Why do consumers

knowingly purchase
counterfeit goods?
An essay into customer behaviour
Jack Thomson

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

Table of Contents
1. Abstract

Page 2

2. Introduction

Page 2

3. Critical Questions

Page 3

4. The First Question

Page 3

5. The Second Question

Page 5

6. The Third Question

Page 7

7. Conclusions

Page 8

8. References

Page 9

Word Count: 1,798 Words

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Abstract
To know why customers knowingly purchase counterfeit goods, we must first know why
customers choose to buy the genuine luxury brands. After this has been established, we can
identify the factors that lead to buying counterfeit goods and then we can evaluate if the
counterfeit industry is damaging to the luxury brand industry itself and why it is an issue in
customer behaviour.
Introduction
People wearing Luxury Brands are making a statement. Anyone can buy a purse, however a
woman wearing a Gucci purse is sending a very different message to a woman wearing a
River Island one. Those buying the former belong to a different consumer class than those
buying the latter (Han et al. 2010). The appearance of luxury branding on goods will attach
prestige and a higher social status to the owner (Grossman and Shapiro, 1988). Because of
this, people will always be looking to buy these luxury brands. However, all branded
products are at risk of counterfeits being made. In the last 20 years, the counterfeiting
industry has grown by 10,000% and is estimated to be worth $600,000 million a year
worldwide (www.iacc.org/about-counterfeiting).
Within this report, I aim to briefly answer the following three questions.
1. Why do consumers choose to buy luxury brands?
2. Why do consumers decide to buy replica/counterfeit goods?
3. Is counterfeiting a damaging industry?

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

In many cases, consumers are unaware that the products they are buying are counterfeit and
only find out when the product fails to live up to expectations. However, I am going to focus
on talking about those consumers who do knowingly buy counterfeit. This is because
otherwise, whilst still a major issue, it would be irrelevant to Consumer Behaviour.
In UK Law, it is not a criminal offense to buy counterfeit goods. However it is illegal to
either manufacture or sell them. Traders who do sell these goods risk a fine of up to 5,000
and/or imprisonment for up to six months. Also, the counterfeit products may be seized and
destroyed if this is ordered by the UK courts (www.which.co.uk).
The theory of social status best explains the trade of counterfeit goods. This is because of the
reasoning behind buying them is heavily related to social status,
Critical Questions
The three questions were decided upon because counterfeit goods are created in order to sell
a product at a price lower than possible when buying the genuine brand. Therefore, in order
to understand counterfeits, we must understand why people buy luxury brands. The other
factors that are present when a customer knowingly buys a counterfeit brand are then
combined with the lower price and give us the consumers motive. In order for this to be a
true issue, however, we must then look at the various reasons why counterfeiting may be
dangerous and/or damaging to their respective industries.

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

The First Question

The first question that I aimed to provide a possible answer for is why customers choose to
buy Luxury Brands. There is already a vast amount of literature on the subject and so the
answers will be those most relevant to the issue.
-

Social Status

Social status is your position within the hierarchy of society that is based on prestige
(www.britannica.com). It is important to note that status is not how financially wealthy a
person is. Whilst this is a factor, there are many more factors that may be taken into account.
Wealth is better described as one of the main separations that form the social differences that
exist between people that culminates in social status. Luxury goods are often more rare than
their lower-priced alternatives (www.bbc.co.uk). This may be because of the rarity or cost of
materials or ingredients used. Other factors that may add to the final price may be the cost of
production, the quantity of products manufactured or a specific trait about the product that
renders it superior (such as a specific designer or a long time spent in development to ensure
quality).
-

Authenticity of Brand

The psychologists, Bloom and Hood (2008) found that children do place higher value in
original objects than in perfect duplicates. They refuted perfect duplicates of their
attachment items such as a favourite toy or a blanket. This suggests that we have an
instinctive faith in authentic objects, despite the replicas being identical to the originals. This

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

explains why we may choose to spend more money on products we know to be genuine and
authentic ones.

Quality

Typically, the higher the price of the product, the higher the quality (Shapiro, 1983). Because
of this widely trusted theory, luxury brands will be trusted to be of the highest quality. This
perceived high quality makes is a very powerful motivator when it comes to making a
purchase (Bertini et al. 2012).
-

Exclusivity

Less luxury brand products are bought than their mid or low priced brand equivalents. This
means that those customers who do buy the products find themselves in a select group of
people who own it. This exclusivity can make the consumer feel special and possibly even
experience a sense of superiority and this feeling can result in a favourable financial return
for the business (Zaina, 2012/2013).
The Second Question
Why do consumers decide to buy replica/counterfeit goods? This question is central to what
this report is trying to establish. Counterfeit products are everywhere, the World Customs
Organisation estimates that between five and seven per cent of all products that are bought
and sold across the world could be counterfeit (www.iacc.org).
-

Conspicuous Consumption

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

This is where a consumer will purposely and excessively buy a luxury brand because they
know that others will view them as social status symbols and they wish to display signs of
high income and wealth. They will continue with conspicuous consumption, first to attain a
high social status and then to ensure that its maintained (Veblen, 1899). In terms of
counterfeit products, the customer will be someone who wants to convey a false social status.
This may be because they want others to view them as impressive and successful, when in
reality they may only have a low income. Counterfeit goods can give this customer the
feeling of higher status they crave, just without the premium price tag.
-

