A

RESEARCH REPORT

On

Counterfeit of luxury good

In Partial Fulfillment Of The Requirement Of The Subject Research design for

management first semester division-A of

Master Of Business Administration

SUBMITED TO: SUBMITED BY:

- Prof. Jayesh Patel -Kinjal M.dave

-Jayesh N. desai

-Mayur T. desai

-Neepa M.gajjar

V. M. Patel Institute of Management

Preface

The key for achievement your goals in life is to work with enthusiasm and you should have

burning desire to learn, to explore, to experience and face challenge in life with positive attitude.

I am the student of MBA. As a part of curriculum of subject research I have read many books and

search from the internet and get many resources to prepare our report. Also filled up questionnaire

for analysis of factor influencing consumer behavior while purchasing bike.

In writing this report we have drawn vast amount of the information, data from the various senior

persons and simultaneously support by various other people. It gave us an edge for improving our

management knowledge and writing skills and to learn various aspects. 3

Acknowledgement

It was indeed an opportunity for us prepared report on the same during our MBA program, first

sem. Research design management subject.

Preparation such kind of report, requires lots of searching and collecting of data from many

sources like internet, books, and other people. During the preparation of this report have read many

books and search from the internet. Also we have taken help from our senior students. We are very

glade to prepare this kind of report.

We would like to thank Prof. Jayesh Patel, who took adequate care & effort in searching books,

magazines, journals, etc. so that we could complete our project smoothly and well in stipulated

timeframe.

Last but not the least: We would like to cite our beloved all our friends for their and

encouragement, support and blessings. These pages could scarcely have been written without their

help.

We express our gratitude to the staff members of V.M. Patel Institute of Management, who directly

or indirectly helped us. 4

Declaration

We undersigned a student of MBA Sem-1st hereby declare there the project work presented is

report is my own work and has been carried out under the supervision of Prof. Jayesh Patel of V.M

Patel Institute of Management.

To the best of our knowledge these works have not been previously submitted to any other

university for any examination by any student.

NO. SUBJECT PAGE

Preface

Acknowledgement

Declaration

1 Introduction

1.1 Background

2 Review of literature

3 Research Methodology

3.1 Objective of the study

3.2 Research Design

3.3 Sampling Design

3.3.1 Target population

3.3.2 Sampling Method

3.3.3 Sampling Size

3.3.4 Execution

3.5 Measure of the study

3.6 Tools for a data collection

3.7 Scale used in data collection

3.8 Summary

3.9 Hypothesis

4 Questionnaire

5 Bibliography

Chapter- 1

Introduction

The practice of product counterfeiting high-visibility, strong brand-nameluxury consumer goods is a

major problem. According to the InternationalChamber of Commerce, global losses from

counterfeiting of luxury brands as well as other consumer goods amounted to more than $200 billion

in 1996and counterfeit products accounted for 5 percent of world trade (NillandShultz, 1996). In

addition, lost revenues and jobs are the immediate damages, as in 1993 alone, the US Customs Service

projected that total USjob loss due to product counterfeiting was 750,000.Past research has examined

the demand side of product counterfeiting (Blochet al., 1993; Cordell et al., 1996; Wee et al., 1995);

the consumption habits of the affluent (Stanley 1988; 1991); or the stages luxury brands go through

before being fully accepted by consumers (Dubois and Paternal, 1995).

However, no prior work has examined the attitudes and reactions of consumers of genuine luxury

goods towards counterfeits. It is important to distinguish between the two types of transactions

involved in counterfeiting: namely, deceptive and non-deceptive. Grossman and Shapiro

(1988a)identified deceptive counterfeiting as a situation in which the consumers arenot aware of

purchasing a counterfeit product at the time of the purchase. Another words, consumers believe they

are purchasing the genuine product. They indicate that deceptive counterfeiting can be observed

mainly in markets for automotive parts, consumer electronic products such as computers and stereo

equipment, pharmaceuticals and medical devices.However, in many cases, and especially in the luxury

brand market, consumers are involved in non-deceptive counterfeiting. This is a situation in

whichconsumers are fully aware that the product purchased is a counterfeit product atthe time of

purchase.

