Similarly, other challenges which affect legitimate business include dilation of their brands, loss of future and current revenue when customer purchase counterfeit products unknowingly as well as counterfeiters' competition. The two types of counterfeiter include non-deceptive and deceptive counterfeiters. Each type of counterfeit damages legitimate business. Problem / Topic Statement: The problem in question is how the government and business can reduce losses resulting from counterfeiting. If the problems for counterfeiting are not solved, there will be less incentive for innovations because all property rights for intellectuals will always be infringed by counterfeiters and the government may not give any ramifications. For instance, businesses can carry out a proper chain of distribution to find out and correct at points where genuine products get to the hands of counterfeiters.
In addition, businesses can destroy undesired or damaged products to prevent them from entering the legitimate chain of distribution. The government should fine counterfeiters heavily to make them deter from their unethical behaviours that result in loss of revenue. In addition, the action of curbing counterfeiting can better be achieved if all people are involved in monitoring counterfeits in the market. Key words Genuine brand, counterfeit product, existing counterfeit, counterfeit consumption, Consumers' judge counterfeit products, Counterfeit and popularity, Counterfeit and perceive quality Table of Contents Abstract 2 Key words 4 Introduction 5 1. 2 Brand awareness 15 4 Effects of consumer awareness of fake products on the genuine products 16 5 The Outcomes of Counterfeit Consumption 17 5. 1 Business risk 17 5. 2 Brand risk 17 5. 3 Economic risk 18 5. 4 Consumer risk 19 5. With the continued increase in the value of this market, the designers for the genuine brands that exist in this market have become targets for the producers of the counterfeit products (Bian & Moutinho, 2011).
This poses a challenge to customers who are interested in the purchase of the genuine commodities from the market. Production of the counterfeit products has threatened companies' efforts in establishing and developing successful brands (Gino, Norton, & Ariely, 2010). Most researchers assume that the production of fake products poses harmful impacts on original brands, however many of them fail to verify how these products threaten the genuine brands negatively (Archibald, Haulman, & Moody Jr, 1983). Because there would be no need to prove how these products negatively affect the consumers' decisions on the purchase of the genuine brands and increasing the demand for counterfeit which increases the counterfeit products. Some theorists like Gistri, Romani, Pace, Gabrielli, and Grappi (2009) state that counterfeit products can be purchased as gifts for family and friends since these gifts will be termed to be expensive compared to just buying ordinary gifts although they are genuine.
The main reason for the purchase being, the imitation of the expensive brands. The consumption of counterfeit products mainly depends on the following elements as identified by this theory; status symbol, fun worth paying for, prestigious, durable, qualitative and exclusive. Counterfeit consumption As outlined in theory above, counterfeit activities continue to pose a threat to genuine brands in various markets. This has forced genuine brands to work harder to protect their reputation, and hence their market. Industrial designs protect the aesthetic attributes of a product. Patents have geographic and time limits and allow the patent holder to prevent certain parties from using patented inventions (Francis, Burgess, & Lu, 2015). Piracy is often linked to the infringement of copyrights while counterfeiting is linked with trademark infringement, but the distinction between these concepts is not usually apparent because companies may protect their products with several intellectual property rights at the same time (T.
I. Han & Stoel, 2017). Counterfeit products definition Scholars Counterfeit products definition (Grossman & Shapiro, 1988) Counterfeits products are lesser quality products imitating the genuine brands. (McDonald & Roberts, 1994; Tom et al. , 1998) Counterfeit products are copies of the genuine merchant meant to be deceived by the consumers. (Newton et al. , 2006) Counterfeit products are dangers low quality products of the genuine brand. On the other hand, non-deceptive counterfeits are products that are apparent counterfeits and have many differences from the originals (Stöttinger & Penz, 2015). Therefore, to distinguish the original products from the counterfeits, Intellectual Property Rights (IPR) owners create specific attributes such as marks that are difficult for the counterfeiters to replicate, and then tell their customers to always look for that mark when purchasing the products.
