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Voluntary Purchase of Counterfeit Products: Empirical Evidence From FourCountriesElfriede Penz a; Bodo B. Schlegelmilch a; Barbara Stöttinger a

a Institute for International Marketing & Management, Wirtschaftsuniversität Wien, Vienna, Austria

Online Publication Date: 01 January 2009

To cite this Article Penz, Elfriede, Schlegelmilch, Bodo B. and Stöttinger, Barbara(2009)'Voluntary Purchase of Counterfeit Products:Empirical Evidence From Four Countries',Journal of International Consumer Marketing,21:1,67 — 84

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Journal of International Consumer Marketing, 21:67–84, 2009Copyright c© Taylor & Francis Group, LLCISSN: 0896-1530 print / 1528-7068 onlineDOI: 10.1080/08961530802125456

Voluntary Purchase of Counterfeit Products:Empirical Evidence From Four Countries

Elfriede PenzBodo B. Schlegelmilch

Barbara Stottinger

ABSTRACT. Counterfeiting, i.e., producing and selling copies of branded products that stronglyresemble the original, has emerged as a major problem for global marketers, rising dramatically overthe past several years. Surprisingly, factors driving the demand for fake products have attracted far lessattention than supply-side remedies. This paper attempts to redress this imbalance by investigating thedemand for counterfeits. Specifically, we consolidate existing findings and develop a comprehensiveyet parsimonious model of the antecedents and drivers of voluntary counterfeit purchases. Followingthe frequent call for more cross-national comparisons, we used a sample of over 900 consumers fromSlovenia, the Czech Republic, Austria, and Mexico to test our model. This large-scale approach callsexisting findings into question and raises provocative thoughts guiding future research in the area.

KEYWORDS. Counterfeits, demand, cross-national comparison, international marketing research,remedies against counterfeits

Counterfeiting has emerged as a majorproblem for global marketers. It has risendramatically over the past several years andnow represents some five to eight percent oftotal world trade (Balfour, 2005; Freedman,1999; Hunt, 2002; IACC, 2002). Expertsdescribe counterfeiting nowadays as moreprofitable and less risky than drug trafficking(European Commission, 2000; Huband, 2004).While counterfeiters benefit from almostno investments in brand-name recognitionand research and development (Harvey andRonkainen, 1985), the original manufacturersuffers from tremendous damage to its brandreputation and profits through the sale of fakeproducts (Green and Smith, 2002; Kay, 1990;Nash, 1989; Wee, Tan, and Cheok, 1995).

Elfriede Penz, Bodo B. Schlegelmilch and Barbara Stottinger are all affiliated with the Institute forInternational Marketing & Management, Wirtschaftsuniverstat Wien, Vienna, Austria.

Address correspondence to Elfriede Penz, Institute for International Marketing & Management,Wirtschaftsuniversitat Wien, Augasse 2-6, 1090 Vienna, Austria. E-mail: elfriede.penz@wu-wien.ac.at

Most efforts to mitigate counterfeits aredirected toward limiting the supply. To detercounterfeiters, companies resort to technologicaldevices such as special inks and dyes orultraviolet and electronic signatures. However,each new measure only appears to be a pawnin the battle against time (Sasser, 1990; Saywelland McManus, 2002; Shultz and Saporito,1996). Legal actions against counterfeitersare also costly. Moreover, the outcomes areuncertain and enforcement is difficult (Blakeney,1995; Chaudry and Walsh, 1996; Harvey, 1987;Keats and Joyner, 1985; Nill and Shultz, 1996;Sandler, 1994; Saywell and McManus, 2002).As long as the demand is thriving, counterfeiterswill always find new ways to serve customers(Albers-Miller, 1999; Ang et al., 2001). It

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appears necessary, therefore, to focus more onthe demand side for counterfeits. In contrastto supply-side deterrents, demand-side drivershave attracted little attention. To redress this,we focus on three issues.

First, we attempt to consolidate contributionsfrom different fields. Past research has lookedat perceived price benefits (e.g., Albers-Miller,1999; Bloch, Bush, and Campbell, 1993), psy-chographic characteristics (e.g., Cordell, Wong-tada, and Kieschnick, 1996; Swinyard, Rinne,and Keng Kau, 1990; Wee, Tan, and Cheok,1995), product characteristics (e.g., Cordell,Wongtada, and Kieschnick, 1996; Wee, Tan,and Cheok, 1995), demographic variables (e.g.,Solomon & O’Brien, 1991) and social influ-ences (e.g., Ang et al., 2001). Notwithstandingtheir merits, a comprehensive understanding ofdemand-side drivers has not yet been achieved,as much of the existing work relies on studentsamples and is scattered across different dis-ciplines. Consequently, we attempt to reassessthe validity of the existing findings in terms ofpredicting the demand for counterfeits in a morerealistic empirical setting.

Second, we revisit the role of prices incounterfeit purchases. Although it is widelyacknowledged that the low price of counterfeitsis the key driver of demand (Ang et al., 2001;Bloch, Bush, and Campbell, 1993; Rangoni-Machiavelli, 1999; Tom et al., 1998; Wee, Tan,and Cheok, 1995), the issue of price sensitivitymerits further investigation. This is evidenced bythe recent emergence of so called “super copies,”i.e., replicas that are of equivalent or even betterquality than the original, say a $500 LouisVuitton handbag. Such super copies are reportedto sell like hotcakes despite offering only asmall discount versus the original (EuropeanCommission, 2000; Kattoulas, 2002).

Finally, since counterfeiting is a global phe-nomenon, it calls for global solutions, for exam-ple, global communication strategies. These areonly feasible if consumers worldwide are drivenby similar factors when buying counterfeits.To date, research on fakes has mostly reliedon single-country settings, which limits thescope for generalization (Fullerton and Punj,1997; Husted, 2000). Therefore, we re-assessthe applicability of existing research findings inmore than one country.

Taken collectively, we attempt to take afresh look at the demand side of counterfeiting.Specifically, we aim to consolidate existing find-ings and assess their usefulness by developingand testing a comprehensive yet parsimoniousmodel of the antecedents and drivers of vol-untary counterfeit purchases. Following the fre-quent call for more cross-national comparisons(Brislin, Lonner, and Thorndike, 1973; Kline,1988; Verma and Mallick, 1988), we use asample of four countries to test our model.

