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Affect Of Counterfeit Goods On Luxury Brand Add in library

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Question:

Do counterfeit products decreases the value and desirability of luxury brand items?

 

Answer:

1. Introduction

Literature review consists the existing theories that relate with the selected topic affect of counterfeit goods on luxury brand. In the global market especially in the clothing sector, counterfeit goods decrease the value and desirability of luxury brand. De Barnier et al. (2012) assumed that global luxury brand decrease 4% market share due to counterfeit goods or products. However, Gistri et al. (2009) argued that luxury brand industry mostly affected by counterfeit inhibitor. Counterfeit products primarily focused on targeting luxury brand due to high growth rate.

In this particular chapter, researcher analyzes the reason of affecting luxury brand by counterfeit goods. In order to analyze selected topic, researcher uses several journals in this part that helps in utilizing exact result for the topic.   

2. Brief Literature Review

2.1 Dilution of Brand: Hurting of New brand to existing brand

In this journal, Nia and Zaichkowsky (2000) analyzed the dilution of trademark is occurring during an introduction of a new brand in the market. There are several new brand that identically similar with the existing brand. Majority of companies is using same products design like an existing brand of luxury products due to lack of a legal standard and low managerial use. In order to conceptualize the measurement methodologies, author of this journal used shared brand network model.

Dilution versus trademark infringement: Dilution of Trademark differs according to the doctrine of legally familiar if infringement of trademark. Kapferer and Bastien (2009) cited that when a competing party substantially uses the same mark trademark infringement occurred. In the luxury brand market, infringement extended due to the wide range of competing brand. Hennigs et al. (2013) depicted that trademark infringement mainly focused on legal doctrine that protects the consumer in terms of misleading information. Gorp et al. (2012) argued that there are two broad forms of dilution such as blurring and Tarnishment. From the point of view of Tarnishment, it refers to the lower evaluation regarding luxury brand instead of counterfeit brand. Negative association is the major factor of fairness of Tarnishment.

Actual Dilution: Trademark dilution is also one of the major issues that affected the luxury brand. According to Amann and Reinecke (2014), trademark dilution produced actual harm to the luxury brand. However, superficial reading on the ruling suggested that actual dilution is not requiring the evidence of lost and sales. Through the circumstantial evidence such as association of mental between the senior marks and junior marks, is helping in developing completely identical methodology towards luxury brands. On the other hand, Bassi (2011) devastated that creating of an identical mark between the senior and junior marks regarding branding effect in the business sector. However, Birkelund (2013) opined that the subsequent decision helped the organization of luxury brand in defining their product standard in the market. Here, the dilutions are found out after complete the confusion of likelihood in findings.

Dilution in brand knowledge was changing: In accordance with Caudevilla-Galligo et al. (2012), dilution is the trademark changes of brand knowledge. Dilution can change if the brand association is weakening regarding category, attributes, taglines, etc. However, it has been found out that consumer response towards brand is the key factor in the success. Brand knowledge of customer is the biggest factor from the point of view of change in brand knowledge towards luxury brand. Brand typically and brand dominance is the key method of recalling brand as well as provides the probability of recalling the brand in the market that creates glory (Cunha, 2013). Public policy researcher and legal scholar suggested that in order to create brand knowledge and make it effective on consumer mind, organization has to develop shared knowledge via dilution by the blurring. It can help in developing knowledge about the senior brands, as well as junior brand in the market of the corporate sector.

Predicting Dilution and Shared brand network: Edwards (2010) in his journals consider the storing strategies of brand information in order to understand senior and junior brand strategy. However, Florence (2012) suggested that in order to develop brand for long terms, organization of luxury brand has to create a link between the encoding of brand information and concept node of brand. From the point f view of ownership, senior brand and junior brand are not related to each other. On the contrary, Hennigs et al. (2013) cited that senior and junior brand is interrelated in terms of mark such as logo, slogan, name, etc. As a result, the existing brand largely affects the new brands. For example, Adidas launched a new sports t-shirt in the market for cricket world cup 2015. As soon as the t-shirt launched in the market, a junior brand copied the design and launched new products that comparatively low price rather than the Adidas's t-shirt. Kapferer (1997) asserted that entirely associated construct for activation of junior brand association need to reduce their probability of designing products according to the products of luxury brands. This completive interface can able to moderate dilution.     