In non-deceptive case, the counterfeit markets found the need of the consumers and try to fulfil it (McDonald & Roberts, 1994) by selling the counterfeit products to satisfy them not to deceive (Arellano, 1994). This might not have a risk for consumers while giving them a chance to experience the luxury lifestyle. 3 Demand for counterfeit products The first concept in this section is to understand the meaning of counterfeit consumers. Normally, those who have purchased the counterfeit product before rely on the previous satisfaction to develop the same loyal spirit. (Tom et al. • This demonstrates the criteria for choice of pirated brands vary by category of product (Greenberge et al. , 1983) and to some extent by Nill and Shultz (1996). For instance, considering pirated clothing, other than physical appearance, design and quality are also important (Prendergast et al.
The concept of brand knowledge is usually built on the image of the brand and its awareness which affected the consumers' decisions (Keller, 1993). 1 Brand loyalty This factor has a significant impact on the customer-based brand equity. It is usually established at the time that the consumers start purchasing products from particular brands without assessing them regarding quality, price and other significant characteristics (K. Kim et al. The consumer purchases these products based on the brand name instead of considering the above features. 4 Effects of consumer awareness of fake products on the genuine products The existence of fake products that contain counterfeited brand enables the customer to remember and identify the original and genuine brand at the same time. This will make them go for the original and genuine products as opposed to the counterfeited products (Caves & Greene, 1996).
Consumers, who have encountered the counterfeiting phenomenon more than once, can efficiently detect the fake products once they come across them. This factor enables them to recognize the superiority of the genuine products (Gino et al. In most cases, consumers do look at fake products consumption of counterfeit products as an effort to assume a given social trait and personality just to enable them to gain social approval. The counterfeiter also benefits because they do not have to pay for any research and development and enjoy the resources that the legitimate company has put into brand development. As such, counterfeiters are more harmful to a business than legitimate competitors. According to the US Chamber of Commerce, counterfeiting costs the American economy up to $250 billion annually (Chiu, Lee, & Won, 2014).
2 Brand risk Counterfeits erode the brand value of legitimate businesses. When low-quality, cheap counterfeits flood the markets, and with an increasing number of customers being deceived to purchase counterfeit products, the demand and market price of the legitimate products significantly reduce. Businesses that are victims of counterfeiting may suffer losses resulting from legal liability. When a consumer purchases a counterfeit product thinking that it is original and gets injured from its use, the brand holder could be held liable for damages. Even if the legitimate business wins the case, they still incur legal costs in an attempt to prove that they are innocent. If the harm from the use of the counterfeit was foreseeable, and the business played a role in creating the risk of counterfeiting and failed to take reasonable steps to correct it, then it will be held liable under tort law (Tang et al.
Therefore, even without the knowledge of the existence of counterfeit products or illicit activities, a business could still have to pay damages for not implementing adequate measures to prevent counterfeiting. 1 Consumers' preference for the counterfeit products The purchase of counterfeit products generates outcomes for consumers regarding their behavior, attitude, cognitions, and emotions. For example, buying counterfeit products could encourage consumers to behave dishonestly, as well as to judge others as unethical (Gino et al. Additionally, the purchasing of counterfeit merchandise has associated emotional outcomes. It has an impact on consumers' personality (Holden & Book, 2012), and on their feeling of dissonance (Bian, Wang, Smith, & Yannopoulou, 2016; Pueschel, Chamaret, & Parguel, 2017). They might experience embarrassment after the purchase (Bian et al. Consumers involved in counterfeit consumption feel pleasure acquiring well-established brands at a low price (Marticotte & Arcand, 2017).
They value the prestige associated with a luxury brand (Marticotte & Arcand, 2017), and so they are willing to purchase a counterfeit (C. Liao & I. Hsieh, 2013) often with low, or no, moral scruples (K. Wilcox, H. The extent to which a consumer has awareness and knowledge of counterfeiting (Baghi, Gabrielli, & Grappi, 2016b) is obviously related to the personal experience of having bought counterfeit goods before (Hoon Ang, Sim Cheng, Lim, & Kuan Tambyah, 2001a). There is a conscience issue here, (Cushman, Young, & Hauser, 2006), and social and cultural considerations also come into play (Baek & King, 2015; Stravinskiene, Dovaliene, & Ambrazeviciute, 2013). That is, the purchase of counterfeits is perceived quite differently in different cultural contexts, generating more or less opprobrium depending on the social context in which the purchase is made.
