Bilgiustam

Drivers of the Counterfeit Market


It is necessary to analyze what drives the parallel market, what is the temptation behind experiencing an illegal activity. According to the literature, there are two main forces driving this market and they are as follows:
• High margins obtained by counterfeit manufacturers,
• Demand and low prices for branded products,
The World Customs Organization states that the main driving force of this market is China’s exponential growth and intensification of its exports. Naturally, not all counterfeit products come from China, but an astonishing 2/3 of the total counterfeit shipments detected by the authorities are from China. This percentage corresponds to approximately 241 million pieces seized globally. US Customs and Border Protection states that the top commodities preferred by counterfeiters are shoes, clothing, watches, pharmaceuticals, and electronics, confirming that this is a real issue to work on. Luxury for consumers should be seen by everyone; In order to gain or increase their social status, customers acquire an expensive product or a fake product for their self-esteem and others to see.
Drivers of the Counterfeit MarketIf potential customers feel that the product set is owned by the masses, interest in purchasing a high-end product will decrease. Because the decision to buy branded products is based on social benefits such as the prestige of owning a product. Owning this nature luxury property is a symbol of success for the client and any fashion brand needs to maintain its exclusivity to attract customers. Because if a brand wants to price products at designer prices, that means it won’t be held by many consumers. Some researchers have presented a theory of two types of social groups, elites and masses. As the elites seek to distinguish themselves from the masses, and hence their high-level purchases, the masses need to imitate the choices of the elite. The primary value of luxury brands is psychological, that their consumption is dependent on a different mix of social and individual cues.
Han and his team point out that people don’t want counterfeit goods, they desire the real product, but sometimes customers who desire to have luxury goods may not be able to pay for the original product and may use counterfeit goods as a bad substitute. This means that consumers’ desire for fake luxury goods always results from their preference for genuine luxury brands. Also, imitations provide social status to the user at a low price but at the same time low quality, which besides hindering innovation, employment and trade does not really harm the end customer in any way. In 1993, he conducted a study that led to the conclusion that people care more about the image a brand carries than the acute lack of quality and functionality of a copy. Not surprisingly, people paid more attention to what holding a particular luxury brand really meant to others than to the actual quality of the product.
They pay more attention to the exterior rather than the interior features of the product, and in particular, this factor causes Asian consumers to have a stronger appetite for luxury goods. Consumers buy counterfeit goods because of the brand status they receive from it, goods with counterfeit status often offer similar qualities to the original goods and the consumer of these goods does not bear any risk of bodily harm. But consumers of these goods expose themselves to social risk because these goods have high symbolic value and social visibility. Bloch and his team stated that the real driver of the demand for counterfeit goods is the demand for luxury goods. As noted, consumers of fake luxury goods are willing accomplices rather than victims of deception, where fake luxury goods increase consumer demand for branded products to some extent.
Some fake buyers believe they are getting similar goods at lower prices. Instead of thinking about what actually goes with designing and assembling a luxury product, they see nothing wrong with the action and perceive designer prices as unfair. Prestige, brand image and fashion are important to buyers of premium brands, but buyers of counterfeit products try to get the image advantages at bargain price, albeit equally worth it. While marketers continue to focus on the quality/price ratio, consumers often realize that they can get enough quality for the price they pay. The transaction of a counterfeit product may seem advantageous to the seller and consumer at the time, but copying it is damaging to the brand as direct revenue is stolen.
According to a study, the consumer values ​​ethical standards and when they feel a company is not meeting those standards, they sacrifice themselves to punish the company, which can turn out to be counterfeiting. It can also be the other way around; customers may sacrifice themselves to defend a company with high moral standards. The study concluded that if the price of the original product is much higher than the price of the counterfeit, the quality is sufficient and the customer does not need to support the manufacturer of the original product. Since price remains one of the most important indicators in the market of a product’s value, the customer is more likely to acquire a fake. This means that consumers who knowingly acquire a fake product are willing to improve quality and performance for the fake image they are purchasing at a discounted price. According to the literature, there are three main reasons that push people to acquire counterfeit, and these three main reasons are as follows:
• The price of the fake product is much lower than the original,
• The quality of the fake is comparable to the quality of the original
• Customers may not see any reason to support the company that produces the original product, which is related to the company’s social responsibility,
Drivers of the Counterfeit MarketFor this report, Poddar and his team conducted a study that provides two relevant results, namely, that if price differentials are higher and quality differentials are lower, purchase intentions increase. The latter and highly relevant in confirming what was said earlier, customers are more likely to buy counterfeit products when they think other people won’t be able to tell the difference. As seen earlier, counterfeit sellers mainly do business online and provide the customer with professional looking websites, lower prices, faster delivery times and a wider range of deliveries, which poses a real threat, especially for luxury homes.
Cordell and his team understand that potential deception occurs because of information asymmetry and opportunistic behavior in business transactions. This is easier to do online, where everything can be manipulated in terms of information and visual aids provided by the seller. Research has found that improved online offering positively impacts buyers, which leads to reduced apparent risk, creates a better mood for customers and provides a more enjoyable experience for them. One of the most relevant factors for consumers purchasing counterfeit products online is price. Often these consumers use the Internet as a tool to gather information and even as a tool to compare the fake with the original product. Another factor valued by customers is security, when counterfeiters produce goods, they do not consider the personal safety of the customer. However, this does not affect counterfeit luxury goods, as many of them are products to be worn instead of medicinal drugs, for example where the danger of purchasing modified goods is more obvious to the end customer. Drivers of the Counterfeit MarketCounterfeit products have a symbolic value for customers who buy them with the desire to raise their social status. Consumers’ desire for counterfeit luxury goods depends on the extent to which such brands fulfill the social motivation that guides these consumers’ luxury brand choices. For this reason, consumers with strong face awareness prefer fake luxury goods that can be used in public to those that can be used on special occasions. This supports the findings of other researchers who state that situational effects are important in the analysis of undetected fake luxury goods.

References:
hbr.org/how-luxury-brands-can-beat-counterfeiters
sciencedirect.com/science/article/pii/pdf?md5=0d827f38c5c5ddb9dbda5729470fe153&pid=1-s2.0-S2212567115013210-main.pdf

Writer: Ozlem Guvenc Agaoglu


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