Consumption of Counterfeit Goods in Thailand: Who Are the Patrons?

ABSTRACT - This study investigates the effects of key constructs including materialism on the use of counterfeit goods among college students in Thailand. The results suggest that users of counterfeit goods tend to be male, from a less affluent family, less influenced by friends, strongly influenced by celebrities, and high in materialism. Materialism was also found to moderate the effects of gender, family affluence level, membership group influence, and taste for western products on the use of counterfeit goods. Family affluence level was additionally found to positively affect the frequency of counterfeit usage. Materialism again was found to moderate the effect of family affluence level.

Citation:

Supanat Chuchinprakarn (2003) ,"Consumption of Counterfeit Goods in Thailand: Who Are the Patrons?", in E - European Advances in Consumer Research Volume 6, eds. Darach Turley and Stephen Brown, Provo, UT : Association for Consumer Research, Pages: 48-53.

European Advances in Consumer Research Volume 6, 2003      Pages 48-53

CONSUMPTION OF COUNTERFEIT GOODS IN THAILAND: WHO ARE THE PATRONS?

Supanat Chuchinprakarn, Bangkok University, Thailand

ABSTRACT -

This study investigates the effects of key constructs including materialism on the use of counterfeit goods among college students in Thailand. The results suggest that users of counterfeit goods tend to be male, from a less affluent family, less influenced by friends, strongly influenced by celebrities, and high in materialism. Materialism was also found to moderate the effects of gender, family affluence level, membership group influence, and taste for western products on the use of counterfeit goods. Family affluence level was additionally found to positively affect the frequency of counterfeit usage. Materialism again was found to moderate the effect of family affluence level.

INTRODUCTION

Counterfeiting is a profitable industry. It is the production of copies that have identical packages, trademarks, and labels as the genuine products but use low quality materials in the production process (Kay 1990; Wee, Tan, and Cheok 1995). Even though counterfeit goods are affordable, they may be harmful to the public due to the inferior quality of materials. Counterfeiting appears to be a major problem for brand name, luxurious, and high priced consumer products. A number of industries have encountered counterfeiting problems. These industries include foodstuffs, petroleum products, medicines, perfume, cosmetics, glasses, computer accessories, phone accessories, electrical appliances, audio and video cassettes, automobile spare parts, toys, apparel, watches, and leather products. However, this study only focuses on those counterfeit items that are used by consumers on a daily basis and consumers know that they are counterfeits. Hence, the counterfeit objects in this study will be confined to clothing items and accessories. The focal products consist of apparel, watches, leather handbags, purses, shoes, and belts.

Counterfeiting is a result of the violation of patent laws and is pervasive in most developing nations, particularly developing countries in Asia. With a high taste of western products and limited budgets, consumers in these nations consider buying counterfeit goods as an alternative to owning brand name luxurious goods. Loss of sales due to counterfeiting should not be considered a major problem since consumers who purchase and use counterfeit goods have no intention to purchase the genuine ones. Under this situation, deception is not an issue since consumers know and are willing to pay for the items. These consumers consider using counterfeit brand name products as a way to enhance their personal appearance and impress others. Counterfeiting may enhance the value of the brand instead of diluting it since only prestigious brand name products have counterfeits (Nia and Zaichkowsky 2000).

The buying and selling of counterfeit goods in Thailand is considered a common phenomenon. College students appear to be the primary target for non-deceptive counterfeit goods (Prendergast, Chuen, and Phau 2002). Most students tend to receive limited allowances from their parents but have a desire to look elegant and fashionable. As a result, the use of counterfeit goods is somewhat widespread among college students. This study was therefore aimed at investigating the patronage of counterfeit goods among college students. The purpose was to examine the effects of demographic and psychographic variables including materialism on the use of counterfeit goods and the frequency of usage.

LITERATURE REVIEW

Consumer behavior may be influenced by cultural, social, personal, and psychological factors (Kotler 2000). Cultural factors include national culture, subculture, and social class, whereas social factors include reference groups, family, roles, and statuses. Personal factors encompass those demographic variables such as age, occupation, income, and lifestyles, whereas psychological factors encompass those variables such as motivation and perception. In this light, consumer consumption of counterfeit goods is expected to be influenced by a considerable set of variables. In this study, a handful of variables associated with consumer demographic and psychographic characteristics were selected as key constructs influencing consumer behavior toward the use of counterfeit goods and the frequency of usage.

Demographic Characteristics

Gender and family affluence level were selected as two key demographic characteristics. It is possible that women in general may pay more attention to personal appearance than men. Hence, women are more likely to use counterfeit products and use them more frequently than men. Family affluence level may also have some impact on the use of counterfeit goods. Students from a less affluent family may have limited income to spend on genuine brand name products and, hence, may switch to buy counterfeit items instead. In this light, it is possible that students who are from a less affluent family are more likely to be users of counterfeit goods than those who are from a more affluent family.