BACKGROUND

The literature distinguishes two types ofcounterfeiting, namely deceptive and nonde-ceptive counterfeiting (Cordell, Wongtada, andKieschnick, 1996; Grossman and Shapiro, 1988;Nia and Zaichkowsky, 2000). In the case ofdeceptive counterfeiting, consumers do not re-alize that they are buying a counterfeit product.Thus, such counterfeits can only be deterredthrough supply-side measures. However, con-sumers often willfully buy a counterfeit good:a so-called nondeceptive counterfeit (Grossmanand Shapiro, 1988; Nia and Zaichkowsky, 2000;Phau and Prendergast, 1998). While supply-sidedeterrents may still be helpful in this context,the active role of the consumer as “accomplice”(Bloch, Bush, and Campbell, 1993) calls fordemand-side counteractions.

To gain a better understanding of what drivesconsumers to buy fake products, we refer totwo streams of literature to explain purchasesof nondeceptive counterfeits: First, we evokethe branding literature. If branded productsdid not attract consumers, counterfeits wouldnot be an issue (Bloch, Bush, and Camp-bell, 1993; Cordell, Wongtada, and Kieschnick,1996). Buying fake products means getting theprestige of branded products without paying forit (Cordell, Wongtada, and Kieschnick, 1996;Grossman and Shapiro, 1988). Second, we drawon consumer misbehavior research, which usesthe purchase of counterfeits as one of its classicexamples (Albers-Miller, 1999; Fullerton andPunj, 2004; Green and Smith, 2002). From thisresearch, we conclude that consumer awarenessof the negative consequences of counterfeits mayimpact the demand for fake products. Below, weoutline the conceptual framework used in this

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paper and develop specific hypotheses regardingthe determinants of counterfeit purchases.

CONCEPTUAL FRAMEWORK ANDHYPOTHESES

We rely on the theory of reasoned action(TRA) (Fishbein and Ajzen, 1980) for guidancein systematizing existing findings and addingvariables. TRA states that behavior, such asthe purchase of counterfeits, is determined bythe intention to engage in such behavior. Theintention, on the other hand, is influenced by theattitude toward the behavior and the subjectivenorm (Eagly and Chaiken, 1993; Fishbein andAjzen, 1980). We measure attitudes towardbehavior rather than attitude toward objects (e.g.,attitude toward a counterfeit item), as the formerare said to be better predictors of behavior(Fishbein, 1967; Fishbein and Ajzen, 1975). Fi-nally, the subjective norm is deemed to representperceptions of preferences held by significantothers about whether a person should engage ina behavior (i.e., purchasing counterfeits) (Eaglyand Chaiken, 1993; Fishbein and Ajzen, 1980).In the following, the theoretical constructs andhypothesized relationships between the mea-sures are outlined in more detail.

Determinants of Voluntary CounterfeitPurchases

Anti-Big Business Attitude and Efficiencyof Counterfeiters

To reduce cognitive dissonance, i.e., themental discomforts caused by e.g., misbehavior(Clow, Kurtz, and Ozment, 1998; Festinger,1957), consumers frequently use pseudorationalexcuses and deflect the blame to another party(Fullerton and Punj, 2004; Sykes and Matza,1957). As such, consumers tend to deny theirresponsibility and play down the damages tothe victims, even blame them for their be-havior or appeal to higher loyalties. As pastresearch shows, consumers justify the purchaseof counterfeits through feelings of sympathyfor small rather than large businesses basedon the impression of large companies beingimpersonal, overwhelming, and socially distant(Fullerton and Punj, 1993; Moore, 1984; Tom

et al., 1998). A similar argument claims thatcounterfeiters deserve support, as they are moreefficient in terms of how they conduct businessand are more customer-oriented in charginglower margins than the original manufacturers(Ang et al., 2001; Tom et al., 1998; Wee, Tan, andCheok, 1995). Both arguments serve as rational-izations for consumer misbehavior and reducecognitive dissonance by intensifying positiveinformation about counterfeiters (Andersson,2004). Consequently, it is proposed that:

H1: The more negative consumers’ at-titudes toward “big business” are, thestronger their intention to purchase coun-terfeits.H2: The more efficient counterfeiters areperceived to be, the stronger consumers’intention to purchase counterfeits.

Negative Effects on R&D

One issue that influences the level of accep-tance of consumer misbehavior is the impact onthe victim (Muncy and Vitell, 1992). In this con-text, Dodge, Edge, and Fullerton (1996) pointedout that specific adverse economic effects on theproducer would lead to stronger condemnationof misbehavior than more general ones (Fuller-ton and Punj, 1997). As the literature stronglypoints out the chilling effect of counterfeitson technology development and firms’ researchand development (R&D) expenditure (Jacobs,Samli, and Jedlik, 2001; Nill and Shultz, 1996;Wilke and Zaichkowsky, 1999), we suggest that:

H3: The more consumers are aware of thenegative impact of counterfeiting on R&D,the weaker their intention to purchasecounterfeits.

Price/Value Relationship

Previous research stresses the favorableprice/value relationship as the major incentivefor the purchase of counterfeits. Bloch, Bush,and Campbell (1993, p. 31) states that “peo-ple buy counterfeits, because they are gettingprestige without paying for it.” This price/valuerelationship works in two ways: Consumersmay think of themselves as smart shoppers,

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as counterfeits are comparable in quality andperformance to the original, but superior in price.Alternatively, consumers may view counterfeitsas inferior to the original in terms of qualityand performance, but think the price advan-tage more than compensates for any shortfalls(Albers-Miller, 1999; Ang et al., 2001; Cordell,Wongtada, and Kieschnick, 1996; Tom et al.,1998). Thus, we hypothesize:

H4: The more positive the price/valuerelationship of counterfeits is perceived,the stronger the intention to purchasecounterfeits.

Embarrassment Potential

Branded products are used to improve theself-concept through the transfer of attributedmeanings and thus the enrichment of self-value. This requires interaction with others, whodeliver meaning to brands (Aaker, 1999; Hogg,Cox, and Keeling, 2000; Keller, 1993). Peoplewho buy branded products may be describedas self-conscious, especially concerned aboutthe impression they make and more sensitiveto interpersonal rejection (Bushman, 1993; Niaand Zaichkowsky, 2000). When making a goodimpression and looking good are importantvalues, consumers who buy counterfeits run aninherent risk. Flaws in the physical appearanceof the counterfeit products may lead to being“detected” as the user of a copy rather than theoriginal. Their friends or peers might make funof them or look down on them for not acquiringthe original product (e.g., Ang et al., 2001).Therefore, it is anticipated that:

H5: The stronger the perceived embarrass-ment potential of counterfeits, the weakerthe intention to purchase counterfeits.