Counterfeiting in ChinaThe International AntiCounterfeiting Coalition (IACC) hasestimated that

counterfeiting is responsible for at least $200billion a year in lost jobs, taxes and sales

(FurnhamandValgeirsson, 2007). In particular, China has beenacknowledged as the world‟s most

notorious country for counterfeiting, where all sources of counterfeit goods can betrayed (Hung, 2003;

Forney, 2005; Cheung and Prendergast,2006; Bian and Veloutsou, 2007). It has been recorded that20

percent of goods sold in the Chinese market are counterfeit goods (Alcock et al., 2003;

BianandVeloutsou, 2007). Thesegoods span across a wide range of products including

apparel,cigarettes, electronics, food, mobile phones, pharmaceuticals,skin care products and many

others (Bush et al., 1989; Jacobset al., 2001; Trainer, 2002). In particular, as the Chinese areavid

consumers of luxury goods (Wong and Ahuvia, 1998;Jiang, 2005; Somezand Yang, 2005; Li and Su,

2007), the counterfeiting of luxury brands has reached astronomicallevels.The trading of luxury goods

in China has proved to be lucrative market as it has been noted as the world‟s thirdlargest consumer of

high-end fashions, accessories, and other luxury products (Ernst &Young China, 2005; Chadha,2007).

The market is recorded as generating more than $2billion in sales a year and is projected to continue

growing by an estimated 25 percent annually (Ernst & Young China2005; Embassy of the People‟s

Republic of China, 2005).Such a rampant counterfeit industry could reduce profits and attractiveness

to foreign investors, and may threaten the brand equity of both international and local luxury products

(Chow,2000; Trainer, 2002).The catalytic growth of counterfeiting can be attributed tothe increase in

world trade and emerging new markets, fastpaced technology advancements, and also the increase

ingoods that are worth counterfeiting (Wee et al., 1995; Blochet al., 1993; Alcock et al., 2003). Luxury

brands are easily counterfeited as it is easy to sell and incur low manufacturing costs (Shultz and

Soporito, 1996; Gentry et al., 2006).Moreover, consumer demand is also increasing due to thepursuit

of status goods and the desire of being in tune withfashions and fads (Chang, 1998; Eisend and

Schuchert-Gu¨ ler, 2006). It is reported by Chinese officials thatcounterfeiting is a staggering $16

billion business annually(Bian and Veloutsou, 2007).

1.1 BACKGROUND

The luxury goods industry is a very lucrative market. Market analyst Mintel had estimated thatthe

global luxury goods industry would be set togrow at a compound annual growth rate of 12per cent

from the current market value of US $ 70billion to $ 100 billion by 2008. 1 With the luxury market

value growing at such a phenomenal rate, many luxury designer brands have become targets for

counterfeit producers. It is estimated that the trade in counterfeit brands has exceeded more than $ 500

billion, 2 and is deemed to be a booming market. 3,4 The market in fake goods may reach the $ 2

trillion mark in 20 years, which represents 3 million businesses in the United States. 5 Counterfeiting

is extremely rampant in Asia, 6 for instance, Korean Customs Service announced that out of the $

162.5 million worth of fake products that have been seized, those bearing Chanel ‟ s logo alone have

accounted for$ 23.5 million, far exceeding any other brand. 7The growth in the counterfeit market can

be attributed to the increase in world trade and emerging new markets.

Counterfeiting, the production and sale of fake products that seem identical to the original product, has

beenmushrooming across the globe and recently growth in dangerous level (Penz&Stottinger, 2005).

Further ,more, ndonesia is among several offenders mentioned in a US report targeting the world‟s

worst piracy offender who will soon see their illegal market overtaken by the Internet, which is

increasingly the sales medium instead of shopping mall stalls and street carts (Jakarta Globe, accessed

on October 15, 2012). According to U.S. Customs and Border Protection Office of International Trade

(2007), 70 percent of counterfeited goods belong to fashion goods, such as handbags, watches,

jewelry, shoes, clothes, hats, sunglasses, and perfume. The current collective buying behavior shows a

high demand for luxury brands product by shoppers at many different social classes. Consumers have

increased their awareness about design and have begun to expect high style (Kay, 1990). Consumers

who are buying luxury brands products may be described as self-conscious and they were especially

concerned about the impression they make (Penz&Stottinger, 2005). Fashion counterfeit products are

believed to carry a high image and the prestige connected to a well-known brand name. The

similarities in appearance, quality, and image created by the counterfeited version compared to the

original product are important in determining consumers‟ purchase intention (Wee et al., 1995).This

paper attempted to explore the Indonesian consumers‟ mindset in relation to purchasing counterfeitsof

luxury brands. The result and model of the previous research had a conclusion which might not be

proper to be applied with the recent condition in Indonesia. The research conducted by the previous

researcher has differed in location ,object, subject, time and or analysis and generally it was conducted

in the foreigncountry whichhas different economic and cultural environment to Indonesia. There are

three main objectives of the current study. First, it examines the influence of social and personality

factors to attitudes towards counterfeit products of Indonesian consumers. Second, it investigates the

relationship between consumer attitudes andpurchase intention of counterfeits of luxury brands. Third,

it examines the influence of social and personality factors to purchase intention of counterfeit

products. The producers and marketers of genuine products could then come upwith ways or different

strategies in engaging the consumers to buy the genuine products over the counterfeit products.

