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First of all it is important to say that there are two types of counterfeit product purchases by consumers. Deceptive counterfeiting takes place where the consumer does not know that they have purchased a counterfeit product. In contrast, non-deceptive purchases of counterfeit products take place where the consumer willingly buys the counterfeit products. We’re dealing here with the latter type of purchase. If lawmakers and the producers of genuine branded goods want to take action against counterfeits as well as dealing with the suppliers they may need to consider why the demand exists. Much in the same way as health campaigns against cigarette smoking were based on understanding the various reasons why people smoke, so it is also clear that the consumption of counterfeits is a complex activity which has many causes that need to be understood.

There has been a significant amount of research into why people buy counterfeit brands and the types of people who may be more willing to buy them. Unsurprisingly people who have relatively little regard for the law will be more likely to purchase counterfeit products. Also people who have negative attitudes towards big business are more likely to buy counterfeit products. This may be because they feel that genuine brands charge unfair prices, those people who see themselves as being shrewd shoppers willing and able to beat the system may also be more likely to buy counterfeits. Counterfeits may also appeal to those people who want to demonstrate their status, but don’t have the funds to do so with genuine products. Another factor that may encourage counterfeit consumption is where people are curious and want to experiment. Some people are also comfortable with taking risks and doing something that is illegal may not be a problem.

"an individual’s crime may not be obvious to those around them"

As an illegal activity, what is peculiar about buying and using fake brands is that this is something where an individual’s crime may not be obvious to those around them. The consumer knows of their true origin, the people amongst whom the consumption takes place will only know if the consumer tells them, depending on the quality of the manufacture. So are counterfeit brands popular because they are difficult to distinguish? Or is it because there is a cachet to having bought something much cheaper than the genuine product (even if it is fake)?

The most obvious factor motivating consumer purchase of counterfeit products is their relatively low price but it is commonly appreciated that such products will be of lower quality than genuine products. However some research has found that people who have previously bought counterfeit goods believe that they are as good as genuine products – no doubt that will encourage them to repeat their actions.

Clearly the manufacturers of branded goods have a great deal of work to do when it comes to consumer perceptions of counterfeit goods and the attractiveness of buying them.

Weblinks

• Fake football shirts - Can Umbro stop the flood?
• Securing your brand – how do you build value into a brand and how do you preserve that value?
• Take it further - sharpen up your business skills
• Join the discussion - why do people buy fakes? Is it really such a bad thing?

Further reading

• Counterfeiting Exposed: Protecting Your Brand and Customers by David M. Hopkins, Lewis Kontnik and Mark Turnage, published by John Wiley & Sons

Courses

• Marketing in a complex world

About the author

Haider Ali is a lecturer in marketing at the OU Business School. He has extensive experience of delivering courses to people in industry ranging from the most junior functions in organisations to senior executives.

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Blogging about

Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

As the fake trade mushrooms and with internet sites already awash with World Cup merchandise at knock-down prices, Umbro is braced for an influx of copycat kit.

The company is right to be anxious. With 12% of all sports goods now counterfeit, global figures reveal the shocking scale of the problem. Dozens of unscrupulous suppliers are preparing to replicate Umbro’s designs and products.

Consumers queuing to exchange their cash for cheap and cheerful imitations have one question on their lips. Why pay 40 quid for a genuine football team strip when a tenner buys a pretty good rip-off? For Umbro, stemming the supply of these cheap copies is only part of the problem. Handling the demand side: persuading the public to ditch the fakes in favour of genuine items from authorised outlets, is even more of a challenge!

At a time when all types of consumer goods are fair game for the counterfeiters, Umbro’s drive to interrupt supply is understandable. In a market awash with everything from fake watches and designer labels to cosmetics and prescription drugs, even the artificial tan is fake. Soon car boot sales, market stalls, newspaper classifieds and Internet auction rooms will swell with soccer gear, as cup fever fuels demand for the best-loved strips.

For Umbro the stakes are high: these counterfeit encounters are much more than a short-term threat. The risks include long-term damage to its brand and consequences for its financial fortunes.

