirated software, First, you dont have the money. Second,Microsoft had monopolized the market then charging high price for its products; this isbad for the world (Male, 19).

Consistent with Cordell et al. (1996), some blame the counterfeit manufacturers forproducing the items and giving them the choice. It is those who manufactured them[the counterfeits] who are unethical; I am just buying what is available in the market(Female, 22). Second, many informants hold a double standard in that they thinkselling counterfeits and knockoffs are illegal, but buying them is legal:

If we take away something from the supermarket, we know that we are stealing. However,when we are buying imitation or pirated products, we paid for it. Therefore, I dont feel like Iam stealing something (Male, 19).

Third, some believe that imitation products do not cause harm to the originaltrademark holders because the value of their transaction is insignificant. When youare buying Microsoft Windows, you would think that he [Bill Gates] is already one ofthe richest people in the world. One or two pirated software wont hurt his income atall (Female, 19), the others nodded. Others argue that they are not going to purchasethe originals anyway. I wont buy a Louis Vuitton because it is way too expensive, sothe company really lost nothing [when I bought the counterfeit] (Female, 22).

Informants suggest a fourth factor, as some saw counterfeiting beneficial to societyby allowing those who cannot afford the authentic products an alternative choice:

I bought a HK$20 pirated CD. However, I wont buy the HK$160 genuine CD anyway.Therefore, there is little, if any, loss to the genuine CD makers. I just benefit myself and hurtno one at all. The society gains as a whole (Male, 21).

This notion is consistent with the Chinese philosophy of sharing. Furthermore, oneinformant even sees how an original manufacturer might benefit from thecounterfeiters:

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There are Hello Kitty clocks, candle-sticks, ovens, even toilet papers [. . .] Sanrio (the licensorof the Hello Kitty character) can get some creative ideas and know what works and whatdoesnt from these counterfeits (Female, 19).

Cultural influence (4 percent)The consumer was influenced by the traditional Chinese cultural value that copyingand imitation is reasonable and acceptable. Western philosophy values creativity andstudents are taught to respect the works of others and avoid copying and plagiarism.Meanwhile, Asian philosophy values the importance of sharing, where ones expertiseshould be shared to maximize the benefit to the society as a whole (Ang et al., 2001).As exemplified in the Chinese proverb he that shares is to be rewarded; he that doesnot, condemned (Swinyard et al., 1990, p. 656). We all learn to copy the good things;good things get copied, thats nature (Male, 20).

When growing up, Asian children are expected to learn, imitate, and copy thegood behaviors of siblings and the knowledge of their teachers. In Asian calligraphy,copying a masterpiece is historically considered an art form in its own right. We arebrought up in an environment where copying is acceptable and encouraged (Female,18); and this comment provides the best support to the above view.

Although the data supports the notion that the Asian value of sharing mayencourage counterfeit consumption, a confounding factor, the lack of understandingproper intellectual property rights, becomes apparent:

What parents did will pass to the next generation. We had often copied books in the past, butnow the intellectual property rule said that we cant. Copying wasnt a problem before. Whyshould we care about intellectual property now? (Male, 20).

Another informant commented that the concept of intellectual property was noteducated seriously either at school or at home. Therefore, we feel like there is nothingwrong about using imitations (Female, 18).

The comment of an informant may be insightful to educators of intellectualproperty rights. Those movie makers and singers are not losing money, they are stillmaking a profit. They talk about intellectual property rights only because they want tomake more money (Male, 20). In short, consumers with a poor grasp of intellectualproperty rights often do not see a problem in buying counterfeits. Their immersion inthe cultural value of sharing further impedes their understanding on how intellectualproperty rights benefits society.

Local interests (5 percent)The consumer evaluated the influence associated with the consumption on the localeconomy and made the purchase when it would benefit/not hurt the local economy.When the manufacturing and distribution of counterfeits are integrated into the localcommunity, some locals view them as legitimate businesses representing the localinterest. Many hawkers [of counterfeits] just want to make a living [. . .] Give themsome room to survive (Female, 22). Another added, You are right. Counterfeitingactually feed many unskilled labors [. . .] Selling counterfeits are better than robbery(Female, 21). Another joined the conversation, at least they dont rob us (Male, 22).

Some believe that when the scale of the counterfeit activity is so large, curbing itmay create more problems. The whole shopping mall sells intellectual property rights

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infringing products; what can they sell if they dont sell those products? (Male, 20).Chow (2000) provided a thorough description of the China small commodities city inYiwu city, a local distribution center of counterfeits. With over 30,000 wholesale stallsand 3,500 full sized wholesale stores, China small commodities city has 200,000 visitorsand 2,000 tons of goods purchased everyday. At least 90 percent of the daily-useconsumer products found there are counterfeits. Thus, the distribution of counterfeitsbenefits the logistic, hospitality and retail industry in the local area and counterfeitingis viewed as a legitimate source of employment and economic development.

Most famous genuine branded goods are imported and generally perceived to be offoreign interest:

The US government forced the Chinese government to get rid of the problem of piratedWindows software because they wanted to protect the Americans interest. If the Chinesegovernment is really going to prosecute those who sell pirated software, then the Americansand Bill Gate would benefit (Male, 21).