Counterfeiting of famous ltrxury brands with a strong brand name and high- visibilify is a never

growing global industry. Already in 1985 Business Week called counterfeiting perhaps the world's

fastest growing and most profitable business" and with more ltrxurybrands with clearlyextemalized

signs of recognition there are no that the industry is diminishing. Exactly how big the industry of

cotinterfeit merchandise is is difficult to calculate exactly since it is an industry operating on a 'grey

market'. One estimate is that cotinterfeiting accounts for more than 6% of worldwide frade or $450

billion a year, and that some $100 million worth of fake goods are seized each year entering the U.S.

(Betts,2004). The problem with counterfeit goods has become even more pressing for ltixury brands

with the entrance of the Intermit as a new market actor. With professional looking websites, low

prices, faster delivery times and wider range of delivery, thecounterfeitmerchandisers are posing a real

threat to the luxury houses. The luxtiryhouses are losing enormous amounts ofninety and are for

example, responding byputting out the word that buying counterfeit products help support for instance

terrorism and other not only illegal activities but also morally apprehensive. One dramatic example

ofcounterfeiting leading to losses for brands is that of Louis Vinton in the Italian marketwho in the late

1970swithdrew completely from the market when they found themselves tabletopcompete with the

counterfeiters oftheir products (Kaikati&LaGarce, 1980:58).Suppliers of counterfeit merchandise

have, like the luxury conglomerates recognized the penetrative power of theIntermit. The practice of

counterfeiting has boomed with the possibility of selling on the Intermit. TheIntermit enables the

counterfeit merchandisers to reach consumers in all parts of the world.Having shipping allover the

world with short delivery times and much lower prices than originalgoods. Also do not face

theproblem of being out of reach of mass consumption. A search on 'Rolex watch' renders 17 900 000

hits(December 3"* 2011). Out of the hits a diminishingly small part are for sites with genuine

merchandise.Cotmterfeiting is not a new phenomenon but with new sophisticated ways to reach

consumers the business isincreasing rapidly. The Intemet offers an abundance of copies, counterfeits,

replicas and otherwise knockoffs ofluxury brand items. A search on the term 'Louis Vuitton bags' on

Google renders hits (December 3""2011), most of them suppliers who offer counterfeit copies or as

they call them 'replicas'.Studies show that price and discotints are important factors for online

shopping, this being the perfect argumentfor purchasing and selling cotinterfeitsonline. April

2012inherent connotations of low prices and wide distribution enters the market? Is the Intermit better

suited as a communications channel for luxury brands than as means for distribution? In order to

investigate these questions this paper studies which 'values' that are prevailing in purchasing

counterfeit merchandise online and whatimplications these would have on luxury brand image and

consequently also on brand manage.

Counterfeiting is one of the fastest-growing industries in the world, with the sale of counterfeit goods

estimated to account for up to 10% of world trade. In countries where this problem is particularly

severe, such as China, it is speculated that as much as20% of all products sold domestically are

counterfeit (Alcock, Chen, Ch‟ng, &Hodson, 2003; Balfour, 2005). Beginning with just a few product

categories such as luxury clothing and personal accessories, imitation of branded goods now affects

awiderange of industries, including music, movies, food, computer software, pharmaceuticals,

fertilisers, and machinery parts (Cheung &Prendergast, 2006). Infact, the World Health Organization

estimates that up to 30% of all the world‟s medicines may well be counterfeits (Alcock et al.,

2003).There are a number of reasons for the proliferation of counterfeiting in recent years, including

the increase in the demand for branded products with growth in world tradeDownloaded by [St. John's

University Libraries] at 10:19 19 September 2011emergence of new markets and removal of trade

barriers, mass-production of counterfeit goods with cheaper access to sophisticated technologies, and

the rise of the Internet making it easy to store and transfer intangible products such as music, videos,

and software with a simple click of a button (Alcock et al., 2003). More ,over, buoyed by inadequate

penalties and weak enforcement of the respective laws and regulations, counterfeiting operators in

countries like China have grown into power fullobbies with political and criminal connections (Chow,

2003).The market for counterfeit and pirated products consists of two important submarkets(H¨ubner,

