Executive summary
This research paper specifically will aim at counterfeit products and whether they affect the brand image and the consumption of products. In recent years, experts have argued that counterfeit products are increasing at a higher rate, and in the 21st century, it will be the biggest crime that every company will have to deal with. Therefore, it is generally not generous to focus only on one side of the story because it might affect a section of the economy and the market. Conversely, some consumers may perceive it differently because some feel counterfeit products are cheaper. So with continuous arguments and division of perceptions, there has been a need for proper research about what exactly counterfeit products are and how they affect the brand and consumption of products, especially for luxury products (Srisomthavil & Assarut, 2018). The other important information that the research paper aimed to generate is the two types of counterfeit products since some sources claim that there are two.
In contrast, others disagree, saying there is only one type of counterfeit product. The research will look at every detail concerning counterfeit products and how it has affected the luxury market. In the past few years, they have been concerned about the high demand for luxurious products (Song et al., 2021). Since few people are in the market, especially consumers and retailers, who need to learn more about counterfeit products, this research aims to offer a deep analysis of the drastic rise in counterfeit products in the luxurious products market and products brand. Finally, with the information obtained after research has been conducted together with data collection, analysis, and processing, the research paper will recommend whether counterfeit products have indeed been affecting the consumption and brand image of the luxurious market and brand products. A conclusion will be finally drawn from the results of the research.
Introduction
It is no doubt that there has been an increased recession, but one market product that cannot go unrecognized in its growth is the market for companies dealing with luxurious products. In most parts of the world, some of the recognized fast-growing countries in the luxury market are China and Japan. Several markets worldwide have recorded low levels of consumption due to increased recession in the world economy. However, in the luxury market, consumption has yet to show any sign of reduction because the demand is increasing every time (Wiedmann et al., 2012) Although. With the increase and expansion of the luxury market, one problem accompanying it is the issue of product counterfeiting, which has increased rapidly since 2008. For instance, in 2008, about 3,304 counterfeit products were recorded, and approximately 3000 people were mercilessly arrested after being found guilty of selling counterfeit goods in the market (“The Effect of Consumer Self-Brand Connection on Willingness to Buy Luxury Brand Counterfeit,” 2020). Deals of Counterfeit products deals are valued at about 69 billion dollars annually and take about 7 % of the overall global trade, making counterfeit a major concern in world market economies. In recent reports, China is the leading country that produces counterfeit products, standing at about 60% worldwide, followed by Korea and Japan. There are different arguments for counterfeit products, and the common argument is that the manufacture, supply, and selling of counterfeit products have some bad effects. They defame the original producer of the product and destroy the company’s image completely, reducing their supply and sales as the level of demand will be poor if their products are realized to be of poor quality. Finally, they reduce the company’s chance of making a desired profit instead causing it to make a loss. However, there have been some arguments about counterfeit products and the opinion of the group of individuals claiming that counterfeit products act as a bridge for luxury companies to climb to higher market rank and help the original producer of the product benefit from the advertisement of the counterfeit goods. Some claim that there is no way counterfeits are misleading customers. However, instead, they benefit from it since some customers need help to purchase the high-quality originally produced product. Therefore the main purpose of this study is to find out if true or false counterfeit luxury products affect the brand image and consumption of luxury brand products.
Literature review
Counterfeit products and Luxury brand products
Counterfeit products are defined as the production of 100% replicated goods produced from the appreciated brand. However, the replicates are made from inferior materials, so their qualities could be better. Some experts argue that counterfeit products are defined as the same products supplied to consumers to take the generated profit by the identified company. This activity of copying the original product aims to make the consumers believe that they are purchasing the original well. Although not all counterfeit products are manufactured to convince the customers that they are purchasing the original brand, there are two types of counterfeit: descriptive counterfeit and non-descriptive counterfeits. Descriptive counterfeit is seen when the honesty and the act of faith of customers do not recognize that the product they are purchasing is not original and can be reflected as a target of counterfeit. On the other hand, non-descriptive counterfeits are described as a scenario where the customer is aware of the fake and the original product. Most counterfeit products are mostly in the luxury brand, and the more the company invests in the production of quality and prestigious products, the more the chances of the product being counterfeited.