 

2.2 Effect of counterfeit on the image of luxury brand

In this journal, it has been analyzed that in recent time, misbehavior of consumer is the enormous issue. Purchase of illicit products or services is also the major issues in these days of business. Based on this theory, Gistri et al. (2009) hypothetically analyzed the effects of counterfeit products or goods on luxury brands. The key concept of this journal that analyzed negative effect never effect on luxury brand or do not create any effect on significant change in perceiving brand image.

Theory on Consumer misbehavior: Several articles cited about the misbehavior of consumer or counterfeit.  In the journal of Reyneke et al. (2011), it has been analyzed that planned behavior of the consumer explores circumstance of purchasing copies products. However, Wiedmann et al. (2012) acknowledged that an intention of purchase has the strongest impact on perceiving behavioral control. On the other hand, Kapferer (2012) cited that moral commitment or risk assumption is more important factors to the consumer related driver instead of supply related factors. Kapferer and Bastien (2009) suggested that a majority of consumer of the country UK probably purchases the products of counterfeit rather than luxury brand. Due to price sensitive people in UK, majority of customer attack to buy products from counterfeit. On the other hand, Kapferer and Michaut-Denizeau (2013) depicted that ethnocentrism is a great aspect of consumer regarding purchasing of counterfeit products. According to them, majority of people prefer to authentic domestic products due to patriotic as well as privacy. Gorp et al. (2012) noted that people in any region should appeal to the Original Equipment Manufacturer (OEM). It is because an original manufacturer set their privacy policy and take responsibility for product if any damage done. 

As the consequence of De, Barnier et al. (2012), people attacks for the brand image products more rather than counterfeit products due to lack of functionality and quality. However, there is high increased demand for counterfeit products. Therefore, Keefer (2010) explained that products of counterfeit are less successful, less wealthy, unable to inferior social status and less self-secure. From this point of view, Nieddu et al. (2010) described that demand of counterfeit products increased day by day due to low price. However, Pal (2011) opined that in order to maintain low price, manufacturers of counterfeit products produce low quality or copies the idea from luxury brand.  In this journal, the author focused on analyzing intention of purchase and process of decision-making regarding counterfeit acquisition. Therefore, author of this journal was unable to produce a clear idea of the evaluation of consumer change regarding original brand.

Theory on counterfeit: Chen et al. (2014) opined that an economic impact is the key factor of counterfeit products in consumer's mind. The review if experts in a market demonstrated that counterfeit products face undesirable problem for lack of class and training of staffs or employees. Unskilled Employee and low design products affect the market of limited brand or counterfeit company. In this journal, author classified the counterfeits products of companies into two different methods such as deceptive counterfeiting and non-deceptive counterfeiting. Gistri et al. (2009) argued that when the customer unknowingly purchases copies products from third party called deceptive counterfeit, whereas when customer buy fake products with fully conscious it is called non-deceptive counterfeit. Apart from that, Reyneke et al. (2011) depicted that non-deceptive counterfeit has significant influence on the situation of buying behavior of a consumer.

Theory of luxury brand:

Hennigs et al. (2013) explained that uniqueness and individualism are the most important part of everyday life from the point of view of ever-increasing importance in these days of information overload and mass production. Therefore, Kapferer and Bastien (2009) analyzed that preference of personal brand and buying decision of the customer changed. In accordance to Wiedmann et al. (2012), the concept of individualism, conspicuous consumption, uniqueness, etc. helps in leading the personal brand more effectively rather than the limited brand or counterfeit products. Gorp et al. (2012), in his study demonstrated that personal brand or luxury brand commonly run with the help of status of the owner and long-term sustainability. De Barnier et al. (2012) stated that a majority of people in these days buy products not only for use but also for maintaining a status. From this point of view, it is utilized that people use luxury brand products not only for personal work but also for the work regarding public opinion and social environment. In this journal, it had been analyzed that price sensitive brand or counterfeit products unable to capture the market of luxury brand in UK. However, this study was not examined in depth about people's concept of luxury brand over counterfeit products in UK.