2007). In the primary (or deceptive) market, consumers purchase counterfeit and pirated products

believing they have purchased genuine articles. The products are often substandard and may carry

health-and-safety risks that range from mild to life threatening. In the secondary (non-deceptive)

market, consumers looking for what they believe to be bargains knowingly buy counterfeit and pirated

products. The policies and measures to combat counterfeiting and piracy in the two market differ; it is

therefore important to know how much of a threat each poses when considering product-specific

strategies (H¨ubner, 2007).Prior research on counterfeiting focuses on its supply side (i.e. deceptive

counterfeiting),with little research on the demand side of counterfeiting (non-deceptive), and most of it

is either fragmented or exploratory without strong conceptual foundations. Hence ,many unanswered

questions and contradictory findings remain (Penz, Schlegel milch, &Sto¨ttinger, 2009;

Staake,Thiesse,&Fleisch, 2009;Wilcox,Kim,&Sen, 2009).As a result, we still do not know why some

consumers may be more prone to buying counterfeit products compared to others. In this paper, we

address this important research gap by conceptualisingaconsumertrait called „counterfeit proneness‟

(CFP) that represents the relatively stable tendency to prefer, purchase, and use counterfeit products.

We distinguish this trait from other similar constructs such as attitude towards counterfeiting, brand

consciousness, face consciousness, materialism, shopping enjoyment, status consumption, and value

consciousness. We also develop a reliable and valid scale to measure CFP based on an extensive

literature review and a series of empirical studies. Finally, we discuss some applications of our new

scale, its limitations, and directions for future research. Counterfeiting is a significant and growing

problemworldwide, occurring both in less and well developed countries. In the USA economy, the cost

of counterfeiting is estimated to be up to $200 billion per year (Chaudhry et al.,2005). Considering the

countries worldwide, almost 5 percentof all products are counterfeit, according to the

InternationalAnticounterfeiting Coalition (IACC, 2005) and theInternational Intellectual Property

Institute (IIPI, 2003).A number of definitions have been used for productcounterfeiting. In this paper,

we use the one given by Co-rdellet al. (1996) and also used by Chaudhry et al. (2005): “any

unauthorized manufacturing of goods whose special characteristics are protected as intellectual

property rights(trademarks, patents and copyrights) constitutes productcounterfeiting.”Actions to limit

counterfeits can arise from both supply anddemand side, considering the tactics companies employ

todeter counterfeits (Chaudhry et al., 2005) and the motivationsthat make a counterfeit an interesting

option for some customers.

The luxury goods industry is a very lucrative market. Market analyst Mantel had estimated that the

global luxury goods industry would be set to grow at a compound annual growth rate of 12per cent

from the current market value of US $ 70billion to $ 100 billion by 2008. 1 With the luxury market

value growing at such a phenomenal rate, many luxury designer brands have become targets for

counterfeit producers. It is estimated that the trade in counterfeit brands has exceeded more than $ 500

billion, 2 and is deemed to be a booming market. 3,4The market in fake goods may reach the $ 2

trillion mark in 20 years, which represents 3 million businesses in the United States. 5 Counterfeiting

is extremely rampant in Asia, 6 for instance, Korean Customs Service announced that out of the $

162.5 million worth of fake products that have been seized, those bearing Chanel ‟ s logo alone have

accounted for$ 23.5 million, far exceeding any other brand. 7The growth in the counterfeit market can

be attributed to the increase in world trade and emerging new markets

Chapter – 2

Review of Literature

2.1 Luxury brands and counterfeit brands

Vanern and Johnson 25 stated that consumers develop prestige or luxury meanings for brands based

upon social interactions (for example aspired and / or peer reference group),objectproperties (quality)

and hedonic values (for example sensory beauty). Luxury or status goods are defined as goods for

which the mere use or display of a particular branded product reflectsprestige onto the owner, apart

from any functional utility. 26 Nueno and Quelch27defi ne luxury brands as „ those whose ratio of

functionality to price is low, while the ratio of intangible and situational utility to price is high ‟

.Bearden and Etzel 28 concluded that publicly consumed luxury products were more likely to be

conspicuous products than privately consumed luxury products. Therefore, luxuryproducts areoften

used to display wealth and power, and highly visible luxury brands dominate this conspicuous

segment. This is a point put forward by Veblen, 29 who suggested that people use Targeting buyers of

counterfeits of luxury brandconspicuous consumption to signal wealth and to infer power and status.