Antecedents

Readiness to Take Risk

The perceived risk of purchase decisions isa central construct in marketing, as consumerscannot always be certain that their goals willbe satisfied through a purchase. The risksincurred are manifold, ranging from financial,

performance, and physical, to psychological andsocial risks (Cordell, Wongtada, and Kieschnick,1996; Cox, 1967; Tan, 2002). However, whilerisk may have a positive connotation, i.e., whenconsumers want to be stimulated and entertaineddue to a sensation-seeking personality (Fullertonand Punj, 1998; Hoyer and McInnis, 2004), weexpect a negative connotation of risk in thecase of counterfeits. Buying counterfeits maybe considered risky in the light of the amountof money lost through malfunction, other qual-ity deficiencies, or due to embarrassment andadverse reactions from the social environment(Ang et al., 2001; Wee, Tan, and Cheok, 1995).Therefore, readiness to take risks was used as anantecedent to the perceived price/value relation-ship. Accordingly, the following hypotheses areformulated:

H6a: Readiness to take risks has a posi-tive impact on the perceived price-/valuerelationship of counterfeits.H6b: Readiness to take risks has a negativeimpact on the perceived embarrassmentpotential of counterfeit goods.

Understanding attitude formation towardcounterfeits would be incomplete withoutconsideration of demographic characteristics(Fullerton, Kerch, and Dodge, 1996). For ex-ample, Solomon and O’Brien (1991) as wellas Tan (2002) found that demographics suchas age or educational background are correlatedwith consumers’ attitude toward counterfeit soft-ware. Other studies, however, show more mixedfindings ranging from “generally strong impact”to “context dependent impact” on purchaseintentions (e.g., Tom et al., 1998; Wee, Tan,and Cheok, 1995), or “no effect at all” (e.g.,Ang et al., 2001). To this end, no clear pictureof how demographic characteristics make animpact emerges. To give demographics adequateconsideration, we decided to phrase the follow-ing hypotheses nondirectionally, supposing bothindirect (on attitudes toward counterfeiting) anddirect effects on purchase intentions:

H7a: Age has an effect on attitudes to-ward counterfeiting (on purchase inten-tions, H7a’).

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Penz, Schlegelmilch, and Stottinger 71

H7b: Education has an effect on attitudestoward counterfeiting (on purchase inten-tions, H7b′).H7c: Income has an effect on attitudestoward counterfeiting (on purchase inten-tions, H7c′).

Moreover, knowledge about counterfeiting isdeemed to have an influence on attitudes towardfake products and counterfeit purchase (Gentry,Putrevu, and Shultz, 2006). Attitudes are formedand modified as information is received, inter-preted, and integrated into prior attitudes on acertain object. The literature on information pro-cessing indicates that information with a positivecontent enforces positive attitudes toward anobject, while negative information strengthensnegative attitudes toward an object (Eagly andChaiken, 1993). Therefore, we predict that:

H7d: More knowledge about the negativeeffects of counterfeiting leads to strongernegative attitudes toward counterfeiting(lower purchase intention, H7d′).

Moderating Variables

Country Background

Counterfeits find buyers around the globe.Consequently, one might assume that the factorsleading to the purchase of counterfeits will beuniversal. However, the literature suggests thecontrary and points to country-specific influ-ences rooted in different cultural values, legalnorms, ethical codes, personal experiences, andeconomic welfare (e.g., Fullerton and Punj,1997; Husted, 2000). Husted (2000) investigatedwhich country-specific factors would impingeon the demand for counterfeit products (piratedsoftware in his case). Empirically, he establishedthree factors as important drivers: GNP (grossnational product) per capita, distribution ofincome among the population, and the positionof a country on Hofstede’s (1998) individualismscale. In testing our theoretical model, weassume that the overall model structure will notdeviate between countries, but expect the rela-tionships between constructs to be moderated bythe specific country background.

Price Discount toward the Original Product

Undisputedly, the favorable price/value rela-tionship is a key determinant in the demand forfake products (e.g., Ang et al., 2001; Bloch,Bush, and Campbell, 1993; Tom et al., 1998).The price discount that counterfeits offer com-pared to the original product represents a sub-stantial benefit. Still, consumers are quite diversein how much attention they pay to price and howand when they react to price discounts (Dicksonand Sawyer, 1990). For instance, the same fakeLouis Vuitton bag is available at different pricelevels ranging from very inexpensive copies tothose with a price close to the original. Tocomprehensively gauge the effect of pricing onthe demand for counterfeits, it is not enough toevaluate the overall relevance of the favorableprice/value relationship of counterfeits (cf. H4),but also the issue of price elasticity. How demandreacts to changes in the price level helps toestablish whether supply-side activities aimedat increasing production costs for counterfeiters,and consequently prices for consumers, actuallyhave an effect on the demand. To investigate theimpact of price elasticity, we look at how fivedifferent price levels moderate the intention topurchase fake products.

Figure 1 shows the conceptual model andsummarizes the hypotheses.

METHODOLOGY

Sample and Data Collection

While traditionally countries in the Far East,such as China, Pakistan, or Indonesia, wereheld accountable for the largest number ofcounterfeits, producing fake products has nowbecome a global business. Many companies haveto fight counterfeiters in their backyard. Out ofthe counterfeit products seized in Germany in1999, a large part came from Eastern Europe,particularly the Czech Republic and Turkey(European Commission, 2000). In addition, thetrade with counterfeit products is exacerbatedthrough the emergence of the Internet. Out of anestimated 20,000 Web sites selling luxury goods,10 to 20 percent are promoting counterfeits.

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72 JOURNAL OF INTERNATIONAL CONSUMER MARKETING

FIGURE 1. Conceptual Model

Anti-Big Business

Efficiency

Intention toPurchase CF

Negative Effects on R&D

Embarrassment Potential

Risk Readiness

Age

Education

Income

Knowledge

Price/Value Relationship

Attitudes towards Counterfeiting

Subjective Norm

Intention

H1

H2

H3

H5

H4

H7b

H7c

H7d

H6a

H6b

H7a

External Factors:Sociodemographic and Personal

Variables

Price Level of CF (20%, 40%, 60%, 80% and 90% below Price of Original Product)Product Type (Polo/Lacoste versus Cartier/Rolex)

H7b'

H7c'

H7a'

H7d'

Unsurprisingly, curbing Internet-based counter-feiting is even more tedious than fighting coun-terfeits in conventional “trade channels” (Euro-pean Commission, 2000; Freedman, 1999).