Psychographic Characteristics

Psychographic characteristics refer to those characteristics concerning social and psychological factors. The selected characteristics consist of social acceptance, personal image, taste for western products, and materialism.

Social Acceptance. Social acceptance is based on the concept of reference group influence. Groups often influence personal values and lifestyles. Individuals often adopt the expressed values of their friends and the celebrities they adore. Two types of group influence are relevant to the use of counterfeit goods. One is membership group and the other is aspiration group (Assael 1992). Membership group refers to the group in which the individual is a part of. Membership groups can be classified into primary and secondary groups. A primary group refers to the group in which the individual has a regular contact with. These primary groups may include family members, friends, or colleagues. On the other hand, a secondary group refers to the group in which the individual has less frequent contact with. These secondary groups may involve political groups or club members. In this study, the influence of membership group will be confined to that of friends. The individual is often in close contact with friends and, hence, may have a tendency to conform to group behavior. If other members of the group wear and use brand name products, the individual will try to wear and use similar products. Thus, it is likely that the use of counterfeit goods is a means for the individual to try to fit in. An aspiration group, on the other hand, refers to the group in which the individual is not a part of but wishes to be a part of. Two types of aspiration groups can be classified. These are anticipatory aspiration groups and symbolic aspiration groups. Anticipatory aspiration groups refer to groups the individual expects to be a part of in the future, whereas symbolic aspiration groups are groups that an individual is not a part of and is not likely to be a part of. In this study, the influence of aspiration groups will be confined to that of symbolic aspiration groups. Celebrities, such as movie stars and singers, are considered members of symbolic aspiration groups. Consumers who are attached to the celebrities they adore will likely to purchase and use the products these people endorse. In this light, it is plausible that the individual who has a favorable attitude toward celebrities but has limited income may purchase and use counterfeit products as an alternative to enhance one’s own status.

Personal Image. Image has been extensively studied in the retail settings. It has been defined as consumer evaluation of salient attributes, which could be tangible and intangible or functional and psychological (Thompson and Chen 1998). In this study, personal image is defined as the tangible appearance of the individual. It is analogous to the level of impression one would like to have (Sampson 1995). Some people consider personal image an important characteristic, whereas some do not give much weight to personal appearance. If one has a tendency to try to impress others, one will be more concerned with personal appearance and likely to purchase and use counterfeit goods with the purpose of trying to enhance one’s own image (Nia and Zaichkowsky 2000).

Taste for Western Products. Taste is analogous to the concept of brand preference. In this study, taste for western goods is defined as individual preference given to western brand name products. For these individuals, the use of western brand name products would help satisfy their personal needs and, at the same time, help increase their personal status in the society. Drawing from this line of reasoning, it may be argued that consumers with high levels of taste for western products are likely to be users of counterfeit products.

Materialism. Traditionally, materialism is a philosophical system that pays attention to the physical matter. It is a general view of the existence of the material or physical objects in the world (Trout and Moser 2002). Belk (1984, p.291) defines materialism as "the importance a consumer attaches to worldly possessions." Materialism in consumer behavior may be conceptualized as consumer attitude toward money and objects. It involves consumer desire and passion to possess physical objects. Young adults and middle-aged people appear to be more materialistic than children and older people (Belk 1985; Csikszentmihalyi and Rochberg-Halton 1981). Materialism is also related to behavior (Browne and Kaldenberg 1997). Belk (1984, 1985) described three dimensions of materialistic values, i.e., possessiveness, non-generosity, and envy. According to Belk (1983, 1985), possessiveness can be defined as consumer tendency to maintain possessions of one’s personal things. In this sense, consumers are reluctant to lose or throw away things. Non-generosity refers to consumer unwillingness to give away things or share things with other people (Belk 1984, 1985). Envy, the third materialistic value, has to do with one’s own possessions. It has to do with one’s displeasure at other people’s happiness, success, reputation, fortune, and possessions of things (Belk 1985; Schoeck 1966). Purchasing and using counterfeit goods may be considered a way to respond to one’s own materialistic needs. As a result, it could be argued that consumers who purchase and use counterfeit goods are likely to be materialistic. In addition, it is also plausible that a high level of materialism will strengthen the effects of other constructs on the use of counterfeit goods. Consumers with high levels of materialism may have a tendency to pay more attention to brand name products; thus, these individuals may be strongly influenced by those demographic and psychographic variables described earlier to use counterfeit products. In contrast, consumers with low levels of materialism may place little weight on personal appearance and the use of brand name products; hence, they may be less influenced by those demographic and psychographic variables.

