Understanding the behaviour of Consumers Who Buy Counterfeit Products

For years, researchers have been study­ing the sup­ply side of the trade to com­bat the sale and dis­tri­b­u­tion of coun­ter­feit prod­ucts. How­ev­er, the oth­er side of this ille­gal activ­i­ty, con­sumers’ demand for fake prod­ucts, remains over­looked. This is prob­a­bly because of the inher­ent dif­fi­cul­ty in chang­ing con­sumer behav­iors. As high­light­ed in pre­vi­ous posts, there is no sil­ver bul­let against illic­it trade, how­ev­er, more focus should be giv­en to reduce the demand for coun­ter­feit prod­ucts.

Con­tin­u­ous efforts, car­ried out main­ly through aware­ness cam­paigns, to com­bat the sale of coun­ter­feit prod­ucts are not enough. Fake goods emerge in every sec­tor; from lux­u­ry bags, per­fumes, and watch­es, to life-sav­ing med­i­cines. Accord­ing to the data stud­ied by the OECD and EUIP, 2.5 per­cent of the imports enter­ing coun­tries by road, rail, ship, or air are pirat­ed or coun­ter­feit goods.

The Attitude of Consumers Towards Buying Counterfeit Goods

Coun­ter­feit­ing can fur­ther be cat­e­go­rized as decep­tive and non-decep­tive. The for­mer occurs when con­sumers are duped into buy­ing a prod­uct which is not gen­uine. A con­sumer, up until the point of sale, will think that he/she is buy­ing a gen­uine prod­uct which is pro­duced by a spe­cif­ic man­u­fac­tur­er.

Non-decep­tive coun­ter­feit­ing, on the oth­er hand, cap­i­tal­izes on con­sumers’ will­ing­ness to buy coun­ter­feit goods. Con­sumers active­ly seek out fake goods, dis­miss­ing the uneth­i­cal and ille­gal ele­ments on the foun­da­tion of which illic­it trade pro­gress­es.

Researchers are still study­ing the dri­ve and ratio­nale behind the unprece­dent­ed growth of coun­ter­feit­ing. Due to the com­plex­i­ty of the sit­u­a­tion, it is vir­tu­al­ly impos­si­ble to explain the phe­nom­e­non in black and white. The glob­al­iza­tion of the coun­ter­feit mar­ket has also made it increas­ing­ly dif­fi­cult to study con­sumers’ buy­ing pat­tern and the fac­tors that shape their pref­er­ences.

Based on the avail­able data, the cat­e­go­riza­tion of con­sumers can be done in the fol­low­ing man­ner:

1. Vic­tims: These are the group of con­sumers who are duped into buy­ing a fake prod­uct. They are gen­uine­ly unaware of the fact that they have bought a fake prod­uct. This is because these items are high­ly decep­tive — pre­scrip­tion drugs, air­plane parts, and heart valves. Due to their naivety, they even suf­fer actu­al phys­i­cal harm.
2. Hedo­nists: These are the con­sumers who inten­tion­al­ly buy high­ly decep­tive coun­ter­feit goods main­ly fash­ion appar­el, fake design­er hand­bags, and jew­el­ry. They buy these prod­ucts to impress oth­ers. These prod­ucts are only used for cre­at­ing an impres­sion around their social group.
3. Cyn­i­cal: Cyn­i­cal con­sumers have low lev­els of trust. They look at each legit­i­mate brand with pes­simism and hold the opin­ion that they are mak­ing high prof­it by charg­ing prod­ucts at high prices. Aware of the good qual­i­ty of coun­ter­feit they go for them because they are against the prof­it-mak­ing mod­el of big busi­ness­es.
4. Vul­ner­a­ble: These con­sumers are not aware of the fact that the prod­ucts can be fake or coun­ter­feit. They are not well-informed about illic­it trade and fail to check whether a prod­uct is gen­uine. The elder­ly, illit­er­ates and the very young are sus­cep­ti­ble to buy­ing fake prod­ucts as they are unable to make well-informed choic­es.

The Reason for the Acceptance of Illicit Trade

Prof­i­teers will always come up with new ways to make more mon­ey. How­ev­er, it is equal­ly impor­tant to under­stand why non- decep­tive con­sumers buy fake prod­ucts know­ing­ly and to what extent they are com­plic­it to pro­mot­ing and nor­mal­iz­ing this men­ace. The fol­low­ing are some of the fac­tors that will iden­ti­fy the dri­ve that leads peo­ple to buy fake prod­ucts.

1. Price Sen­si­tiv­i­ty: Con­sumers whose pur­chas­ing pow­er is inverse­ly pro­por­tion­al to high prices are more like­ly to buy coun­ter­feit goods, instead of orig­i­nal prod­ucts. This also indi­cates that con­sumers who have high sen­si­tiv­i­ty to price will eval­u­ate a coun­ter­feit item on the basis of its price. This phe­nom­e­non is depen­dent on a series of fac­tors includ­ing month­ly income, val­ue con­scious­ness, and prod­uct involve­ment.
2.  Brand Sen­si­tiv­i­ty: If a con­sumer has a high sen­si­tiv­i­ty to a brand, he/she can be prone to buy­ing coun­ter­feit good. This is because even a fake brand gives the same ‘pres­tige’ as the orig­i­nal one. Con­sumers who buy coun­ter­feit lux­u­ry prod­ucts try to show that they can afford famous brands’ prod­ucts which are often list­ed at high prices.
3. Social Con­sen­sus: This refers to society’s accep­tance of the trade of illic­it trade. If the reac­tion towards illic­it trade is severe, con­sumers will be dis­cour­aged from buy­ing them. The social con­sen­sus includes eth­i­cal con­cep­tions, reli­gious beliefs, legal­i­ty, moral judg­ments, and integri­ty.
4. Price/Quality infer­ence: Gen­er­al­ly, many con­sumers are attract­ed to coun­ter­feit prod­ucts main­ly because of their price tag (which is sig­nif­i­cant­ly low­er than the price of the orig­i­nal prod­uct). While many con­sumers under­stand that the qual­i­ty of these prod­ucts is not good, they still buy it because the dif­fer­ence in the price is sig­nif­i­cant and it makes up for the loss in qual­i­ty.