The same holds true for the demandfor counterfeits: Counterfeits from across theglobe find interested consumers globally. Interms of actual country selection, we usedthe criteria outlined by Husted (2000) andtried to reach a certain geographic spread ofcountries.

Specifically, we conducted a survey in fourdifferent countries, namely Austria (AT), Mex-ico (MEX), Slovenia (SLO), and the Czech Re-public (CZ). These countries share similaritiesin terms of availability and access to counterfeitproducts, the desire for branded products, etc.,but display differences in terms of cultural andeconomic background. With a gross domesticproduct (GDP) per capita of $30,000 (adjustedfor purchasing power parity, or PPP) and afairly equal distribution of family income (Gini

index: 31), Austria is the wealthiest among thecountries selected. In terms of GDP per capita,both former Eastern Bloc countries, Sloveniaand the Czech Republic, score comparativelylower but display similar economic welfarestructures (GDP per capita: $19,000 [SLO]versus $15,700 [CZ]; Gini-Index: 28.4 [SLO]versus 25.4 [CZ]). Mexico, in turn, differssubstantially in economic terms from the otherthree countries. GDP per capita amounts to$9,000, and household income is distributedunequally among the population (Gini index:53.1) (CIA, 2004).

Data were gathered by means of a writtenquestionnaire survey with the help of specifi-cally trained research assistants in the differentcountries. All respondents were assured fullanonymity. The questionnaire was based onthe pertinent literature and expert interviews inthe countries under investigation. After pretest-ing and checking for content validity of themeasures, the final questionnaire was made

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Penz, Schlegelmilch, and Stottinger 73

available in German, Czech, Slovenian, andSpanish. Linguistic equivalence between thedifferent versions was established through back-translation (Brislin, 1970). Given that to date, amodel of this complexity has not been developedand tested in such a demanding environment,convenience sampling appeared acceptable ineach country except for Austria, where a quotasample could be used (based on age, gender,and education). In the other countries, question-naires were randomly distributed to visitors ofshopping malls in major cities and collected im-mediately on site after completion. For Mexico,this sampling procedure appeared less useful.In line with Brislin and Baumgardner (1971),we endeavored to maintain cross-cultural com-parability among respondents regarding thesampling characteristics of age, gender, andeducation. To secure comparability particularlywith respect to education, we chose a differentsampling procedure in Mexico, namely within amultinational corporation (MNC). Specific carewas taken that this MNC displayed a reason-able distribution of economic welfare amongrespondents.

In total, 940 questionnaires were returned andused for further analysis. The Austrian question-naire was completed by 385 respondents, whichrepresents 38.4 percent of the total sample.This is followed by the Czech sample, whichconsists of 242 respondents (25.5 percent), andthe Slovenian sample, which comprises 195respondents (20.5 percent). Finally, 118 Mex-ican respondents completed the questionnaire(12.4 percent). In terms of demographics (genderand age), the samples show a high degree ofsimilarity. With regard to education, the majorityof Austrian and Slovenian respondents havecompleted a vocational or secondary school,while the Czech and the Mexican sample showa higher level of education.

Measurement

Consumers’ attitudes toward counterfeitingare investigated through the use of five-point,multi-item Likert scales. The measurement ap-proach for each theoretical construct will nowbe described in more detail.

Intention

We operationalized this construct by usingtwo product categories of luxury brands, specifi-cally Rolex/Cartier watches and Polo/Lacoste T-shirts, which are particularly sought-after fakesand appear in a variety of different qualitylevels. To take this variation into account yetnot confuse respondents, they were advised tothink of counterfeits as products that look exactlythe same as the original branded product. Inaddition, we examined the intention to purchasecounterfeits as a function of price (Bloch, Bush,and Campbell, 1993). Taking that into account,the reaction to five different price levels wasmeasured (20, 40, 60, 80, and 90 percent belowthe price of the original items). Thus, with 2brand choices and 5 price reductions versus theoriginal, a total of 10 items were developed tomeasure the intention to purchase counterfeits.

Attitudes

Fishbein (1967) as well as Fishbein and Ajzen(1975) state that attitudes toward behavior arebetter predictors of behavior than are attitudetoward objects (e.g., attitude toward a counterfeititem). In accordance with their view and basedon the literature, 11 items were developed tomeasures consumers’ attitudes toward counter-feiting and purchasing counterfeit luxury brands.

Embarrassment Potential

Consumers’ beliefs about whether significantothers think they should engage in the behavior(e.g., wearing counterfeit clothes) have beenfound important (Ang et al., 2001; Bushman,1993; Nia and Zaichkowsky, 2000). Fishbein andAjzen (1975) proposed including the subjectivenorm in attitude models in order to provide anadditional determinant of the intention. In ourstudy, we operationalized the subjective normconstruct by asking respondents to assess thereactions of others to their own (hypothetical)behavior, namely wearing and purchasing coun-terfeits. Two statements were included in thequestionnaire.

Knowledge

Consumers’ knowledge about products andtheir consequences influence their perceptions

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and preferences (see also Alba and Hutchin-son, 1987; Brucks, 1985; Moreau, Lehmann,and Markman, 2001; Park, Mothersbaugh, andFeick, 1994). Consequently, the questionnaireincluded four newly developed items that testwhether consumers are aware of the economicand societal problems associated with counter-feits.

Readiness to Take Risks

To measure readiness to take risks, a slightlymodified “Risk Taker (Purchase)” scale wasapplied. This scale consists of six items andmeasures a person’s reported willingness to takea risk by, for example, trying unfamiliar productsor brands (Raju, 1980).

Product Category

Past research assumed that consumers pur-chasing fake products differ by product type(Bloch, Bush, and Campbell, 1993; Tomet al., 1998) and has used different productcategories to investigate the demand for counter-feits (e.g., Cordell, Wongtada, and Kieschnick,1996; Tom et al., 1998; Wee, Tan, and Cheok,1995). Along these lines, we selected twoproduct categories with a high fashion appeal:textiles (“Polo/Lacoste”) and luxury watches(“Cartier/Rolex”). In both cases, appearanceand visibility are salient product features. Inaddition, watches convey a certain risk of mal-function, which is less important with textiles(Nia and Zaichkowsky, 2000).

