Understanding the behaviour of Consumers Who Buy Counterfeit Products

There is no denying the fact that illicit trade is a worldwide problem. It poses a serious threat to legitimate businesses and hurts a brand’s image.

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.