METHODOLOGY

Depth interviews were carried out with ten target respondents. The purpose was to obtain preliminary information about the use of counterfeit goods. The information obtained was then used to develop the questionnaire. Scales used to measure key constructs were based on information from depth interviews and existing scales (Belk 1984, 1985). All key constructs associated with psychographic characteristics were measured using multiple items. To check face validity of the scales, a panel of five academic scholars was asked to evaluate the scales. After that, changes were made to improve the scales. The first draft of the questionnaire was then pretested on 30 students and changes were made to finalize the questionnaire. Some scale items were dropped due to low internal consistency with other items measuring the same constructs. The final version of all the relevant scales is presented in Table 1.

The population of interest was confined to undergraduate students at a Thai university. Students who enrolled in the business classes from year 1 to year 4 were selected as participants. Classes were randomly selected as target groups for questionnaire distribution. Two hundred copies of the questionnaire were distributed to students who took classes at each year of the four-year college level. The total number of questionnaires distributed was 800.

ANALYSIS AND RESULTS

Of the 800 questionnaires distributed, 662 usable questionnaires were received, representing a response rate of 82.75%. The respondents consisted of 30.9% male and 69.1% female. The mean age of respondents was 20.33 with a standard deviation of 1.32. The majority of respondents had income below Baht 5,000 (41.8%) and between Baht 5,000 and 9,999 (50.2%). We received 22.1% of questionnaires from freshmen, 26.7% from sophomores, 28% from juniors, and 23.2% from seniors.

The types of counterfeit goods students often purchased and used were clothes (62.6%), handbags (60.8%), purses (57.4%), shoes (37.0%), watches (34.1%), and belts (14.8%). The cited advantages for using counterfeit goods were the ability to use cheaper brand name products (81.6%), the ability to obtain a new and modern item inexpensively (63.4%), no fear of losing (38.8%), keeping up the circulation of money in the country (28.7%), and being self-satisfied (18.6%). The cited disadvantages for using counterfeit goods were poor quality materials (76.4%), nondurability (60.1%), unethical behavior (48.6%), and losing face if friends know (13.7%).

Exploratory factor analysis with varimax rotation as well as coefficient alphas were performed on those constructs using multiple measures. The three dimensions of construct "materialism" were analyzed separately as three different scales. The preliminary results suggested that item V212 of construct "taste for western products" and item V213 of dimension "possessiveness" had low factor loadings and low correlations with total than other items measuring the same scales. Accordingly, these two items were dropped from further analyses. The final coefficient alphas for membership group influence, aspiration group influence, personal image, taste for western products, possessiveness, non-generosity, and envy were 0.80, 0.72, 0.70, 0.73, 0.54, 0.55, and 0.60. The composite scores were then employed to represent each construct using multiple measures. The scores from the three dimensions of materialism were combined to represent materialism construct.

TABLE 1

SCALE ITEMS FOR KEY CONSTRUCTS

The Use of Counterfeit Goods

Logistic regression was employed to investigate the effects of key demographic and psychographic constructs on the use of counterfeit goods. Logistic regression was selected because our endogenous variable was a dichotomous variable. The endogenous variable was operationalized as users and non-users. We assigned 1 to represent users and 0 to represent non-users. We had seven exogenous variables with gender being the only categorical variable. We assigned 1 to represent male and 0 to represent female. The interaction terms between materialism and each of the other exogenous variables were also included in the model. However, including both main and interaction terms in the same model would bring about multicollinearity problem. Hence, a mean-centering technique was applied to all the exogenous variables (Smith and Sasaki 1979). All the interaction terms in the model were based on the multiplication of the new scores, whereas all the seven exogenous variables were based on the original scores.

Logistic regression was performed and the results are presented in Table 2. The overall model was significant (c²=36.502, df=13, p<0.001). Five of the seven exogenous variables were found to be significant. These are gender (p<0.10), family affluence level (p<0.05), membership group influence (p<0.10), aspiration group influence (p<0.05), and materialism (p<0.05). Four of the six interaction terms were found to be significant. These were interactions between materialism and gender (p<0.10), between materialism and family affluence level (p<0.10), between materialism and membership group influence (p<0.05), and between materialism and taste for western products (p<0.10).

Frequency of Using Counterfeit Goods

We also examined the effects of the seven exogenous variables and the interactions between materialism and each of the other exogenous variables on the frequency of counterfeit usage among users of counterfeit goods. Since the frequency of counterfeit usage was a five point scale, OLS multiple regression was employed. The results are presented in Table 3. The results indicated that the overall model was not significant (R²=0.038, F=1.431, p>0.10). However, when examining the effects of individual variables, only family affluence level and the interaction between materialism and family affluence level were found to have significant effects on the frequency of counterfeit usage (p<0.05 and p<0.10).