ANALYSIS AND RESULTS

Multi-item scales were used in our struc-tural equation modeling. Employing Amos 5(Arbuckle and Wothke, 2003) for analysis,the objective was to assess the cross-nationalapplicability of the developed scales and, subse-quently, to test our hypotheses by estimating thestructural models.

Assessing Measurement Invariance

In assessing measurement invariance, wefollow Steenkamp and Baumgartner (1998),who propose the multigroup confirmatory factor

analysis (CFA) model as the most powerfuland versatile approach. Table 1 summarizes andcompares the models derived in the course of theinvariance measurement process.

First, a test of equality of variance matricesand mean vectors was employed, showing thatcovariances and means are not invariant acrosscountries (multigroup CFA). Thus, we couldestablish that a separate country analysis isrequired. Configural invariance was examinednext. Overall, the five-factor structure of theproposed model seems to be invariant across thefour countries, and the factor structure is similaracross countries.

Next, a test for full metric invariance wasapplied to check further whether cross-nationalconsumer responses to various scale items canbe meaningfully compared. Contrasting the fitstatistics of the full metric invariance modelwith the baseline model (configural invariancemodel), it can be seen that there is a significantdecrease in χ2. Based on this analysis, validcomparisons of latent means across countries areallowed. In addition, factor covariance and factorvariance were assessed. In this way, we addressthe issues of discriminant validity (covariances)and homogeneity of factor scores in the pop-ulation (variances). Relative to the configuralinvariance model, χ2 decreased significantlyand therefore we assume factor covariance andfactor variance in our data. Finally, error varianceinvariance was established (see Table 1). Afterthese methodological tests, we can concludethat the overall model structure holds in allcountries and can therefore be used for furthercross-country comparisons.

Intention to Purchase Counterfeitsat Various Price Levels

In a subsequent step, a two-factorial anal-ysis of variance with repeated measures wasapplied in order to assess the statistical sig-nificance of differences between countries andprice levels. The analysis used the intention topurchase counterfeit products (Polo/Lacoste andCartier/Rolex) as dependent variables, countries(Austria, Slovenia, Czech Republic, and Mex-ico) as independent variables, and different pricelevels (20, 40, 60, 80, and 90 percent) as repeated

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Penz, Schlegelmilch, and Stottinger 75

TABLE 1. Multi-Group Analysis of the Attitude Toward Counterfeits Measure(Five-Factor Model)

χ2 df RMSEA CFI TLI

Equality of Covariance and Means 1,007.13 292 0.05 0.71 0.64Equality of Covariance 761.81 277 0.04 0.80 0.74Equality of Means 835.00 273 0.05 0.77 0.70Configural Invariance 940.85 237 0.06 0.72 0.56Metric Invariance 723.93 245 0.05 0.75 0.69Scalar Invariance 724.39 248 0.05 0.72 0.81Factor Covariance Invariance 765.94 253 0.05 0.79 0.70Factor Variance Invariance 742.56 242 0.05 0.80 0.70Error Variance Invariance 904.78 260 0.05 0.74 0.64

measures. Mauchly’s test of sphericity indicatesthat the multivariate analysis of variance isappropriate for the data analysis, based on theassumption that the dependent variables arecorrelated (Polo/Lacoste: χ2 = 1772.13 with 9df; p < 0.001 and Cartier/Rolex: χ2 = 1988.65with 9 df; p < 0.001). A significant overallmain effect was found for the four countries, theprice levels, and the product types (p < 0.001).In addition, there is a significant interactionbetween countries and price levels with bothproduct types, indicating that the differencesin intention to purchase counterfeits at variousprice levels are country-specific.

Structural Models

Having satisfied the various measurementissues, the structural models were estimated.Based on the results discussed above, differ-ent models were considered in the followingmultigroup analyses (SLO, AT, MEX, CZ), eachdealing with a product type (Polo/Lacoste andCartier/Rolex) at a specific price level (20, 40,60, 80 and 90 percent). For space reasons, Tables2 and 3 only display the results of the models thatconsider the intention to purchase counterfeitsat the lowest and the highest percentage beloworiginal price. Based on the goodness-of-fitstatistics, the models are found acceptable.

Findings

Past research has stressed that price is a keydriver of the demand for fake products. Indeed,

the perceived, favorable price/value relationshipof counterfeits proved to have a strong impact onthe intention to purchase, except for Mexicans.This effect increases, as the price gap betweenoriginal and fake product widens. The higher theprice discount and thus the more favorable theperceived price/value relationship, the more con-sumers are lured into buying fakes. These find-ings are not unexpected. However, completelysurprising is that all other attitudes towardcounterfeiting, which were reported influentialin previous studies, did not affect the intentionsto buy fakes. Anti-Big Business sentiments,the perceived efficiency of counterfeiters, andthe embarrassment potential of fake productsshowed only sporadic impact. The attitudestoward the negative effects of counterfeiting onR&D did not affect the intention to purchasefake products at all. In addition, opinions didnot change in substance or magnitude with pricevariations. These findings clearly contradictresults from previous studies.

In past research, demographic characteristicshave also been linked to intentions to purchasecounterfeits. As past findings were mixed, wetested for a direct link as well as for an indirectlink through the attitudes toward counterfeitingon intention. Supporters of counterfeiting oftenmaintain that original manufacturers exaggeratetheir losses in sales through fake products,as purchasers of the copy would not be ableto afford the original anyway. Following thisargument, it would be the less wealthy whorevert to counterfeits. Again, our results do notsupport this contention. As it turns out, income

Downloaded At: 12:50 9 January 2009

TAB

LE2.

Res

ults

ofP

ath

Ana

lysi

s—P

olo/

Laco

ste1

Pric

e20

%be

low

Orig

inal

Pric

eP

rice

90%

belo

wO

rigin

alP

rice

Hyp

othe

size

dpa

thA

ustr

iaS

love

nia

Mex

ico

Cze

chR

ep.

Aus

tria

Slo

veni

aM

exic

oC

zech

Rep

.

End

ogen

ous

varia

bles

onIn

tent

ion

βC

.R.

βC

.R.