Dilution as a change in Brand Knowledge: Chen et al. (2014) acknowledged that trademark dilution is the notion of changing brand knowledge in the environment of luxury brand. Blurring is weakening the list of brand association such as attributes, tag lines, category of brand, etc. Marketing of brand is creating differential effect on brand knowledge.     

 

2.3 Affect of counterfeit products on ownership of luxury brand

2.3.1 Luxury Goods

According to Pullig et al. (2006), luxury goods are those goods or items that are consuming by the consumers that are not necessary to the consumers. However, they are bought by them for making the life of the consumers more pleasant. Luxury goods are in compared more costly and are consuming by the users having a good amount of accumulated wealth and higher income levels. Reyneke et al. (2011) commented on the fact that luxury goods can also be termed as status goods, which on mere display brings prestige and increases the status of the customers possessing it. These luxury goods are excellent, expensive as well as exclusive. Park and Rim (2012) had a view that these luxury goods are so manufactured keeping in mind the quality, look and texture. The luxury goods are also manufactured keeping in pace with the ongoing fashion trend in order to attract the customers having snob appeal for these goods (Gistri et al. 2009).

In addition to this, Wiedmann et al. (2012) commented that the customers possessing the luxury items and goods have these goods to set themselves apart from the ongoing trend. They also treat this in order to articulate their personality. For this reason, the demand for the luxury goods has increased to a considerable rate. In contrast to this, Reyneke et al. (2011) commented on the fact that the counterfeit goods are equally important for the customers as it is a daily necessity. In general, customers of an average income level are always inclined towards the counterfeit goods for having trendy goods at considerably low prices. Customers having inclination towards good quality products have an inclination towards the branded goods since branded products never compromise with the quality. On the other hand, according to Hennigs et al. (2013) luxury items include Hermes handbags, Gianni Versace suits, Mercedes-Benz cars, Polo shirts, Cartier, and Rolex watches, etc. are bought by the lavish customers. They bought these to set their trend and set themselves apart from the general trend. For this reason, the demand for handbags, belts, wallets, pens have increased to a considerable rate for the customers.

2.3.2 Customers concerned on Luxury Brands

Phillips (2011) commented on the fact that the individuals who are self-conscious and have a snob attitude for branded products are concerned with the luxury goods. The luxury items are so possessed by the customers in order to give a strong impression of their personality on the others. These individuals are more concerned about the physical appearance as well as trendy and ongoing fashions. According to Wiedmann et al. (2012), these preferences for buying international as well as nationally branded products are the result of above mentioned factors.  Moreover, these customers in order to have the branded product have an inner conflict of selecting the best brands for them irrespective of any price. Since, the luxury and branded products are the symbols of status, individuals with brand consciousness are more inclined towards it. In addition to this, Chen et al. (2014) had a view that customers tend to buy the luxury products in order to satisfying the appetite for these symbolic meant products. It is said that whatever may be the product, it is the brand that matter to the individuals. Therefore, it can be said that the luxury goods represent an expression of one's value.

According to Gorp et al. (2012), the consumption pattern of the individual symbolizes the social class and status of the individual. Apart from this, from the buying behavior of the consumers, the income and the standard of living of the consumers are well depicted. For the customers, the social position is essential since it convey the social class, wealth and affluence of them in the society. Kapferer and Bastien (2009) commented that having luxury and branded products of the customers emphasizes in the social group and power where brand image is very important. Having the counterfeit products can easily fulfill the reasons of the having luxury products but are of low quality and do not give the most desired social status to the customers.  So, Qu (2012) had a view that more than having the practical usages of the luxury goods, individuals prefer to have these goods in order to hold a good and uplifted social status in the society.