Consumers are motivated by a desire to impress others with their ability to pay particularly high prices

for prestigious products. 30 When they carry a luxury branded product, it is an ostentatious display of

their wealth.Counterfeits are reproductions of a trade market brand – usually that of a luxury brand. 23

They are closely similar or identical to genuine articles,including packaging, labelling and trademarks

to intentionally pass off as the original product. 31 – 33According to McDonald and Roberts,

34consumers who purchase counterfeit goods can be separated into those who are deceived into

thinking that the product they bought is genuine and those who knowingly buy counterfeits. The first

would be a victim, when they unknowingly and unintentionally purchase counterfeit goods due to it

being so closely similar to the genuine articles. 9,26,35,36 However, the latter is a willing participant

or consumer of counterfeit products, wherein they seek out counterfeit products even when they know

that the products are illegal and a copy of the genuine. 9,20,23As such, this paper only focuses on the „

accomplice ‟ , or consumers who are willing purchasers of counterfeits of luxury brands. Counterfeits

are cheaper alternatives to the expensive originals. 37 In many instances, these counterfeits have

shown that there might not be any noticeable difference in perceived quality. 12As such, counterfeit

brands may diminish the symbolic value of authentic luxury brands and dilute the brand equity.

26,38,39Buyers of genuine products may refrain from purchasing these.

2.2 Selected literature review

What are luxury goods?

Traditionally, luxury goods or status goods are defined as goods for which the mere use or display of a

particular branded product brings prestige on the owner, apart from any functional utility (Grossman

and Shapiro, 1988b).These goods are often expensive and exclusive, such as Cartier and Rolex

watches, HermeÂs handbags, Polo shirts, Gianni Versaci suits and Mercedes Benz cars. Recently,

luxury producers are finding that the trend to war casual dressing has forced people to search for new

ways to set them selvespart and express their personality (Hessen, 1998). This has led to an increasing

demand for luxury accessories such as belts, handbags, wallets and pens, which can be easily worn on

casual dress days.

Who buys luxury brands?

Bushman (1993) conducted a study to examine the buying behavior of publicly self-conscious

individuals. According to Bushman, publicly self conscious individuals are especially concerned about

the impression they make on others. They are more concerned about physical appearance and fashions;

are more likely to use different strategies to gain approval from others; are more compliant with

standards in society; and are more sensitive to interpersonal rejections. The results of his study suggest

that these individuals prefer buying national and famous brands to bargain brands regardless of what

the actual product is like.

While a brand imitation is designed so as to 'look like' and make consumers 'think of the original

brand, a counterfeit product is designed to 'be like' the original and provide consumers with a less

expensive copy (d'Astous&Gargouri, 2001:153). Counterfeiting has both a supply and a demand side

and despite the supply-side efforts to reduce counterfeiting, the practice endures. In some areas, such

as consumer fashion goods, counterfeiting appears to be increasing (Chute, 1990). According to Bloch,

Bush and Campbell (1993:28) counterfeiting has flourished due to worldwide demand for high profile

brands which carry a premium price and are easy to copy. This is consistent with Kapferer's (1997)

point that luxury glitters and the fact that luxury is visible is essential: luxury must be seen, by the

consumer and by others. That is why luxury brands extemalise all of their signs: the brand signature

must be seen and recognized on the person wearing the brand, and it must be recognized worldwide.

2.3 Counterfeit Goods

When purchasing a counterfeit good the consumer may or may not be a knowing and willing

participant in the illegal practice. Grossman and Shapiro (1988) identified two types of counterfeiting;

deceptive counterfeiting which is described as a situation in which the consumers are not are of

purchasing a counterfeit product at the time of the purchase. Consumers cannot readily observe the

qualify of the goods, nor can they easily distinguish copies from authentic merchandise. Grossman and

Shapiro (1988) indicate that deceptive counterfeiting can be observed mainly in markets for

automotive parts, consumer electronic products such as computers and stereo equipment,

pharmaceuticals and medical devices. The luxury brand mark ever, often shows the other side, where

consumers are involved in non deceptive counterfeiting. In this situation consumers are fully aware of

the fact that the product purchased is a counterfeit product at the time of purchase. Grossman and