A luxury brand is a special brand of products featured with high quality and expensively priced products. Most counterfeit follow luxury market products because of the nature of the products in this market. In 2012 the estimated consumption level of luxury products worldwide was approximately predicted to reach a value of $440 to $ 460 billion dollars in a year. So overall, luxury brands deals with quality products and products that are priced highly. Several types of research have come up with different definitions of luxury brands; however, most of the definitions have one thing in common: there is some aspect that luxury brands must consider in luxury (Purwanto et al., 2019). Different sources of research state that luxury brands must contain artistic content, come from craftsmanship, be famous and known worldwide, and have a specific, individual, and known design. Some certain restrictions and controls are imposed on luxury brands. One of the restrictions is on the level of production and distribution so that there is a high demand for products and services that be unique in a certain way.
Although there are different perceptions concerning the effect of counterfeit goods, the negative effects subdue the positive effects because counterfeit products spoil the reputation and image of the brand (Park-Poaps & Kang, 2017). Genuine manufacturers and researchers have argued that counterfeit reduces the market value of a certain product of a brand and spoils the image of the brand. In addition to that, counterfeit products are also responsible for providing brand equity that negatively affects the brand’s reputation. Moreover, counterfeit products can reduce product costs and disrupt product sales and distribution (Marticotte & Arcand, 2017). On governmental concerns, there are areas that counterfeit products affect. Government officials argue that counterfeit good is responsible for reduced innovation in the country. Counterfeit products threaten the well-being and welfare of the customers who consume the products produced. It is one of the areas that criminals use to carry out criminal activities and terrorize individuals.
Some negative impacts are imposed by counterfeiting in the business and manufacturing sectors. When buyers trust a certain organization and believe that the goods they are being supplied in the market are original yet fake, they find out that the products are not as original as expected affects their trust (Li et al., 2020). Customers can end up buying counterfeit goods that do not match their expectations, breaking their trust (Khan et al., 2021).In addition, when the versions of counterfeit products are in the luxury goods market, the counterfeit good cannot be desirable to their original. This will generally affect the sales, value of the brand, and loyalty of the customers.
Moreover, counterfeiting increases the organizations’ expenses because most organizations invest in different measures that can help them combat and fight counterfeits. On the other hand, this affects their level of investment in new products and production processes, minimizing organizations’ ability to innovate (Chand & Fei, 2020). Counterfeits also affect consumers in one way or the other. The consumer’s safety and health are at risk due to counterfeiting. Consumers who consume sub-standardized counterfeited goods risk suffering from health problems because most of the products are not fit and standard for consumer consumption. When there is minimal utility, the consumers, due to the poor quality of the products, are a major issue to the market because this will affect the level of demand of consumers (Doss & Robinson, 2013). Whenever luxury brand customers are affected by counterfeit issues, they adopt certain strategies. They ‘fight,’ meaning they abandon the available brand and follow a new one. Luxury brand consumers also tend to do something known as ‘reclamation,’ which is about expounding the description of the brand owner. The consumers can also decide to ‘and rand,’ which means that the consumers can decide to differentiate all the available brand signs. Counterfeit products can lead to the loss of a particular brand image of luxury and affect consumption by pushing away the spirited luxury brands from the real brand(Kambiz & Fereshteh, 2013).
Research approach
In this thesis, there are two types of approaches have been applied, and those are inductive and deductive research approaches. These two approaches will be analyzed and looked at in detail. After the two approaches have been studied in detail, a decision concerning the problem will be solved efficiently. Either use of qualitative or quantitative research methods will do this.