Finally, the scarcity (Eisend & Schuchert-Güler, 2006a), ephemerality (Janssen, Vanhamme, Lindgreen, & Lefebvre, 2014), and the personality, or image of the genuine brand, all play a part in the complex decision the customer makes (Bian & Moutinho, 2011). In general, the purchase of a counterfeit has an adverse impact on governments, genuine brands, and consumers. Even if the business chooses to donate inferior or surplus products, they should look for one or two reputable charities to ensure that the goods do not find their way back into the supply chain. Moreover, brand owners should only deal with legitimate retailers and distributors. Similarly, wholesalers and manufacturers must check the credentials of the companies they choose to deal with to prevent them from dealing with businesses of questionable character.
Bian et al. (2016) show that counterfeiters pretend to be legitimate businesses and purchase products in large quantities with the intention of blending the fake with the real products to confuse customers and to maximize their returns. Q. Cheng, H. Zhu, M. Le, &Y. Z. , 1983), a high retail price (Caves & Greene, 1996), a well-known brand name or high brand equity (Erdem & Swait, 1998), or warranties (Boulding & Kirmani, 1993; Kelley, 1988) as a proxy for quality information. For example, consumers will evaluate a brand with warranties more positively than brands without warranties, because the existence of a warranty itself guarantees the high quality of the brand. This research suggests that the existence of counterfeits for a genuine brand will serve a similar role for quality signalling. 1 How do consumers judge counterfeit products? Consumers have varying perceptions and feelings over counterfeit products (Kelley, 1988).
Generally, consumers buy counterfeit products with an intention to signal positive traits. Some consumers exploit themselves unknowingly when they are influenced by their friends to deliberately consume counterfeit products. For example, some consumers desire to be unique in their forms of consumption of the newest product in the market. This is usually the first cause that leads to a wider consumption of rate of counterfeit products. Therefore, counterfeit products are not easy to identify unless consumers are enlightened on how to identify such products. 2 Reasons consumers consume counterfeit products (why do consumers buy counterfeits? Counterfeit goods are illegal in the market and are a form of mistreating consumers from their rights (Chung, 2012) Therefore, combating the problem of counterfeit brands can be reduced by first understanding reasons behind the consumption of these counterfeit products.
This is because their minds are easily misled and stick to the fact that genuine products usually charge unfair prices. In this case, consumers who feel to be shred shoppers have high risks of buying counterfeit products because they feel they are willing and have the potential of beating the system. Consumers who desire to show off their status without enough funds to achieve this can deliberately purchase counterfeit goods to quench their desires (Hieke, 2010). In addition, consumers who are in an environment where they are curious and want to experiment face higher risk of buying the counterfeit product. Lastly, consumption of counterfeit product can be common among people who always take risks in doing illegal things. Untrusted employees venture in non-ethical activities or practices such as making bad deals with counterfeit suppliers who sell their fake products through popular companies.
1 Counterfeit and popularity Counterfeit and popularity have affected many countries in a number of ways. The most common items of counterfeit are physical fashionable products such as bags and watches. The counterfeiting of these products resulted in a big loss to the government. Counterfeit is a critical time where many intellectual property rights of brands were violated. This indicate that most of the counterfeit products constituted by popular brands in the market. Consumers should therefore not have confidence in products sold based on the historical popularity of the company. Instead, every person should play a role by investigating the safety of products before purchasing it for consumption. 2 Counterfeit and perceived quality Quality of product refers to the degree at which product meets the expected needs of consumers.
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Journal of Business Research, 65(10), 1507-1515. Zhan, L. , Sharma, P. , & Chan, R. Y. Wilcox, H. M. Kim, & S. Sen, 2009a) Moral Social motivation (Barnes, 2007) Self-deception (Grossman & Shapiro, Oxford University Press/1988) Value the prestige associated with luxury brand (Eisend & Schuchert-Güler, 2006b) The scarcity of the original product (Bian et al. , 2016) Moral intensity (Gino et al. Kim & K. P. Johnson, 2014) • Moral judgments • Individuals' self-view • Susceptibility to interpersonal influence • self-construal (Gino et al. , 2010) Do not predict the impact of counterfeits on ethicality (Stravinskiene et al. , 2013) Paradox • Social motivation • Ethnicity • Demographic (Teah & Huang, 2015) Personality • Social motivation • Ethnicity • Demographic • Culture context (Tom et al. Chen, H. Zhu, M. Le, & Y. Wu, 2014) • Brand prominence Face consciousness (Zhang & Mittal, 2005) • Accountability type • perceived difficulty of choosing from original and counterfeit.
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