Social-Adjustive and Value-Expressive Functions

Social relationships with others are dependent on our self-presentation (DeBono, 1987) which
is called our social-adjustive function. Allowing self-expression is another important social
function that is called a value-expressive function. Different attitudes towards luxury brands
can determine a potential customers likelihood of purchasing counterfeit products. If their
attitude serves a social-adjustive function, then the consumer is much more likely to purchase
counterfeits than if their attitude is a value-expressive one. Likewise, their personal moral
beliefs about the consumption of counterfeit products only affects their likelihood of buying
them if the person has a value-expressive attitude towards luxury brands (Wilcox et al. 2008).
-

Status Goods

Luxury brands often have a combination of both the status and the quality of the products.
When a counterfeit is produced however, these two elements are separated and so a potential
customer who would like to buy the status can do so even if they either are not willing or they
are not financially able to buy the two elements together (Grossman and Shapiro, 1988). This
can mean that if the customer accepts foregoing the quality that is so associated with the

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

brand, they could, as long as they have no moral objections, have a fully valid motivation for
buying counterfeit brands.

The Third Question

Is Counterfeiting a damaging industry? This question, unlike its two predecessors is much
easier to attribute a fixed answer to.
The International AntiCounterfeiting Coalition provides a large amount of data on the topic
of the damage caused by counterfeiting. As a direct result of counterfeiting, U.S. businesses
lose an estimated $200,000-$250,000 million every year in lost revenues. The Tax that would
be paid on this revenue could be used for social welfare schemes such as better schools or
hospitals with more resources. Also, a large proportion of counterfeit luxury products are
manufactured in factories that have appalling working conditions, extremely exploitative
wages, potential child labour and products that are constructed with sub-standard, in some
cases even dangerous, ingredients or components and this presents a major health and safety
issue for the consumers. These counterfeits have caused the loss of over 750,000 U.S. jobs
which is a major negative economic outcome (www.iacc.org).
The industry is also very destructive to society as the acceptance of counterfeit products
shows a willingness to disregard the law which is a cornerstone of society and designed to
protect citizens.
The money lost by businesses means that they then must increase their spending in
departments such as marketing and customer relationships. These extra funds having to be

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

invested in those departments can have the effect that less money is spent on key areas such
as New Product Development (Hieke, 2010).
Also the fact that these products are so widely distributed and so cheap means that they soon
lose the exclusivity that made them desirable to begin with (Hieke, 2010). If the designer
brands lose this exclusivity and high status and they become commonplace, they then
become, by definition, void. This is because designers desire to be exclusive (Moore et al.
2000) and as soon as they are freely available then they are no longer a luxury item and thus
have no place in the market.
This evidence leads to the conclusion that Counterfeiting is not only damaging to luxury
brands and the fashion industry, but also to economic health and society in general.
Conclusions
Customers choose to purchase luxury brands because of their social status and the image of
themselves that they want others to see. They also buy these products because of the
instinctive faith that humans have in authenticity. Two other factors that can affect the
consumers choice of luxury brands are the exclusivity that comes with buying them and the
perceived high quality of luxury goods.
The factors that can motivate someone to buy counterfeit goods are conspicuous consumption
and the false social status that this can convey and the social function attitudes towards
luxury brands that can identify
1. If you are likely to purchase counterfeit goods
2. If your moral beliefs are likely to prevent you buying counterfeit goods.

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

The counterfeit industry has many economic and social drawbacks. It not only is linked to
criminal activity but also unemployment, lack of funds for social welfare, loss of exclusivity
and, in some cases, can be harmful or even dangerous.
The Counterfeit industry is an incredibly damaging one and, unless it is controlled, could lead
to the demise of many businesses internationally that are trying to sell their high quality
products in a responsible and ethical manner.
References
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Product Proliferation and Willingness to Pay for Quality, Journal of Marketing
Research, 49 (1), page 39
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http://www.which.co.uk/consumer-rights/rip-offs-and-scams/counterfeit-goods-yourrights-explained/your-rights/. Last accessed 13/12/12.
3. Cronin, F. (2011). What Will Be a Luxury in the Future. Available:
http://www.bbc.co.uk/news/magazine-13875014. Last accessed 13/12/12.
4. DeBono, K.G. (1987), Investigating the Social Adjustive and Value Expressive
Functions of Attitudes: Implications for Persuasion Processes, Journal of Personality
and Social Psychology, 52 (2), pages 279-287
5. Grossman, G.M. and Shapiro, C. (1988), Foreign Counterfeiting of Status Goods,
The Quarterly Journal of Economics, 103 (1), pages 79100
6. Han, A.J., Nunes, J.C. and Dreze, X, (2010), Signalling Status with Luxury Goods:
The Role of Brand Prominence, Journal of Marketing. 74 (4), pages 15-30

Why Do Consumers Knowingly Purchase Counterfeit Goods?

Jack Thomson

7. Heike, S, (2010), Effects of Counterfeits on the Image of Luxury Brands: An

Empirical Study from the Customer Perspective, Journal of Brand Management, 18
(2)
8. Hood, B.M. and Bloom, P. (2008) Children prefer certain individuals over perfect
duplicates, Cognition 106, pages 455 462
9. IACC. About Counterfeiting. Available: http://www.iacc.org/about-counterfeiting/.
Last accessed 13/12/12.
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http://4356049642aa3c99a6e91c99180a8219894d6198.gripelements.com/pdf/member
-resources/facts_on_fakes.pdf. Last accessed 13/12/12.
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Journal of Marketing, 34 (8), page 919
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