Shapiro (1988)describe that the public is well aware of the market availability of bogus brand name

watches, leather goods, fashion apparel, perfumes and designer sunglasses among others. They point

to the fact that given this awareness and the fact that these fakes sell for a mere fraction of the cost of

the legitimate products in outlets that are evidently not official distribution outlets, one can suspect that

many buyers are not fooled. Grossman and Shapiro (1988) also pose the question on why a consumer

would knowingly purchase a counterfeit item and give as one possible explanation that the product

offers good value for money in light of its frue qualify or use fullness hey render this explanation

insufficient because why incur the risks associated with illegal copying when legitimate products

could be offered at a lower price. Instead they propose the alterative explanation that it is the label and

identifying design characteristics (e.g. logo or distinctive fabric patens) that are of value to consumers,

such as the case is for status goods. In buying these types of counterfeit goods the risk is much smaller

than with counterfeit goods that are technically advanced or of a medical nature. Counterfeit status

goods often offer similar product qualities as the original merchandise and the consumer of this goods

is not at any risk of bodily harm, or otherwise 'serious' risk. The consumers of these goods, however,

subject themselves to social risk because the goods are of high symbolic value and social visibility

(Nill& Shultz, 1996).Efforts of fighting counterfeiting practices come in many forms and Nill and

Shultz (1996) propose that among conventional, supply-side remedies against counterfeiting, that

include everything from diplomatic and legislative pressure to high-tech product labeling, some are

effective while others are not and that because of this, company focus should also be on the consumer

demand side of counterfeiting, with an emphasis on ethical consumer decision making.

2.4 The Internet's Affects on Branding

Shopping has become the fastest-growing use of the Intermit, and almost 40 percent of Intermit users

report shopping as a primary use of the Web (GVU, 1998 in Donthu&Garcia, 1999). Price comparison

sites and shopping agents enable consumers to obtain and compare prices rapidly and put pressure on

brand prices as lower price levels become more transparent (Sinha, 2000). Sinha (2000) sees the

widespread availability of information about product prices, features and competitors on the Intermit

as posing a threat to brands. On a similar note, Sealy (1999) argues that brand management is out of

date in today's markets where e.g. inter active marketing make traditional brand management less

effective. As an argument for this point of view it is claimed that the greater choice and ability to

compare products will make the information provided by brands redundant as the main function of a

brand is an indicator of qualify or some feature that differentiates the product or service.

2.5 Luxury Online

Lately brand marketers have found themselves needing to rethink their branding strategies in order to

have both off"-line (bricks and mortar environment) and on-line (clicks environment) (de Crematory,

2001). Luxury brands are no exception to this new thinking. De Crematory (2001) argues that a brand

that exists in a bricks and mortar environment can be migrated to a clicks environment using the same

brand essence, provided it remains true to the same values. This is for example seen on the luxury

retailer Luxury, belonging to the LVMH concerns, where Louis Vinton has its' own separate web

store. Louis Vinton in the bricks and mortar environment has very selective distribution selling their

products solely in their own boutiques which are strategically placed in key locations in larger cities.

An online brand experience encompasses all points of interaction between the customer and the brand

in the virtual space (Christodoulides& de Chematony,2004:170). Rubinstein and Griffiths (2001:401)

pointed out that "...on the Net you have to orchestrate everything you do to deliver a highly

differentiated and consistent positive experience". Pine and Gil more(1999:17) encouraged marketers

to "create a brand image emphasizing the experience customers can have surrounding the purchase,

use, or ownership of a good". Pine and Genre‟s encouragement of emphasizing.

Chapter – 3

Research Methodology

3.1) Objective of the study

Nill and Shultz (1996) suggest that companies should implement and sponsor marketing and

advertising campaigns to reduce the demand for counterfeit goods. However, they caution that the

success of such campaigns depends on a number of factors including product category, individual

characteristics of the consumers, strength of brand image and marketing communication method.

Based on these suggestions, the objective of this research is to identify who buys pirated brand, why

they buy these goods and how they buy them.

3.2) Research design

The research design can be classified in to three broad categories.

1) Exploratory

2) Descriptive

3) Casual

In this study using Exploratory research design

A focus group was formed to generate more information about counterfeit buying behavior due to

the exploratory nature of this study. All the participants in the focus group had recently purchased

either pirated VCDs or pirated brands of clothing

3.3) Sampling design

There are two types of sampling designs.

A) Probability sampling.

B) Non-probability sampling.

Here non-probability research design used.

A non-probability sampling technique that attempts to obtain a sample of convenient

element. The selection of sampling units is left primarily to the interviewer.

3.3.1) Target population

Demographics N Percent

Gender

Female 154 75.5

Male 50 24.5

Age

20-29 139 68.1

30-39 37 18.1

40 and above 28 13.7

Marital status

Never married 160 78.4

Married 43 21.1

Divorced/separated 1 0.5

Occupation

Administrative staff 31 15.2

Civil servant 18 8.8

Executives and managerial 49 24.0

Professional 22 10.8

Sales and marketing 17 8.3

Student 24 11.8

Technician/skilled worker 20 9.8

Others 23 11.3

Annual salary

14000 or below 39 19.1

14001-21000 49 24

21001-28000 62 30.4

28001-35000 24 11.8

35001 and above 39 19.1

3.