2.3.3 Symbolic identity of brand goods

Price- According to Reyneke et al. (2011) the quality products, exclusive store locations, attractive packaging, expensive promotions, celebrity endorsements and good advertising campaigns etc. all contributes to all higher prices of the luxury goods. In addition to this, the company's manufacturing branded products make a large investment in producing the goods and products recognizable and outstanding instantly among the huge products diversity available in the market. Roicklinsberg and Sandin (2010) commented on the fact that higher prices give the consumers a snob feeling of possessing it as well as they feel superior to buying it. This is because; this gives a feeling of superiority to them as well as makes them feel standing apart from the social trends and fashion. In addition to this, Wiedmann et al. (2012) commented on the fact that consumers try to possess the luxury goods in order to impress the other people, so they are motivated by having these products. Moreover, consuming the luxury products is a mere flaunt of the wealth the consumers have in compared to others in the society.

Brand Name- According to Han et al. (2010) the brand name have a strong impression and impact on the individuals since, the products selling under the brand have a symbolic icon and values added to that particular brand. This helps in giving an impression to the customers about the product so that it when possessed by the customers gives a social impression to the other people in the society. The Porsche products such as caps, automobiles, and wrist watches, etc. have outstanding finishing, glamor and sophisticated look that help in attracting the customers as well as help them to maintain a social status in the society. Doss and Robinson (2013) had commented on the fact that the branded products are so bought for what they truly mean rather than what they actually are.

 

2.4 Separation of brand and product in a counterfeit culture

2.4.1 Growth of Counterfeits

According to Gentry et al. (2001), Counterfeit products are those products that are of low cost and quality and are the replacements for the branded products. These products are targeted to those customers who want to have branded products but cannot afford it (Chen et al. 2014). Counterfeits products are easily available to the customers also have a demand internationally among all groups of people. Gistri et al. (2009) commented on the fact that the sales of the counterfeit products is nearly $299 billion where the International Chamber of Commerce had statistically found out that counterfeit products affect the 8% of the international trade. The customers prefer the counterfeit products since; it becomes difficult for others to difference between the real products and fake products. Moreover, Hennigs et al. (2013) had commented on the fact that the counterfeits are the in a huge demand for the local people of a country as well as to the tourists. This is because; these are available easily in the market at low price range.

Zampetakis (2014) argued in the fact that the market for counterfeit products have increased to a huge extent with the rise of e-commerce publicity. This is because; the e-commerce sites mainly aim at providing the customers the trendy products at comparatively low and affordable prices. The start-up and newly opened firms who are offering good prices may or may not be selling the genuine products to the customers. In today's world, the market is filled up with huge fake products other counterfeit products to give the customers a taste of having branded products. The lack of expertise in identifying the difference between the counterfeit products and genuine products also give a huge advantage the counterfeit market. This also leads to a huge sale of the counterfeit products without the acknowledgment of the customers that they receive a lot of counterfeits products in the name of genuine products.  In addition to this, Bian (2014) had a view that the advancement in the technology has a great impact on the start-up costs of counterfeits products.

2.4.2 Comparison of quality across Counterfeits

GiroÌ (2010) commented on the fact that there is a huge difference in quality of the genuine products and counterfeit products. The counterfeit products look alike the original branded products but are of low quality and also of low durability. It is also seen that the customers are also in search of counterfeit products since the prices of the products are comparatively low and quiet affordable to all the customers. The individuals who are more inclined and focused on the social status and fashion will lean towards the genuine products irrespective of price since they are concerned with the quality of the product. Gorp et al. (2012) cited an example from the market of Hong Kong depicting that individuals have a choice of buying diverse status of counterfeit products for different goods. There lies a huge difference in quality of the genuine products and counterfeit products, which the consumers have to understand at the time of buying. Hieke (2010) had a view that the customers have to understand the difference between the difference in genuine and counterfeit products by extensive market research since prices are not the only factor of difference.