βC

.R.

βC

.R.

βC

.R.

βC

.R.

βC

.R.

βC

.R.

Pric

e/V

alue

Rel

atio

nshi

p2>

Inte

ntio

n−0

.65

−6.3

4−0

.36

−3.2

8−0

.27

−1.4

5−0

.35

−4.0

6−1

.09

−8.8

7−1

.13

−8.4

8−0

.43

−1.9

0−1

.34

−12.

75

Neg

ativ

eE

ffect

son

R&

D>

Inte

ntio

n0

−0.0

20.

060.

470.

141.

160.

020.

290.

171.

840.

151.

06−0

.08

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4−0

.04

−0.4

5

Ant

i-Big

Bus

ines

s>

Inte

ntio

n0.

261.

370.

371.

680.

532.

65−0

.03

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40.

030.

150.

000.

010.

421.

690.

522.

22E

ffici

ency

>In

tent

ion

0.31

2.94

0.47

2.3

−0.0

3−0

.21

0.34

5.48

0.24

1.97

0.33

1.43

0.16

0.95

−0.0

9−1

.33

Em

barr

assm

ent>

Inte

ntio

n−0

.03

−0.4

5−0

.23

−2.5

4−0

.08

−0.6

7−0

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−0.9

20.

030.

370.

252.

450.

000.

000.

00−0

.04

Exo

geno

usva

riabl

eson

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ntio

nγ

C.R

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C.R

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C.R

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C.R

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C.R

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C.R

.

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me

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tent

ion

0.07

1.02

0.13

1.69

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4−2

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0.11

2.22

0.05

0.55

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9−0

.98

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3−1

.69

0.04

0.63

Edu

catio

n>

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ntio

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470.

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ge>

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0.02

0.16

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9−1

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3−2

.25

−0.0

7−0

.75

−0.3

2−2

.24

−0.1

8−2

.15

Kno

wle

dge

>In

tent

ion

0.69

2.19

−0.0

3−0

.07

−0.5

5−1

.25

0.25

0.63

0.62

1.77

0.20

0.39

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1.43

3.00

End

ogen

ous/

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geno

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riabl

eson

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tude

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Age

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igB

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ess

0.07

2.61

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0.15

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0.07

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0.08

1.54

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0−1

.31

0.15

4.21

Edu

catio

n>

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i-Big

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ines

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−2.7

9−0

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9−0

.11

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5−0

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−2.5

3−0

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1In

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e>

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470.

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80.

020.

440.

071.

390.

031.

03K

now

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Ant

i-Big

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ines

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4−0

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.92

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4−0

.94

−0.9

3−7

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−0.3

9−3

.19

−0.5

3−2

.63

−0.1

3−0

.88

−0.9

0−7

.46

Age

>E

ffici

ency

0.14

3.83

0.16

2.51

0.02

0.19

0.15

2.25

0.14

3.84

0.15

2.45

0.02

0.26

0.16

2.34

Edu

catio

n>

Effi

cien

cy−0

.09

−1.6

8−0

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.07

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5−0

.09

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7−0

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2−0

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cy−0

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570

0.08

−0.0

1−0

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−0.0

2−0

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0.03

0.55

0.00

0.00

−0.0

1−0

.15

Kno

wle

dge

>E

ffici

ency

−0.7

2−4

.05

−0.7

5−2

.89

−0.8

2−4

.76

−0.8

4−4

.19

−0.6

7−3

.89

−0.6

6−2

.61

−0.7

9−4

.67

−0.8

4−4

.29

Age

>N

egat

ive

Effe

cts

onR

&D

0.07

1.87

0.09

1.33

0.02

0.14

−0.1

1−1

.89

0.07

1.89

0.09

1.33

0.02

0.19

−0.1

1−1

.88

76

Downloaded At: 12:50 9 January 2009

.

Edu

catio

n>

Neg

ativ

eE

ffect

son

R&

D−0

.09

−1.6

2−0

.07

−0.8

40

0.02

−0.0

5−0

.79

−0.0

9−1

.62

−0.0

8−0

.95

−0.0

1−0

.07

−0.0

5−0

.80

Inco

me

>N

egat

ive

Effe

cts

onR

&D

0.01

0.19

−0.0

5−0

.79

−0.0

1−0

.11

0.02

0.46

0.01

0.15

−0.0

6−0

.85

−0.0

1−0

.08

0.02

0.45

Kno

wle

dge

>N

egat

ive

Effe

cts

onR

&D

0.03

0.15

0.35

1.4

0.26

1.15

0.57

3.22

0.06

0.34

0.43

1.67

0.29

1.24

0.60

3.34

Age

>P

rice/

Val

ueR

elat

ions

hip

0.01

0.26

0.13

1.95

0.19

1.83

−0.0

9−1

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0.02

0.42

0.14

2.03

0.19

1.82

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8−1

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Edu

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n>

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e/V

alue

Rel

atio

nshi

p0.

091.

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3−0

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40.

091.

50−0

.02

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9−0

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0

Inco

me

>P

rice/

Val

ueR

elat

ions

hip

0.05

0.78

0.09

1.24

0.01

0.24

0.09

1.93

0.05

0.77

0.07

1.07

0.02

0.30

0.09

1.81

Kno

wle

dge

>P

rice/

Val

ueR

elat

ions

hip

0.9

4.22

0.42

1.31

0.79

2.24

0.72

2.08

0.85

4.15

0.43

1.29

0.81

2.30

0.79

2.29

Ris

kTa

ker>

Pric

e/V

alue

Rel

atio

nshi

p−0

.21

−1.8

3−0

.06

−0.4

3−0

.29

−0.9

6−0

.2−0

.89

−0.1

6−1

.38

−0.0

2−0

.17

−0.2

6−0

.86

−0.2

2−0

.96

Exo

geno

usva

riabl

eon

Em

barr

assm

entP

oten

tial

(Sub

ject

ive

Nor

m,S

N)

γC

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γC

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γC

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Ris

kTa

ker>

Em

barr

assm

ent

−0.2

5−2

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3

Goo

dnes

sof

Fit

χ2

(118

9)=

3126

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p<

.001

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f=2.

63.

χ2

(118

9)=

3159

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p<

.001

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f=2.

66.

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SE

A=

0.04

RM

SE

A=

0.04

Not

e.1A

ssu

gges

ted

byB

olle

n(1

989)

unst

anda

rdiz

edes

timat

esar

eus

ed.

