Literature Review

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Literature Review
Product Counterfeiting: Motivations of Consumers When Purchasing Non Deceptive Counterfeit Goods Nowadays, luxury brands have become even more prevalent especially in developing countries where economies are starting to emerge.

“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 & Shapiro, 1988a)

Long ago, luxury goods were mostly meant for the highly affluent individuals. Today, when we try to walk into a middle class shopping mall, the first thing we will notice are people carrying luxury brands in the form of handbags, gadgets, pens, and so on. As more people aspire to have these luxury brands, but cannot afford or are unwilling to pay for high prices to get one, the next option that comes into mind is purchasing a counterfeit version of the product. Therefore, the desire of consumers to own luxury branded items even though they cannot afford or are unwilling to pay for premium prices lead the proliferation of counterfeit goods. The primary objective of this literature review is to examine why consumers continue to purchase counterfeit goods and understand why there is demand for such products. So that luxury brand retailers would be able to come up with new strategies to further differentiate themselves from imitators and new strategies to reshape consumer perception towards counterfeits.As a result, they would be able to lessen the detrimental effects caused by imitators. “Counterfeits are reproductions of a trademarked brand, which are closely similar or identical to genuine articles.” (Cordell, Wongtada,& Kieschnick, 1996)

The act of counterfeiting encompasses various aspects such asthe utilization of packaging, labelling, andtrademarks, to intentionally pass off as the original product(Kay, 1990; Ang, Cheng, Lim, & Tambyah., 2001; Chow, 2000).According to Trott & Hoecht (2007), the value of counterfeit products marketed annually in the world is estimatedto be over US$1 Trillion. Considering the countries worldwide, almost 5 percentof all products are counterfeit, according to the InternationalAnti-counterfeiting Coalition (2005) and theInternational Intellectual Property Institute (2003). Thus, counterfeiting is increasingly becoming a serious threat to luxury brands, as legitimate brands that are spending on extensive research and development activities to come up with new designs and other innovations will only end up being copied by imitators.

Even though counterfeiting has become an area of great concern worldwide, there is still very limited research on the area. In addition, there were only a few studies conducted on consumer attitudes or intentions when purchasing counterfeit goods.Since 1980’s, most studies on product counterfeiting have focused on the adverse impacts of counterfeit goods to those legitimate brands. Furthermore, previous studies on counterfeiting placed emphasis on anti-counterfeiting strategies that will help legitimate luxury brands battle out imitators (Bamossy & Scammon 1985; Bush, Bloch, & Dawson, 1989; Chaudhry & Walsh, 1996; Olsen & Granzin, 1992). Nia and Zaichkowsky (2000) cautioned that readers should take note of the two types of counterfeiting which include deceptive and non deceptive. Grossman and Shapiro (1988b)identified deceptive counterfeiting as a situation in which the consumers arenot aware of purchasing a counterfeit product at the time of the purchase. But since most of the time, consumers knowingly engage in non deceptive counterfeiting, we will try to concentrate on non deceptive counterfeiting, as consumers would tend to have clearer intentions when they are strongly aware that what they are going to purchase is not a genuine product. While most researchers on...
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