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Counterfeit Goods

Introduction

Counterfeit consumer goods are products that are sold with the name of another brand without the original brand owner authorization and are often of low quality. In other words, they are described as knockoffs, fake, replicas or copy products. The sellers of these products often infringe the patent, trademark and the copyright of the owner of the brand by using the names of the brand as theirs. The prevalence of counterfeit products has extended to almost every nation in the world and this is not only posing a risk to a country’s local industries that fear lack of market for their products but also a health risk to people who use these products. Counterfeit products are in every industry such as pharmaceuticals, construction, software, toys, perfumes, music recordings, medicine and others (Ahmad, Shamsi & Hussain, 2016). The use of counterfeit products such as fake medicine pose a dangerous health problem to individuals and also the construction of building using counterfeit goods leads to the collapse of these building during or sometime after construction hence resulting to loss of property and lives. Counterfeit products only last for a short time hence making the buyers incur more costs when purchasing the products again. Consumer behavior relates to how customers select and buy goods in the market to satisfy their want. The relationship between selecting or buying counterfeit and consumer behavior largely depend on customer's attitude towards the counterfeit product where he or she might have purchased one before, pricing, integrity, personal gratification and subjective norm (Carpenter & Edwards, 2013). This paper will, therefore, determine the effect or impact of having counterfeit products on consumer behavior. Further, the paper will determine how the customer attitude and behavior influence their selection decisions. Companies also require information on consumer behavior so that they can devise their marketing strategies by checking at how the consumers respond to a certain counterfeit product.

Impacts of Counterfeit Goods on Consumer Behavior

To examine the relationship between counterfeit products and consumer behavior several factors such as consumer intentions, pricing, integrity, and availability as well as how they link to each other. By describing the above factors will bring light on how the consumer is tricked into buying these products thinking it’s genuine. Some people either purchase knockoffs intentionally or unintentionally due to the high level of similarities (Blackstone, Fuhr & Pociask, 2014). Recently most counterfeit products have moved towards ensuring improving quality of their products hence making it difficult to differentiate between them with the original one.

First, customer intentions largely determine if one will go for a replica product or not. Customers have different needs and they choose products depending on how they want to satisfy these needs. A buyer whose aim is to buy many items, sell them and make large profits will often go for counterfeit products because they are cheap. This is an indicator that when these buyers need products they have to choose counterfeit over original ones as they are less expensive and they will be able to sell more items at cheaper prices thus making profits. The buyer gets accustomed to the replicas and this influence the consumer behavior in the sense that in most cases they have to choose and buy fake products over the original one (Chaudhry & Stumpf, 2011). This happens as many consumers often go for cheaper products due to the low purchasing and also since the fake products last for a short time they choose them for short projects over original ones which are slightly expensive. A person whose aim is to make long-term projects such as building will often go for the quality raw materials and will anyway try to avoid counterfeit products as he or she is familiar with the repercussions of using low-quality goods (de Lucio & Valero, 2014). Selecting between a counterfeit and an original product becomes difficult due to the increased quality of the copy and in such circumstances, they will get tricked to buying counterfeit over original one (Drucker, 2014). 

Lack of consciousness and education is another major problem that makes people land into the deception of replicas. People lack education on the health impacts and effects on the economy when they choose to buy replicas. Also, some other individuals are not health conscious and fail to question themselves on something. Such people lack full information on the harm associated with using these products. The cosmetics industry is among the industries that are growing at a steady rate which is up to 3% with a worth $445 billion during 2016. In 2017 the industry spiked to a growth of approximately 12%. This has created an opportunity for knockoffs to enter the market due to high demand (Cho, Fang & Tayur, 2015). Companies like Estee Lauder, have been hard hit by this problem and its customers are tricked into buying fake products in believing they are buying original products. Continued lack of information about the dangers of using knock-offs is making people become less conscious of their health and the economy as well (Economics, 2017). Also, knockoffs have reached large online retailers thus available to the larger market. Knock-offs are very cheap and, in most cases,, they are fifty percent below the recommended retail price (Staake, Thiesse & Fleisch, 2009).

The final factor that may make consumers shift to buying counterfeit thus impacting on their customer behavior is peer pressure and lack of integrity. Some people especially the extroverts have a societal pressure which makes them shift their attention on high-end products. They believe that high-end products will make them authentic and will improve their self-worth. Even when these individuals cannot afford these products they choose to go for a counterfeit such as jewelry parts, watches, outfits and bags (Dégardin, Roggo & Margot, 2014). When they receive approval and appreciation from others this increases their ego and they engage into a vicious cycle of purchasing the products. Lack of integrity is what makes them go for these products because as influencers of the society they should set a good example by choosing only to purchase authentic and original products. The pressure to buy a certain product due to the pressure of the society increases the chances of buying cheap copies which might cause health risks thus a clear show of carelessness (Andres et al., 2014).

How Consumer Behavior Affects Firm’s Marketing Decisions to Combat Counterfeit Products

It is evident that the marketing decision to go for a certain product largely depends on its availability and price. Companies have to rely on the data of consumer behavior to purchasing counterfeit products to revamp their marketing strategies. Where consumers are more inclined to counterfeit products, it influences how companies prepare their product for the marketplace. Continued creation of copies is a loss to companies as they have to strive with the tight competition and ensure it makes profits. One of the challenges that companies face due to the presence of knock-off is allocating high expenditure to protect and enforce patent and intellectual property rights thus reduction in profit margins(du et al., 2017). Firms have to protect their products and by that, they come up with strategies to combat counterfeiting through investigations and lawsuits. So they have to improve their human resources, marketing, and development of products (Michman & Mazze, 2006).