3

3.2) Sampling method

Primary Data:

The primary data collected through questionnaires administered to a sample of 100 consumers

Secondary Data :

Secondary data was collected through various publications of newspapers, magazines, books,

research paper.

3.3) Sampling size

Two hundred and four usable responses were analyzed with SPSS software version Of the

respondents, 75.5 per cent were female. The majority (68.1 per cent) of the respondents were between

20 and 29 years old. The highest percentage in terms of occupation was executive and managerial

level, at 24 per cent.

3.3.4) Execution

Counterfeiting of luxury brands has become a severe global economical problem that cannot be

alleviated overnight. Singapore ‟ s stand on piracy and intellectual property is a main deterrent for

counterfeit products to enter the country. But this has not stopped citizens from purchasing counterfeit

products when they are overseas. Countries are best advised to work together to defeat or curb this

problem. Notably, the stance towards anti-counterfeiting is toughening on a global scale. However, it

requires long-term planning and execution of strategies that suitably target consumers and suppliers to

be able to succeed. It is crucial for managers to understand the fundamentals of consumer attitudes and

purchase behaviors of counterfeits to be able to counter the counterfeit epidemic. In summary, this

study presents the following conclusion: It is evident that consumer attitudes towards counterfeits of

luxury brands play an important role in affecting consumer purchase intention. The social influence of

the consumers plays an important role in their intention towards purchasing counterfeits. Even though

most Singaporean consumers have a stable income, the price and quality of the counterfeit luxury

product versus the original is still an incentive for them to opt against the latter. There are a number of

limitations worthy of improvement and future research. This study was conducted through an online

survey and distribution of printed surveys among a certain social circle. This may limit the populations

that could be reached. It is relatively tough to find retail shops that sell counterfeits of luxury brands.

Those who purchase counterfeits of luxury brands may not have bought them in Singapore, but may

have purchased them when they were overseas, where counterfeit products are readily available. The

addition of factors such as where do they usually purchase or where did they last purchase the

counterfeit luxury products can be further investigated to test for their influences on consumers.

Another study on Singaporean consumers who travel overseas frequently and who often buy

counterfeit luxury products could well be delved into and examined. This could entail the examination

of situational and emotional factors involving tourists on holiday, as they are likely to have a sense of

excitement and a softened ethical stance.

3.5) Tools for data collection

The survey instrument was designed and put up on a website. Three hundred postgraduate students

from a large university were emailed the website address, and were instructed to take part in the

survey. It was highlighted to the sample that participation in this study was voluntary and that

respondents ‟ anonymity was ensured. Owing to the sensitivity of some questions asked, the

respondents were further reassured that their responses would not be traced back to them. The

demographic details requested were purely for statistical analysis. Respondents were given 2 weeks to

complete the survey, and a reminder email was sent 1 week before the survey was closed. Two

hundred and twenty surveys were completed, but 16 were rejected due to incomplete information. As

such, 204 usable responses were employed in the final analysis.

3.8) summary

It is crucial for managers to understand the fundamentals of consumer attitudes and purchase

behaviors of counterfeits to be able to counter the counterfeit epidemic.

In summary, this study presents the following conclusion: It is evident that consumer attitudes

towards counterfeits of luxury brands play an important role in affecting consumer purchase

intention. The social influence of the consumers plays an important role in their intention towards

purchasing counterfeits.

Even though most Singaporean consumers have a stable income, the price and quality of the

counterfeit luxury product versus the original is still an incentive for them to opt against the latter.

There are a number of limitations worthy of improvement and future research. This study was

conducted through an online survey and distribution of printed surveys among a certain social

circle.

This may limit the populations that could be reached. It is relatively tough to find retail shops that

sell counterfeits of luxury brands. Those who purchase counterfeits of luxury brands may not have

bought them in Singapore, but may have purchased them when they were overseas, where

counterfeit products are readily available.

The addition of factors such as where do they usually purchase or where did they last purchase the

counterfeit luxury products can be further investigated to test for their influences on consumers.

Another study on Singaporean consumers who travel overseas frequently and who often buy

counterfeit luxury products could well be delved into and examined.

This could entail the examination of situational and emotional factors involving tourists on

holiday, as they are likely to have a sense of excitement and a softened ethical stance.

Further exploration using qualitative approaches to examine consumer purchase behavior of

counterfeit products may provide deeper insights.