2D

ueto

the

wor

ding

ofth

eite

ms

load

ing

onth

efa

ctor

“Pric

e/V

alue

Rel

atio

nshi

p”th

ees

timat

essh

owne

gativ

eva

lues

whe

na

posi

tive

rela

tions

hip

betw

een

varia

bles

resu

lted

and

vice

vers

a.

77

Downloaded At: 12:50 9 January 2009

TAB

LE3.

Res

ults

ofP

ath

Ana

lysi

s—C

artie

r/R

olex

1

Pric

e20

%be

low

Orig

inal

Pric

eP

rice

90%

belo

wO

rigin

alP

rice

Hyp

othe

size

dpa

thA

ustr

iaS

love

nia

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ico

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chR

ep.

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tria

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veni

aM

exic

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zech

Rep

.

End

ogen

ous

varia

bles

onIn

tent

ion

βC

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βC

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βC

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βC

.R.

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.R.

βC

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βC

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βC

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Pric

e/V

alue

Rel

atio

nshi

p2>

Inte

ntio

n−0

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−6.0

7−0

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4−0

.36

−1.9

7−0

.23

−2.8

2−1

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−8.5

2−0

.74

−5.0

7−0

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6

Neg

ativ

eE

ffect

son

R&

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4

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531.

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0.32

3.42

0.47

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0.13

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0.63

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0.30

1.62

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me

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0.02

0.35

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1−0

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0.07

1.56

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0.78

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05

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.

Age

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0.07

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Kno

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−0.6

8−3

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−0.7

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Age

>N

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ive

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cts

onR

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0.07

1.88

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0.07

1.88

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78

Downloaded At: 12:50 9 January 2009

.

Edu

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Inco

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450.

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46

Kno

wle

dge

>N

egat

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cts

onR

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0.05

0.33

0.41

1.61

0.28

1.22

0.59

3.33

0.04

0.26

0.40

1.54

0.27

1.17

0.59

3.33

Age

>P

rice/

Val

ueR

elat

ions

hip

0.01

0.27

0.14

1.99

0.20

1.87

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9−1

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0.40

0.14

2.08

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091.

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7

Inco

me

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0.05

0.77

0.08

1.11

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80 JOURNAL OF INTERNATIONAL CONSUMER MARKETING

has neither a direct nor an indirect effect on theintention to purchase.

Neither of the other demographic variables,i.e., age nor education/knowledge had a directeffect on the intention to purchase counter-feits. Given that, attitudes toward counterfeitingdid not moderate the impact of the favorableprice/value relationship on purchase intentions.However, except for Mexico, knowledge has asignificant negative effect on the perceived effi-ciency of counterfeiters and anti-Big Businesssentiments. The more consumers know aboutthe detrimental impact of counterfeiting, theharder they find it to rationalize their behavior.Thus, informing consumers specifically on the“business practices of counterfeiters” may helpto change their attitudes. In general, specificknowledge still has a stronger impact thangeneral education. It is therefore the informationabout the specific topic that influences attitudesrather than the general level of education. Theinfluence of age and education varied even moremarkedly and did not provide any conclusiveinsights across countries, price levels, or productcategories.

In addition to the findings supported acrosscountries, some relationships are idiosyncratic tothe specific country context. The same holds truefor the different product categories, however,less compelling and less clear-cut than the resultson the country background. Some examples ofthese findings are outlined in the following. Withregard to the antecedents of purchase intentions,one example is the influence of efficiency:For instance, Austrians have higher purchaseintentions if they believed that counterfeiters aremore efficient. With regard to anti-Big Businessbeliefs, results revealed that while Mexicans’intentions were significantly influenced in thecase of Polo/Lacoste at a 20 percent pricediscount, Czechs’ intentions were influenced inthe case of Cartier/Rolex at 90 percent discount.Finally, if Slovenes feared to be embarrassedwearing fake Polo/Lacoste their intention de-creased significantly at all price discounts, andwhen wearing a fake Cartier/Rolex at a 20percent price discount.

One example of the effect of country-specificdemographics is age. When it comes to anti-Big Business sentiments, only the Czech and

Austrian sample displays an age effect. Simi-larly, older Austrian and Slovenes believe morestrongly that counterfeiters are more efficientthan manufacturer of original brands. Similarcountry specific effects can be observed in therelationships between knowledge and anti-BigBusiness sentiments in the Czech, Austrian, andSlovenian sample, as well as between knowledgeand negative effects on R&D in the Czech sam-ple only. Additionally, the more Austrians seemto know, the less the price/value relationship ofcounterfeits is perceived as positive.

The impact of the education level on certainattitudes also differs between countries. Forexample, while better-educated respondents inAustria and in Slovenia (for Polo/Lacoste at a90 percent discount and Cartier/Rolex at a 20percent discount) do not support anti-Big Busi-ness sentiments, this variable is not significantin the Czech and Mexican sample; additionally,fewer better-educated Slovenes believe in theefficiency of counterfeiters (except for the 20percent discount of Polo/Lacoste). Overall, how-ever, country-specific findings turned out to berather erratic than following a certain pattern,which limits their usefulness in terms of specificmanagerial applications.

Taken collectively, our findings reveal fun-damental discrepancies to prior findings in thefield. In our extensive empirical analysis, noneof the investigated attitudes toward counterfeits,except for the price argument, turned out to haveany substantial impact on purchase intentions.The same holds true for demographic variablesand their impact on purchase intention. Never-theless, one finding relating to demographicsis worth reporting. Specific knowledge aboutcounterfeiting rather than the level of educationmakes a difference when it comes to attitudestoward counterfeiting. If consumers know aboutthe “business model” of counterfeiters, thenthey find it harder to rationalize their behavior.

CONCLUSIONS

Over the last few decades, sales of counterfeitproducts have increased dramatically. Whilesupply-side deterrents have been discussedextensively among practitioners and in the

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Penz, Schlegelmilch, and Stottinger 81

academic literature, the demand side has re-ceived comparatively little attention. Althoughthe few existing research endeavors focusingon the demand side provide some interestingpointers, these studies do not yet yield a com-prehensive picture of the phenomenon underinvestigation. Our objective in this researchwas to validate existing findings in terms ofpredicting the demand for counterfeits. In partic-ular, we attempted to consolidate contributionsfrom different fields and reassessed the validityof the existing findings in terms of predictingthe demand for counterfeits in a more realisticempirical setting. Moreover, we revisited theprice/value relationship in counterfeit purchases.Finally, referring to counterfeiting as a globalphenomenon, we reassessed the applicabilityof existing research findings in more thanone country. For that purpose, we relied on amulticountry setting with “nonstudent” samples.