With counterfeit goods in the market, there is high competition due to the low cost of products and easy accessibility of the copies since retailers go for cheap products so as to make more profits in return due to more sales. Counterfeit highly influence and impact marketing decision (Oliver, 2014).  First, the company can decide to improve the quality and packing of the product. Improved quality will ensure that the product continues to meet the customer’s need, does not cause a health crisis and serve them for a longer time compared to the copies thus reduced competition. Again the firms can decide to develop designs that cannot be counterfeited by focusing on the styling and packaging (Thumm, N., Butticè, V., Caviggioli, F., & Franzoni, C, 2018 ). Finally, the firm can choose to come up with repairs and support services. This may be costly for a company that wishes to avoid competition but at last, it will benefit the company as it will attract and retain more customers.

Last, the marketing mix decision that a business can result in due to the prevalence of counterfeit goods is a promotion. A company ought to keep of communicating the information of the product to its customers by giving updates on the designs and the reasons to use the product and what the company is doing to ensure that all customer needs are met. The company can seek to use social media as a tool for an advertisement or other advertising channels to communicate the innovations implemented by the companies regarding the products. The advancements of a product should be designed in such a way that it will not be copied (Fink, Maskus & Qian, 2016).

Conclusion

It is evident that counterfeit products are harmful to any country where they destroy the local industries or global industries wh*ose aim is to produce genuine and quality products as well as creating employment to a majority in the country. It is illegal to produce counterfeit products and the penalties for such activity are very harsh with a minimum of twenty years in jail if found guilty (De Mooij, 2018). So it is upon the government to improve its enforcement strategies by giving the public and brand owners an opportunity to seek legal actions against the knockoffs. Also, the government can create awareness of the effect of embracing counterfeit goods by educating them of the health concerns of counterfeit products as well as an economic crisis brought by these illegal activities. The government loses a lot of money on untaxed goods as they are sneaked into the country as they are smuggled to the country where they evade taxes.

References

Academic Journals

Ahmad, N., Shamsi, A. F., & Hussain, S. (2016). Impact Of Counterfeit Products On Consumer Buying Behavior: Empirical Investigation From Karachi Cites. Grassroots, 50(1).

Andres, J., Hersch, R. D., Moser, J. E., & Chauvin, A. S. (2014). A New Anti‐Counterfeiting Feature Relying on Invisible Luminescent Full-Color Images Printed with Lanthanide‐Based Inks. Advanced Functional Materials, 24(32), 5029-5036.

Blackstone, E. A., Fuhr Jr, J. P., & Pociask, S. (2014). The health and economic effects of counterfeit drugs. American Health & Drug Benefits, 7(4), 216.

Cho, S. H., Fang, X., & Tayur, S. (2015). Combating strategic counterfeiters in licit and illicit supply chains. Manufacturing & Service Operations Management, 17(3), 273-289.

de Lucio, J., & Valero, M. (2014). Buying decisions of counterfeit goods and moral judgment. ESIC Market. Economic & Business Journal, 45(1).

Dégardin, K., Roggo, Y., & Margot, P. (2014). Understanding and fighting the medicine counterfeit market. Journal Of Pharmaceutical And Biomedical Analysis, 87, 167-175.

Economics, F. (2017). The Economic Impacts of Counterfeiting and Piracy. Frontier Economics, Melbourne.

Fan, S., Lau, R. Y., & Zhao, J. L. (2015). Demystifying big data analytics for business intelligence through the lens of the marketing mix. Big Data Research, 2(1), 28-32.

Fink, C., Maskus, K. E., & Qian, Y. (2016). The Economic Effects Of Counterfeiting And Piracy: a Review And Implications For Developing Countries. The World Bank.

Thumm, N., Butticè, V., Caviggioli, F., & Franzoni, C. (2018). Impact Of Counterfeiting On The Performance Of Digital Technology Companies (No. 2018-03). Joint Research Centre (Seville site). https://ideas.repec.org/s/ipt/iptwpa.html

Carpenter, J. M., & Edwards, K. E. (2013). US Consumer Attitudes toward Counterfeit Fashion Products. Journal of Textile & Apparel Technology & Management (JTATM), 8(1).

Chaudhry, P. E., & Stumpf, S. A. (2011). Consumer complicity with counterfeit products. Journal of Consumer Marketing, 28(2), 139-151.

De Mooij, M. (2018). Global Marketing And Advertising: Understanding Cultural Paradoxes. SAGE Publications Limited.

Drucker, P. (2014). Innovation and Entrepreneurship. Routledge.

Du, S., Yu, K., Bhattacharya, C. B., & Sen, S. (2017). The business case for sustainability reporting: Evidence from stock market reactions. Journal of Public Policy & Marketing, 36(2), 313-330.

Fink, C., Maskus, K. E., & Qian, Y. (2016). The Economic Effects of Counterfeiting and Piracy: a Review and Implications For Developing Countries. The World Bank.

Joshi, Y., & Rahman, Z. (2015). Factors affecting green purchase behavior and future research directions. International Strategic Management Review(1-2), 128-143.

Michman, R. D., & Mazze, E. M. (2006). The Affluent Consumer: Marketing and Selling the Luxury Lifestyle. Greenwood Publishing Group.

Oliver, R. L. (2014). Satisfaction: A Behavioral Perspective on the Consumer: A Behavioral Perspective on the Consumer. Routledge.

Staake, T., Thiesse, F., & Fleisch, E. (2009). The emergence of counterfeit trade: a literature review. European Journal of Marketing, 43(3/4), 320-349.