Habit (2 percent)The consumer did not think much about the consumption prior to the purchase andthe consumption was spontaneous. Many informants admitted that they are used tothe idea of buying counterfeits and have been buying counterfeits habitually for a longtime. Recent conceptualizations of habit, from an information-processing perspective,suggest that the repetition of a behavior, which is initially based on conscious anddeliberate process, automates the whole cognitive processing. When I want software,there is no need to think, I will just go there [the counterfeiters] to buy it (Male 21).

Some consumers had an initial negative attitude towards buying imitations, butchanged their attitude and became more willing to buy imitations instead of originalproducts after they accidentally bought an imitation:

I dont know that it was a counterfeit, I wouldnt be buying it if I knew [. . .] but now I dontmind [. . .] next time I will buy again, it is cheap and of good quality (Female, 23).

Unless the consumption experience and consequences are disastrous, the behavior ofbuying imitations is likely to be repeated. Once these habits are formed, they are oftendifficult to break. The intention to discontinue a habit requires sufficient strength tooverride the well-practiced behavior:

I go there [where counterfeits are sold] when I have nothing else to do, to see if there are anynew movies or new computer games [. . .] It is difficult to resist the temptation to take a look[. . .] [and] when I see something I want, I will buy it (Male, 21).

Desire for exploration (1 percent)The consumer believed that the consumption process is fun, can satisfy ones desirefor knowledge, or an urge of curiosity.The consumption of counterfeits may lead topleasure from the process. Some purchasers found the purchasing processadventurous:

The process was exciting [. . .] You write down the code of the product they want, give it toseller, and pay. Then, the seller will tell you when and where to collect the [counterfeit]products. Then, you show up at the location at the right time, you will find the products(Male, 21).

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Although this process may remind some people that it is illegal and discouragepotential customers, other consumers enjoyed the thrill and found the process exciting.Along the same line of reasoning, consumers also derive pleasure by satisfying theirurge of curiosity:

Some British students from the exchange program asked us to bring them to Ladies marketto find some imitation Louis Vuitton bags. It is because those imitation bags are rare in theircountry, so they want to buy them for fun and for the adventure (Female, 19).

Cultural differencesWhen we categorized the responses based on the informants city of birth (born inHong Kong informants vs born in Mainland China), several inter-cultural differencesemerged from our data. In terms of product category, the Hong Kong informantsexperience of counterfeit mainly falls in two areas: digital content and fashionableluxury products; the top four categories accounted for nearly 84 percent of the contentthey shared. The Mainland Chinese experienced a wider spectrum of counterfeitproducts as more consumption experience with apparel items and daily products wererecalled. As a Mainland informant calmly explained, we see all kinds of counterfeitsall the times in the Mainland (Male, 22).

We note that the lower incident of mentioning of audio/video media in the Mainlandgroup may be attributed to confusion, or their lack of knowledge in intellectualproperty rights. One Mainland believed that there is no such thing as counterfeit[pirated] music in China; all CDs manufactured in China are legit (Male, 18). A HongKong informant replied, there is no legit music in China; all are counterfeits. Then aheated debate on what counts as a counterfeit and what does not began.

The reasons behind consumption may also differ. Although value for money (i.e. theutility factor) is the most importance motivator behind their counterfeit consumption, itaccounts for around 33 percent of total incidents by the Hong Kong informantscomparing the over 40 percent by the Mainland informants. More Hong Konginformants (10.8 percent) voiced concerns about the ethicality of their decisions thantheir Mainland counterparts (4.2 percent). Meanwhile, more Mainland informants(9.1 percent) justified their counterfeit purchases through the local interest argumentthan Hong Kong informants (3.5 percent). There seems to be no difference in the otherfactors (e.g. risk perception) across the two groups. We speculate that differences infamily income may explain variance found in the utility dimension, while difference inrespect for intellectual property rights may be a plausible explanation for the variancein the ethicality dimension. The difference in local interest may be explained by the factthat most counterfeits are produced in (thus closely integrated with) Mainland Chinainstead of Hong Kong.

Discussion and implicationsWhile the importance of price in purchasing counterfeits was revealed in the data, theprominent effect of utility was also due to other aspects such as convenience inobtaining counterfeits, or transaction utility, and personalization service provided bythe counterfeiters. Utility appeared most with respect to clothing, accessories, softwareand designer luxury goods and might be the most difficult to change.

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The second factor, but negatively related to counterfeit consumption, was perceivedrisk. Consumers saw significant physical risks in many counterfeit purchases(e.g. electronics) but report of counterfeit consumables were almost non-existent: food(2.0 percent); cosmetics (0.2 percent); and medicines (0.2 percent). Yet consumablecounterfeit products feature prominently on the black market (www.havoc.com/products, 2012). It is clear consumers sought to avoid counterfeits, especially wheretheir health, safety, or criminal implication were involved. If consumers can be taughtto spontaneously recall the risk factor associated with counterfeit consumption, theymay be more likely to buy from the original manufacturers than from thecounterfeiters. The physical risk factors must be direct and prominent.