According to Hennigs et al. (2013), there are two types of counterfeit products- products with a same name but are of different style and products with up class-forged bags. These products are the replica of the original bags, but the difference lies in the price and the material used for manufacturing these products. Kapferer and Bastien (2009) had a view that the best indicator for judging the quality and worth of the counterfeit products is the price. The customers will not mind in paying good prices for the good and quality products that can give value to the money spent on it. In contrast to this, Marck (2010) argued that there are many customers who are ready to pay high for a better counterfeit products mainly for clothing and sunglasses. In the case of VCDs, the difference between the fake products and counterfeit products can easily be distinguished. The quality of filming matters a lot in the counterfeit products since the quality is poor and not at all up to the mark. In addition to this, Kim and Park (2010) commented on the fact that the stores also place the real as well as the counterfeit products in the same stores displaying on the same shelves and charging the same rates for them. It is against the ethics of the stores and is a cheat to the customers where the customers unknowingly buy the counterfeit products by paying the same prices.

2.4.3 Price bargaining related to Counterfeits

According to Reddy (2010) the consumers after understanding the level of counterfeit, they tend to bargain for the right price. This is because, the customers are not ready to accept the prices that are initially told for the counterfeit products and so the customers for the price lowering bargain them. In addition to this, Savelli (2011) had a view that the customers who seek for the counterfeit products are those who want products of low prices. These customers are in search of the alternatives of the genuine products.

Reyneke et al. (2011) commented on the fact that initially the marketers attach a higher rate on the counterfeit products in order to gain a huge profit margin even after the price bargaining done by the customers.  The lowering of the price range depends on the level of bargaining of the customers. In addition to this, Sanyal et al. (2014) had commented on the fact that the customers, in general, opt for the alternatives or counterfeit products in search of finding goods alike the trendy products but at comparatively at  low price range. 

2.5 Customer Attitude towards counterfeit products

2.5.1 Gender biases towards Counterfeit products

The purchase of counterfeit products is considered as misbehavior on behalf of the customers that are deviated from the general and accepted norms (Carpenter and Lear, 2011). Teik et al. (2013) commented on the fact that according to the statistical data it has been seen that men are inclined towards the unlawful activities in comparison to the women. This resulted in the exploration of the relationship between the gender and inclination towards purchasing various counterfeit products. Again, Wall and Large (2010) had a view that the males are more intentional towards buying counterfeit products such as pirated CDs, watches, etc.

On the other hand, Wiedmann et al. (2012) commented on the fact that the culture of the individuals plays an important role in appropriate knowing about the gender biases towards the counterfeit goods. A study in China showed that the male consumers are much more biased towards the pirated CDs. Again a research was done among the Chinese customers' that showed that the females are inclined towards piracy of software.  Moreover, Zhou and Lu (2015) had a view regarding the sample taken among the Slovenians that showed the men were more inclined towards the counterfeit software and t-shirts as compared to that of females. But in cases of fake luxury watches, the attitude towards those products is equal for both men and women. 

In addition to this, Tungate (2009) had a view that the difference in purchase and buying behavior depends solely on the difference in nationality. In UK, it has been seen that 1/3 rd population of the customers has purchased counterfeit products at some point in time. According to Teik et al. (2013) the males of UK are more inclined towards the counterfeit sunglasses. Another research has showed that the customer's inclination towards the Gucci and Rolex products are irrespective of any gender.

2.5.2 Ethics related to Counterfeit products

The consumer ethics includes the principles, rules, morals and standards that take into account the purchase, sale, and services while buying the products. Shukla (2011) commented on the fact that the consumers who are honest, polite and responsible hold a very negative towards the counterfeit products. But in converse to this, Perez et al. (2010) had an opinion that the customers who are basically dishonest and irresponsible as well as are not bounded by the rules and regulations are more inclined towards possessing counterfeit luxury items. In addition, researcher found out that numerous consumers who willing to exchange the protected values of a good for a discounted price.