Quantitative approaches are very commonly used, and the understanding derived may still be

limited.

3.8) Hypothesis

H1: Brand consciousness has a negative influence on the attitudes towards counterfeits of luxury brands.

H2: Personal gratification has a negative influence on attitudes towards counterfeits of luxury brands.

H3: Value consciousness has a positive influence on attitudes towards counterfeits of luxury brands.

H4: Consumers who are more concern about price over quality have more negative attitudes towards

counterfeits of luxury brands.

H5: Social influence has a positive effect on attitudes towards counterfeits of luxury brands.

H6: Brand prestige has a negative effect on attitudes towards counterfeits of luxury brands.

H7: Consumers with positive attitudes towards counterfeits of luxury brands have higher intention to

purchase counterfeits of luxury brands.

3.9) Pilot testing

A pilot test of ten samples was used to elicit the willingness of participants to participate in the survey.

This was largely due to the sensitivity of the topic of the study. It was planned to adopt the projective

technique if this method of data collection was not acceptable. However the results of the pilot test

justified the original choice of survey method.

Chapter – 4

Questionnaires

Dear sir or mam, we are the student of V.M. PATEL INSTITUTE OF MANAGEMENT in M.B.A

Programme sem-1.This questionnaire is a part of the research for a master dissertation related to “Factors

Influencing Consumer Behavior While Purchasing Bike”. The results of this survey will be used for

academic purposes only. The survey is anonymous and does not require any personal details to be

submitted.

Name : ______________________________

Gender : Male Female

Age : Below 20 20-25 26-30

31-35 36-40 41-45

46-50 51-55 56-60

61-65 66-70 71-75

76 & above

Profession/Occupation:

PG Student Employed

Self Employed Retired Person

1. In your opinion, how easily available are counterfeit products in your home country?

In your opinion, how easily available are counterfeit products in your home country? Easily

available

Almost easily available

Available

Difficult to get

Not available

2. Do you think you are able to distinguish a counterfeit product from the original?

Do you think you are able to distinguish a counterfeit product from the original? Yes

No

3. How likely are you to buy a counterfeit?

How likely are you to buy a counterfeit? Very likely

Likely

Maybe

Not likely

Not at all

4. Do you think the actions taken against counterfeit products are severe enough to stop you from buying

these products in your country?

Do you think the actions taken against counterfeit products are severe enough to stop you from

buying these products in your country? Yes

No

5. Would more severe consequences stop you from buying counterfeit products?

Would more severe consequences stop you from buying counterfeit products? Yes

No

6. If yes, which consequences would stop you from buying counterfeit products? (Please tick all that apply,

multiple answers possible)

If yes, which consequences would stop you from buying counterfeit products? (Please

tick all that apply, multiple answers possible) Imprisonment

Border Control

Social stigma

Monetary penalties

Laws

Education

Company initiatives

8. In your opinion, how easily available are counterfeit products in your home country?

In your opinion, how easily available are counterfeit products in your home country? Easily

available

Almost easily available

Available

Difficult to get

Not available

9. Do you think you are able to distinguish a counterfeit product from the original?

Do you think you are able to distinguish a counterfeit product from the original? Yes

No

10. How likely are you to buy a counterfeit?

How likely are you to buy a counterfeit? Very likely

Likely

Maybe

Not likely

Not at all

11. Do you think the actions taken against counterfeit products are severe enough to stop you from buying

these products in your country?

Do you think the actions taken against counterfeit products are severe enough to stop you from

buying these products in your country? Yes

No

12. Would more severe consequences stop you from buying counterfeit products?

Would more severe consequences stop you from buying counterfeit products? Yes

No

13. If yes, which consequences would stop you from buying counterfeit products? (Please tick all that

apply, multiple answers possible)

If yes, which consequences would stop you from buying counterfeit products? (Please tick all that

apply, multiple answers possible) Imprisonment

Border Control

Social stigma

Monetary penalties

Laws

Education

Bibliography

1988 Grossman Foreign counterfeiting of status

goods

2004 Gupta, P.B, Gould To pirate or not to pirate? A

comparative study of the ethical

versus other influances on the

consumer software acquisition

mode decision.

2003 Harvey, P.J Laboratory markets in counterfeit

goods: hong kong versus las vegas.

1980 Hawkins Consumers behavior

2003 Hoe, Hogg Fakin it counterfeiting and

consumer contradictions

1987 Harvey, M.G. Industrial product counterfeiting.

1989 Foster, M. US firms battle the pirates of taiwan

1991 Fortune How copycate steal billions