Supply is fed by an overwhelming influx of dubious goods from counterfeiting hotspots such as the Far East. Consumer protection specialists explain that there is a high price to pay for supporting the fake trade. The image these experts present is stark, and their warning for consumers is bleak: your kit may be cut-price, it may even be the right colour and fit, but it’s likely to be shoddy quality and your consumer rights will disintegrate when the second-rate materials and printing fail in your washing machine.

"Your soccer shirt could be funding illegal trade, gun crime and even terrorism"

More shocking still, your soccer shirt could be funding illegal trade, gun crime and even terrorism. And that’s not all. Legitimate business is paying the highest price. Last year alone 17,000 European jobs were lost as a result of brand counterfeiting. According to the Anti-Counterfeiting Group (ACG):

Legitimate traders are hit when fakes undercut their markets, and the black market each year is worth around £9bn, on which unpaid VAT alone would fund several new schools and hospitals.

Despite such dire warnings, many consumers remain relaxed about the counterfeiting malaise. A recent report for The Organised Crime Task Force revealed that shoppers see fakes as a bargain, justifying their behaviour on the basis of the prohibitive price tags of genuine items. Many are either unaware or unwilling to acknowledge the darker side of the trade.

"Ultimately it is the consumer who decides whether to pay full price or be lured by the bargain-prices of copycat kit"

For Umbro, this is the root of the problem. Ultimately it is the consumer who decides whether to pay full price or be lured by the bargain-prices of copycat kit. These shoppers are savvy, and a growing number are prepared to pay for counterfeit brands. Umbro’s best chance of solving the problem is to develop an effective marketing strategy based on a clear understanding of consumers’ motives, perceptions and behaviour.

Consumer behaviour is defined as the purchase and consumption activities of ultimate consumers who buy products and services for personal or household use. Anticipating these buying patterns is the challenge for all marketing practitioners as they strive to influence this behaviour. Consumer expert Bernard Dubois explains that analysing these aspects of human behaviour involves answering three fundamental questions:

1. Who buys? What is the consumer’s identity?
2. How? What is the purchasing process like?
3. Why? What factors explain the purchase?

This last question is particularly intriguing for businesses striving to understand key customer drivers. Dubois expands on this point by describing three groups of explanatory factors, occurring at these levels:

• individual
• interpersonal
• sociocultural

Taken in combination these variables influence consumer preferences and purchase patterns. At the individual level, this involves an appreciation of consumer motivations, perceptions, experience and attitudes. It is with these factors that Umbro must grapple if it is to successfully attack the fake demand problem.

Umbro needs a twin strategy to tackle the fakers. Whatever action the company takes to locate the counterfeiters and stem supply, it must also strike at the heart of consumer demand. The sports gear supplier must rapidly tune into what motivates shoppers to buy these cheap imitations. Is it really all about price? Is quality a key consideration, or are there other factors at play?

Recent research by ACG pinpointing cost as a key driver in the market for fakes, also suggests that decisions are not purely driven by economic considerations. For buyers of DVDs, speedy access to new movies has fuelled the fake trade, while availability is also an issue for toy buyers. It is these kinds of nuances which soccer strip suppliers must grasp if they are to dissuade consumers from their errant behaviour. Ready, convenient access through a mix of retailing channels may be as important to consumers as low price.

Football pundits are already speculating about which nation will lift the 2006 World Cup. The victorious team will be assured an enthusiastic response from its supporters. Whether the football strip sported by these fans will be genuine, is much less clear. Some of the omens are good, not least because enforcers are demanding tougher legislation and stiffer jail terms for fakers.

For Umbro the message is clear. Winning the game depends on a twin strategy to tackle both the demand and supply side issues. The final whistle in Umbro’s encounter with the counterfeiters may be getting closer, but the tournament is only just beginning.

Further reading

• Understanding the Consumer by Bernard Dubois, published by Prentice-Hall
• The Deadly Trade in Counterfeit Goods by Tim Phillips, published by Kogan Page
• Anti-Counterfeiting Group
• Fake Nation? A study into an everyday crime research conducted by Dr Jo Bryce (University of Central Lancashire) and Dr Jason Rutter (University of Manchester)
• Securing your brand – how do you build value into a brand and  how do you preserve that value?
• The trainer tamer – how Jonah Perretti became the scourge of Nike

About the author

Sally Dibb is Professor in Marketing at the OU Business School. Sally chairs the Academy of Marketing's Special Interest Group in market segmentation.

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