When it comes to decep­tive coun­ter­feit­ing, con­sumers are duped into buy­ing fake prod­ucts because they have a great lev­el of sim­i­lar­i­ty to the orig­i­nal prod­uct. Also, they belong to the line of prod­ucts (life-sav­ing drugs, etc) which peo­ple believe are hard to be fake. This lack of infor­ma­tion is what results in con­sumers pur­chas­ing coun­ter­feit goods and incur­ring huge loss­es. Con­sumers who fall for this trap are main­ly elder­ly, the very young, or the illit­er­ate.

How to Decrease Demand for Counterfeit Goods

Coun­ter­feit­ers are in every sec­tor. They are imag­i­na­tive and flex­i­ble, and they are will­ing to adapt to new devel­op­ments and inno­va­tion. Coun­ter­ing their activ­i­ties is an uphill task. But it can be done if there is coher­ent coop­er­a­tion between com­pa­nies and gov­ern­men­tal author­i­ties.

The fol­low­ing steps can be tak­en to com­bat the grow­ing trade of illic­it goods. Through these steps, com­pa­nies can also cre­ate aware­ness among peo­ple regard­ing the risks asso­ci­at­ed with fake prod­ucts. The four cat­e­gories define how the buy­ing pat­terns of a cer­tain group of con­sumers can be changed and what action should be tak­en against coun­ter­feit­ers.

• Hedo­nists: In today’s age, social media has become the main plat­form for com­mu­ni­ca­tion. This is the place where brands should spread aware­ness among peer about coun­ter­feit goods. Through influ­encers, who have a huge fol­low­ing, brands should pro­mote social dis­ap­proval of the own­er­ship of coun­ter­feit goods. An inter­ac­tive ses­sion between the influ­encers and fol­low­ers will have a more pow­er­ful impact than two-dimen­sion­al print ads. These efforts should be com­bined with strict sanc­tions and/or finan­cial penal­ties against con­sumers who will­ing­ly buy coun­ter­feit goods. This will also send a clear mes­sage to peo­ple regard­ing the risks asso­ci­at­ed with pur­chas­ing coun­ter­feit items.
• Cyn­i­cal: These are cus­tomers who will­ing­ly buy coun­ter­feit prod­ucts. This is why because they hold big cor­po­ra­tions in con­tempt of charg­ing unfair prices. Com­pa­nies should intro­duce new prod­ucts or extend exist­ing prod­uct lines. It should also set prices that are in pro­por­tion to con­sumers’ income lev­els. For exam­ple, to curb illic­it trade in the South Asian mar­ket, Apple intro­duced an afford­able iPhone SE which was the most sought-after bud­get smart­phone.
• Vul­ner­a­ble con­sumers: To cater to this seg­ment, brands should apply the bot­tom-of-the-pyra­mid (BOP) mar­ket­ing tech­nique. They should cre­ate ser­vices and prod­ucts that can pro­vide for the needs of con­sumers who have lim­it­ed eco­nom­ic resources. The abil­i­ty of con­sumers to buy basic neces­si­ties will improve due to low and afford­able prices. Con­sumers will also be able to improve their stan­dard of liv­ing.
• Vic­tims: IP own­ers, com­pa­nies and both nation­al and inter­na­tion­al gov­ern­men­tal author­i­ties must coop­er­ate to iden­ti­fy and appre­hend those who are involved in the man­u­fac­tur­ing, dis­tri­b­u­tion, and sale of coun­ter­feit goods. Heavy finan­cial penal­ties com­bined with jail time must be imposed on the cul­prits and their iden­ti­ties should be pub­li­cized. This will deter oth­er peo­ple from car­ry­ing out their ille­gal oper­a­tions.

Wrapping up

For improv­ing their effec­tive­ness, busi­ness­es must ensure that their strate­gies are in line with or clos­er to con­sumers’ moti­va­tions. This can be done by:

• Focus­ing efforts to bet­ter under­stand what are the dri­vers that influ­ence con­sumers’ buy­ing pat­terns and to what extent the brand’s alter­na­tive strate­gies (as dis­cussed above) have impact­ed con­sumers’ buy­ing pref­er­ences.
• Com­pa­nies should adopt addi­tion­al strate­gies to counter illic­it trade. These strate­gies shouldn’t be lim­it­ed to chang­ing price lev­els. In fact, the com­pa­ny should imple­ment authen­ti­ca­tion solu­tions to coun­ter­feit goods. The com­pa­ny can also influ­ence con­sumers’ opin­ion through pro­mo­tion­al cam­paigns.
• Brands should work with con­sumers, dis­trib­u­tors and law enforce­ment agen­cies to iden­ti­fy peo­ple run­ning the illic­it busi­ness. By offer­ing loy­al­ty schemes, the brands can influ­ence cus­tomers to buy from their gen­uine out­lets only.