The results presented in this paper call intoquestion the existing knowledge on the demanddrivers for counterfeit products. Except for theperceived favorable price/value relationship, allother attitudes toward counterfeiting did not—orin a very limited and erratic manner—influencethe intention to purchase fake products. Theseresults were supported across all four coun-tries, all price levels, and all analyzed productcategories. The same holds true for knowledgeand the demographic variables initially deemedinfluential, such as age, income, and education.

One interpretation of the results is thatconsumers’ purchase decisions, when it comesto buying fake products, follow a much moresimple logic than anticipated in the literature.What lures them into buying is price—nothingmore, nothing less.

The fact that price issues have such a strongeffect on the purchase intention while otherattitudes do not, may be a sober message fromconsumers. Conceptually, brands are promisesthat represent functional, symbolic, and ex-periential benefits (Hsieh, Pan, and Setiono,2004) and consumers reward these benefits bypaying a premium price. Interestingly, however,our results show that consumers intend tobuy counterfeits even at relatively small pricediscounts. For example, we find that counterfeitspriced 20 percent below the original’s price

already significantly increase purchase intent.Without having explicitly measured the qualityperception of original versus counterfeit withinthis research, these results suggest that, in theeyes of the consumer, the counterfeit’s promisecomes very close to the brand’s promise. As theoriginal brand’s value-added seems to vanish incomparison with the copy, it is necessary to gaina better understanding of what still separatesoriginals from fakes from the vantage point ofthe consumer.

In terms of managerial implications, thisresearch suggests that attention should primarilyfocus on changing the perceived price/valuerelationship of counterfeits among consumers.Effective means to reduce the perceived pricedifferential between fakes and originals mayinvolve both communication as well as productactivities. Current attempts to render counter-feiting more expensive through elaborate copyprotection measures may objectively reduce theprice differential between fakes and originals.Emphasizing that originals may easily be ex-changed should the customer not be completelysatisfied with the quality of the product willalso increase the perceived value of buying the“real thing.” Moreover, communication activi-ties need to elaborate more clearly and con-vincingly the downsides of the counterfeiters’“business model.” This will make it harderfor consumers to rationalize their behavior andwill take some focus away from the priceadvantage of counterfeits. Clearly the easiestway to address the price differential betweenoriginals and fakes would be to reduce the pricesof the branded originals. This would also addressconcerns of some governmental institutions andconsumer lobbyists who think that the highprices for luxury invite counterfeiters. Such astep, however, requires great caution, as it ishardly reversible and may in the long run damagea brand’s image as a premium product. To thisend, this alternative will only be realistic for veryfew marketers of premium brands.

As far as future research in this area isconcerned, our results underline the value ofinvestigating what role originals and fakes playin the overall consumption and ownership pat-tern of consumers. It is necessary to reassesswell-established contentions in the context of

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82 JOURNAL OF INTERNATIONAL CONSUMER MARKETING

counterfeits. At least one of them, namelythat consumers strive for the original wheneverpossible and only settle for the fake if they cannotafford an original, is called into question by ourfinding that the intention to purchase fakes isindependent of the level of income. It seems thatconsumers have become more self-confident intheir relationship with counterfeits and use themquite purposefully, sometimes intentionally re-placing them for the original—perhaps in certaincontexts—or mixing the ownership of brandsand fakes. Our findings clearly demonstrate thatattitudes as predictors of purchase intention areof very limited importance, at least in the contextof the luxury brands that we investigated inthe selected countries. A definitive assessmentof their relevance will require investigation ofother product categories where functionality andrelated risks play a more important role, forexample, software or pharmaceuticals. Anotherworthwhile extension of the work presented inthis paper would be the inclusion of additionalcountries with a less “Western” approach tobuying fakes (i.e., Asian markets). As the Asianconcept of counterfeits and imitations differsfrom Western views (Hung, 2003), it is likelythat Asian consumers’ intention to purchasecounterfeits will be driven by different motiva-tions. Research establishing the conceptual andfunctional equivalence of the constructs usedin our paper would be required in this context.Future research attempting to identify alternativeexplanatory variables for the purchase of coun-terfeit luxury brands may also find it insightfulto look at the emotional side of purchasing fakesrather than only at attitudinal decision-makingaspects. Being a smart shopper, i.e., the cognitiveapproach of using the beneficial price/valuerelationship argument for decision making, isone direction in which customer behavior hasbeen analyzed. It may well be that the purchaseof fakes is influenced by emotional situations.Indeed, the purchase of fakes could also createpositive emotional situations. It may be theemotionally appealing purchasing situation thatentices customers to revert to fakes rather thanthe original. Strolling through one of the nightmarkets in Bangkok or Hong Kong or beingexposed to merchants on beaches in Spain,Italy, or elsewhere may provide an environment

stimulating enough for consumers to buy fakeproducts. Moreover, this shopping experiencemay be perceived as more pleasant than en-tering the original manufacturer’s authorizeddealership. For consumers, buying a fake watchmay be “a good laugh,” while they neverintended to buy the original. The prospect ofhunting down a “bargain” may evoke feelings ofexcitement and drive purchasing behavior muchmore than the cognitive argument of supporting“the small counterfeiters.” The purchase of fakesmay, however, also evoke negative emotionslike fear or distress. Once again, this points tothe need to analyze other product categories,where functional benefits are more important,e.g., software or pharmaceuticals. Here emotionsof fear and uncertainty may accompany thepurchasing decision, as the fake may not liveup to the expected quality, thus nullifying theprice advantage.

Taken collectively, the issue of counterfeitsand counterfeiting in globally active businesseshas lost nothing of its timeliness. The same holdstrue for this topic as a research area. In light ofour findings, however, we advocate leaving theestablished paths and venturing in new directionsto take a fresh in-depth look at what motivatesconsumers to buy fake products.

AUTHORS’ NOTE

The authors are listed in alphabetical orderto indicate that they contributed equally to thispaper.

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RECEIVED: August 1, 2006REVISED: August 1, 2007

ACCEPTED: November 1, 2007

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