Research Philosophy
There are varieties of products in the luxury brand category, and therefore in this thesis, we determined the product to use for investigation purposes. According to (Cademan et al., 2012), The reason for choosing watches and not any other products in the luxury brand is because watches have many brands that can be categorized as luxury segments and fulfill the requirement stated in the executive summary. The product is unique, has artistic content, and has an acknowledged design.
Data collection method
This study used two well-known approaches to collect data obtained from primary data. The two approaches of data collection were through survey and observation. The observation was applied as a method of data collection where the researcher was interested to understand what activities were being done by the respondents. This mostly involved respondents’ activities and behaviors instead of the researcher asking them about what they saw or did in such situations (Knievel et al., 2013). This data collection method cannot be appropriate for this study because the main focus was to determine the respondents’ opinions regarding counterfeit products in the luxury brand and not what they do in daily life (Brandão & Gadekar, 2019).
The survey was the perfect data collection method because it depended on the communication of the researcher with the respondents. It is the perfect substitute for the observation method because observation cannot be applied where there is a large sample size. The observation method needed to be more suitable for this thesis; therefore, the only remaining choice was the survey because it focused on the thought of the people. This method was applied by the questionnaire distribution as the number of respondents was approximated to be around 240. The number of respondents was enough to offer the required information rather than obtaining information from a few respondents. However, one of the risks associated with the questionnaire’s distribution was that some individuals easily got bored and gave the wrong information. However, this risk was minimized by informing the respondents of the time the questionnaire would take. It was distributed on several online platforms, such as Facebook. The survey was further distributed in several universities through student emails, and the number of residents was many compared to Facebook. It took one week for the researcher to obtain the full response from respondents.
Sampling approach and procedure
The researcher used two types of variables, and that was Y variables and X variables. The Y was a population of about 30-50 years old, while the x variable contained individuals aged 20 to 28. This population was selected because of the purchasing power of the luxury brand(Francis et al., 2015). The sample was collected mostly from Canada, and Canadian statistics were used as a source for data generation. Due to several reasons, such as the time, the type of sampling method was a non-random sampling method, and this was the method that was used to distribute the questionnaire. The statistical method was used to calculate the respondents needed for sampling.
Data Analysis
Data analysis was done through a statistical program known as SPSS and Stata. InSPSS, the tools used in data analysis were; descriptive statistics, regression analysis, correlation, and one-sample t-test (Zhuo et al., 2020).In the descriptive analysis, there was a presentation of the data’s mean, mode, range, and standard variance. During the correlation analysis, the coefficient used was Karl Pearson which explained the relationship between the young and old population data set that was collected.
Regression analysis was also used to determine the relationship of the variables, and the researcher asked the questions in the data such as is there a relationship? How strong is it if there is a relationship (Rinaman & Fischer, 1997)? Counterfeit goods are spread globally among luxury brands. Therefore, a one-sample t-test was applied to determine if there is a difference between the spread of counterfeit products around the world and their means (Bian et al., 2014). In addition, this method was used to determine the answers to the general hypothesis created during the research, such as does counterfeit affect luxury brand products?
Limitations Validity and Reliability
The research was collected well with the consideration of all the elements and rules that are required. However, the research faced the main limitation, which was a need for more time to carry out the research process and identify respondents to be given the questionnaire. This thesis allowed content validity by allowing two experts from different fields to check the questionnaire to see if it was valid. They checked how the survey and the distribution of the questionnaire were done. For readability, this project focused on the calculation of Cronbach alpha which specifically determines the correlation of different variables.
Conclusion
Since there is a division of agreement concerning counterfeit goods, only some require purchasing legitimate products because they have the financial ability to do so (Astuti et al., 2017). The other individuals who cannot afford the original goods will still go for the counterfeit products. According to the research, counterfeit markets have been increasing at a higher speed, and china is currently leading in the world market. Therefore, to finalize, not all the effects of counterfeiting are negative for the luxury brand because it has benefits and drawbacks to consumers, organizations, and the market in general.
Reference
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