DISCUSSION

Our logistic regression results suggest that users of counterfeit goods tend to be male, from a less affluent family, less influenced by friends, strongly influenced by celebrities, and materialistic. The effects of gender and membership group influence have gone in the opposite directions from what we expected. It appears that the proportion of men who use counterfeit products is higher than that of women. One possible explanation is that when it comes to clothing items and accessories, men may be less meticulous than women and, as a result, they may pay less attention to product quality. They purchase and use counterfeit goods because these products are brand name products and inexpensive. In contrast, women may pay more attention to product quality and, as a result, will be more selective about purchasing counterfeit goods. The negative effect of membership group influence suggests that consumers whose friends use genuine brand name products may be forced to use genuine brand name products as a way to try to fit in (Assael 1992). On the contrary, when consumers are among friends who do not use brand name products, they will have more leeway to use whatever products they prefer including counterfeit goods. Not only materialism has a direct effect on the use of counterfeit goods, but it also moderates the effects of other constructs on the use of counterfeit goods. A high level of materialism appears to strengthen the effects of gender, family affluence level, and membership group influence but weaken the effect of taste for western products. A subgroup analysis provides confirmation of these results. When splitting the sample into high and low materialism groups using the median score, gender, family affluence level, and membership group influence were found to be significant and in the right directions under a high materialism condition (p<0.10 for gender and p<0.5 for the rest), whereas only taste for western products was found to be significant but in the negative direction under a low materialism condition (p<0.05). This negative effect of taste may be due to the fact that with low levels of materialism, consumers who prefer western products will be more likely to purchase and use genuine products while consumer who have a lower degree of preference toward western products will be content with using counterfeit goods.

In examining the effects of main and interaction variables on the frequency of using counterfeit goods among counterfeit users, only the effects of family affluence level and the interaction between materialism and family affluence level appear to be significant. Family affluence level was found to have a positive effect on frequency of usage. This implies that students who are from a more affluent family tend to use counterfeit products more frequently than those who are from a less affluent family. This may be due to the fact that students who are from a more affluent family tend to be more familiar with brand name products; however, with limited allowances, they may be forced to purchase counterfeit products as an alternative and use them frequently. On the other hand, students who are from a less affluent family may be less familiar with brand name products and, hence, may purchase and use counterfeit products sporadically. Therefore, the frequency of counterfeit usage is somewhat lower. The significance of the interaction between materialism and family affluence level suggests that a high level of materialism should strengthen the positive effect of family affluence level on the frequency of usage. Students with a high level of materialism will put more emphasis on personal appearance and, as a result, the effect of family affluence level on the frequency of usage will be strnger. A subgroup analysis of high and low materialism conditions provides confirmation of this interaction effect.

TABLE 2

LOGISTIC REGRESSION ANALYSIS: THE USE OF COUNTERFEIT GOODS

TABLE 3

OLS MULTIPLE REGRESSION ANALYSIS: FREQUENCY OF USING COUNTERFEIT GOODS

This study is considered exploratory in nature. We simply wanted to investigate the main and interaction effects of some key variables on the use of counterfeit goods and the frequency of usage. However, some limitations of the study can be identified. First, the sample of this study was confined to only college students. Second, the study may have left out some other variables such as attitude toward lawfulness of counterfeit goods, quality of counterfeit goods, and ease of access to counterfeit markets. Third, some of the unexpected results, such as the effects of gender and membership group influence, were difficult to explain and, hence, warrant further investigation. Forth, the materialism measures in this study were borrowed from Belk (1984) without taking into account the measures developed by Richins and Dawson (1992). Fifth, the results from this study could be specific for Thai consumers. Therefore, future research should be extended to cover the use of counterfeit goods among working people as well as taking into account some other constructs, such as those mentioned above. A comparative study may be carried out with the use of materialism scale developed by Belk (1984) and the scale developed by Richins and Dawson (1992). A cross-cultural study may prove to be beneficial toward the understanding of consumer attitudes and behavior with regard to the use of counterfeit goods. Further, a study might be carried out to investigate pros and cons of having counterfeit goods in the market as well as the role of the country in dealing with counterfeit goods.

CONCLUSION

The production of counterfeit goods is an illegal activity. However, counterfeit goods might be considered substitute products for consumers who cannot afford to pay for the genuine ones. Counterfeit goods are abundant in most developing nations. Thailand is one of those countries where counterfeit goods are plentiful. This study focused on the effects of materialism and other psychographic and demographic constructs on college students’ behavior toward the use of counterfeit goods. It appears that materialism is one of the key constructs that has main and moderating effects on the use of counterfeit goods.

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