Effects of Using Counterfeit Products on Consumer Feelings and Purchase Intentions

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HKUST IEMS Academic Seminar
Amy N. Dalton
26 Nov 2015 (Thursday)
4:00 - 5:00 pm
IAS1038, 1/F, Lo Ka Chung Building, Lee Shau Kee Campus, HKUST

Key insights

Amy Dalton, HKUST Associate Professor of Marketing and IEMS Faculty Associate, discussed the growing issue of counterfeiting in both developed and emerging economies, with counterfeits posing major challenges for businesses and governments alike. To better grasp the scale of the problem, Prof Dalton referred to some of the most recent statistics, one of which was that counterfeits were estimated to cost U.S. businesses upwards of US $300 billion in annual revenue and an unmeasurable quantity in brand uniqueness in 2013. In 2014, governments seized over US $1.22 billion worth of counterfeit and other goods infringing on intellectual property rights. Moreover, the market for counterfeits has grown by more than 10,000% in the past two decades and continues to expand.

This growth in the counterfeiting market is partly attributable to consumer demand. Previous research indicates that many consumers knowingly purchase and use counterfeit products primarily in an attempt to signal social status to others. Prof Dalton’s research is novel in that it explores the little-known realm of the post-purchase experience, i.e. the experience of using counterfeit goods and their downstream consequences.

Prof Dalton focused on three key questions in delving into the post-purchase experience of counterfeit goods, namely: 1) how consumers felt while using counterfeit products; 2) how these feelings vary across individuals and situations; and 3) the effect these feelings have on the attractiveness of both counterfeit and genuine brand goods. To answer these questions, Prof Dalton conducted five separate single-factor, between-subject product evaluation surveys administered to students and staff members at HKUST. To gain further insights on how to design more effective anti-counterfeit good advertisements, she also conducted a sixth study using a Google Image search of the keyword “anti-counterfeit campaigns”, coding the content of the first 200 campaign ads into general categories.

Prof Dalton found that the key factor driving consumers to purchase counterfeits—the desire to signal status to others — related to the mixed feelings consumers experience when they use counterfeits. Specifically, consumers who use counterfeits to signal social status experience positive emotions related to the brand’s potential signaling value, while also experiencing negative emotions related to the risk of social judgment should their ploy be discovered. She also found that mixed feelings are more likely when counterfeits are used in public settings, and thus are visible to others, compared to private settings, where the counterfeit is less likely to be observed. 

Importantly, consumers tend to be averse to experiencing mixed feelings and thus seek to avoid situations that give rise to them. For this reason, mixed feelings lower consumers’ willingness to pay for counterfeits and suppress intentions to purchase other counterfeits in the future. Mixed feelings also increase the appeal of genuine products, as these are not associated to feeling mixed. These results suggest that the use of counterfeit products can serve as a stepping stone for purchasing genuine brand goods. 

Abstract 

Counterfeiting, the use of a brand name without the brand owner’s authorization, poses a major challenge for governments and businesses. All told, counterfeits are estimated to cost U.S. businesses upwards of US$300 billion in annual revenue and an unmeasurable quantity in brand uniqueness. Moreover, the market for counterfeits has grown by more than 10,000% in the past two decades and continues to expand. This growth is partly attributable to consumer demand. That is, many consumers knowingly purchase and use counterfeit products, often in an attempt to signal social status to others (Wilcox et al. 2009).

The present research contributes to literature on counterfeit consumption by exploring (1) how consumers feel while using counterfeit products, (2) how these feelings vary across individuals and situations, and (3) the effect these feelings have on the attractiveness of both counterfeit and genuine brand goods. We find that the key factor that drives consumers to purchase counterfeits, the motivation to signal status to others, is associated with consumers experiencing mixed emotions when counterfeits are used. Specifically, consumers who use counterfeits to signal social status experience positive emotions related to the brand’s potential signaling value, while also experiencing negative emotions related to the risk of social judgment should they be caught. We also find that mixed emotions are more prevalent when counterfeits are used in public settings, and thus are visible to others, compared to private settings, where the counterfeit is less likely to be observed.

Importantly, consumers tend to find mixed emotions aversive and thus seek to avoid situations that make them feel mixed. For this reason, mixed emotions reduce willingness-to-pay for counterfeits and suppress intentions to purchase other counterfeits in the future. Mixed emotions also increase the appeal of genuine products, as these are not associated to feeling mixed. These results suggest that the use of counterfeit products can serve as a stepping stone for purchasing genuine brand goods.

About the Speaker

Professor Amy Dalton studies consumer psychology, with an emphasis on factors that influence consumption and other behaviours outside consumer awareness. Her research has been published in top-tier academic journals, including the Journal of Consumer Research and the Journal of Personality and Social Psychology, and practitioner journals, including the Harvard Business Review. Her research has been featured in international media outlets, including the New York Times, Wall Street Journal, Fortune, BusinessWeek, and Forbes. She is an Associate Editor at the Journal of Consumer Psychology and is a member of the Editorial Board of the Journal of Consumer Research and the Journal of Marketing Research. Professor Dalton holds a Bachelor of Science in psychology from the University of Toronto and a Ph.D. in marketing from Duke University’s Fuqua School of Business.

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