According to Lisa Maria Turunen and Laaksonen (2011) the consumers who consider that counterfeit goods are unethical to buy, they are less likely inclined towards the purchase of such products. In addition to this, the consumers having more inclination towards the ethical considerations will be more embarrassed if they find out that they are wearing counterfeit goods. Moreover, Tao and Mingna (2011) had a view that the adaptation of buying counterfeit products solely depends on the nature of the customers and their integrity. It is totally based on the nature of the customers on acceptance of the counterfeit products and usage of it in the daily life.

In addition to this, Truong et al. (2010) had commented on the fact that there are several customers who actually hold the value of honesty and claims that they cannot be carried off by the counterfeit products. They consider counterfeit products are the stealing of the original products or making clone of the original branded products. Counterfeit product affects on luxury product badly. To them, this kind of act is unethical, and they tend to stay away from committing such acts of buying these products. According to Wilcox et al. (2009) there are many customers who believes in fair and ethical trading tend to engage themselves in buying goods and products that are ethically sold irrespective of the price and keeps a safe distance from those products that are sold unethically.

 

2.5.3 Social Costs and Counterfeit products

Zhou and Lu (2015) commented on the fact that the customers in order to possess luxury and branded products buy the fake and counterfeit products in order to get the flavor of having counterfeit products at low cost. A study shows that the consumer response towards the counterfeits is highly favorable when the price is too high and is out of the reach of the people. According to Zlatevska (2011) the International Law Labor Organization has reported that there are millions of children who are working hard and are even  forced for manufacturing counterfeit products in China. Many counterfeit organizations and companies are totally associated with terrorists and crime groups.

JeongHeonBae (2013) had a view that the culture of the people, their gender, behavior and purchasing behavior all affects the purchase of counterfeit products.  The ethical dilemmas between the customers also affect the buying and sale of the counterfeit products. Moreover, the sale of the counterfeit products also depends on the moral and values of the organization and their ethical factors regarding the sale and purchase of the customers. De Barnier et al. (2012) had an opinion that based on the research it has been seen that the highly educated and socially recognized people are less likely inclined and interested towards the counterfeit goods and products (Shaw, 2011). It is even seen that the consumers often opt for the counterfeit merchandises without considering or taking into account the issues regarding the public welfare.

2.5.4 Anti-big trading attitude and counterfeit products

Shukla and Thampy (2011) had commented on the fact that the customers have a feeling of sympathy towards the small and start up businesses and they end up buying counterfeit products rather than buying from the brand owners itself. It is often believed that the customers due to having lower prices and low-profit margins, the consumers are more inclined towards purchasing counterfeit products. Chen et al. (2014) had commented on the fact that the negative attitudes towards the counterfeit products are due to violation of the consumer practices. The customers are often termed of having "Robin Hood Syndrome" for violating the privileges of brand owners by providing support to the counterfeit products.

3. Summary

Thus, to sum up, it can be said that the literature explores the effect of counterfeit products to luxury brands in the business sector. From the above discussion, it has been identified that counterfeit products mostly affected the luxury brand from the point of view of price. The implication of shared brand network increased rapidly. The speed of activation is increased in the proximity and strength of linkage among the constructs. It can be said from the psychological aspect that consumers want to possess the luxury branded products in order to have a feeling of superiority among the society. They are always in the mood to maintain a good standard in the society and are highly sensitive towards interpersonal rejections. It is found out that counterfeit products changed the both side of the market for luxury brands. Motivations for customer purchase are complex and ambivalent. Further, depending on different nations and buying attitude, the customers have difference in their buying attitudes. It has been also analyzed that sometimes, court interpreted with the opinion of mental association regarding luxury brand and counterfeit products when competing for the identical marks. Here, it also can be concluded that the sellers initially put up huge prices for the counterfeit products and on seeing the interest level of the customers, bargaining of those products are done and are brought at nominal prices. Apart from that, it is also identified purchase motivation and attitude of consumer vary based on purchase occasion. However, in this literature review, researcher concluded that a value of consumers regarding the purchase of luxury brand varies. However, this research work helps in segmenting the luxury market and designing the strategies for development of market.

 

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