Social risks such as losing face for wearing knockoff apparel are dreadful, yetplausible, consequences of consuming imitation products. When these kinds of riskyconsequences flash by the minds of consumers during their product evaluationprocess, they are more likely to reconsider their choices in favor of original brands. Ourinterviews showed that consumers might avoid consuming counterfeit products if theircircle of influence disapproved and ridiculed the use and ownership of fakes.

When it comes to confusion, our data may partially explain why educational leveland product knowledge have little power on mitigating the effect of product confusion.It is because consumers rely on a limited number of situational cues (e.g. price andlocation) to judge the authenticity of a product, and these cues can be easilymanipulated by the counterfeiters. The perceived ethicality of counterfeit consumptionseems to be pragmatic and the results suggest when counterfeiting is perceived tobenefit the society as a whole, even though it may hurt a subset of individuals, manyinformants judge it to be ethical.

Finally factors of culture, local interest, habit, and desire for exploration accountedfor very few of the motivations to purchase counterfeits. It is interesting to note theinfluence of desire for exploration on counterfeit consumption only represented1 percent of the data. This motivation is only relevant when the consumer consumes,not for the sake of the product but, mainly for the emotional processes involved.Cultural influence was one of the least frequently mentioned factors by therespondents, likely because they are so immersed in the influence of their deeply rootedcultural values, and thus are not consciously aware. Instead of seeing how culture mayinfluence their behaviors, many informants had difficulty in seeing how intellectualproperty rights benefits them both short-term and in the long run.

Summary and insightsIt is clear from the study that the consumer does want authentic goods, but many timesare not sure how to identify them. The main sources of identification are thedistribution channels, but these are not fool proof. Therefore, communication of how toidentify real brands needs to be a priority for business (e.g. presence of holograms).The laws of a country may also have a profound effect on consumer perceptions andmotivations to purchase. For example, in France it is illegal to buy counterfeit goodsand those who have bought them may have them confiscated (Casalonga and Guerrini,2009). While in the USA, customs allows one counterfeit product per person to enter thecountry. By contrast the estimated value of counterfeit goods in the USA in 2011 was225 billion versus 8.5 billion for France (www.havoc.com/products, 2012). So wherecounterfeit goods are tolerated at the individual level, the ethical perceptions may

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follow the legal consumer laws. Businesses need to press governments to considercounterfeit purchases by consumers as a serious crime.

Our finding that consumer ethics may depend on whether the activity benefits thesociety as a whole is worthy of additional discussion. Much of the extant discussionrelating to consumer ethics focuses on the degree of harm consumer perceivethemselves inflicting on the brand owner, business, and/or the society. We learn thatwhen consumers thought their counterfeit consumption caused little or no harm, theydo not see much ethical concern in their actions (Ang et al., 2001; Nunes et al., 2004).A sub-theme, within the ethicality dimension, is that some of those who purchasecounterfeits see the benefits of their purchases beyond the value for money. Someconsumers believe that they are helping others (hawkers who sell the counterfeits orthe manufacturers who products the product). The literature lacks research thatsystematically studies the (perceived) benefits of counterfeit consumption on thesociety and might be studied carefully in the future.

The findings on local interest send an important message to internationalmarketers, as our informants suggested that some people may hold positive attitudestowards local counterfeiters. As Penz and Stottinger (2008) found, Ukrainians see thecounterfeiters as less professional but more human; Mexicans see the counterfeitersas soft and lenient. The logic behind the locals consumption seems to be that buyinga local (counterfeit) product benefits the local community whereas buying a foreign(genuine) product does not. This again emphasizes the need to crack down on thepurchase, as well as the creation of the counterfeit.

Note

1. The coders (senior students) were experienced with quantitative and content analyses. Theywere trained by the authors using pretest focus group data.

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Koklic, M.K. (2011), Non-deceptive counterfeiting purchase behavior: antecedents of attitudesand purchase intentions, Journal of Business Research, Vol. 27 No. 2, pp. 127-137.

About th authorsDr Felix Tang is an Assistant Professor of marketing at Hang Seng Management College inHong Kong. His research interests include pricing modeling, customer satisfaction, counterfeitconsumption, and perceived fairness. He is currently teaching principles of marketing, consumerbehaviour and services marketing.

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Dr Vane-Ing Tian is a Lecturer at the Open University of Hong Kong. Her research focuses onChinese wisdom in marketing strategy and counterfeit consumption. She is currently teachingmarketing research.

Dr Judy Zaichkowsky is a Professor of marketing at Simon Fraser University in Canada. Herknowledge and expertise on the role of involvement in consumer research has had a majorimpact on the field of marketing. Dr Zaichkowsky was the Recipient of the 2013 C.W. Park awardfor outstanding contribution to consumer psychology. She is the author of The PsychologyBehind Trademark Infringement and Counterfeiting (2005). She is currently teaching brandmanagement, consumer behaviour and Retailing Berlin, a course which focuses on aesthetics.Judy Zaichkowsky is the corresponding author and can be contacted at: zaichkow@sfu.ca

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