memorandum 77

8/13/2019 Memorandum 77

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Research Memorandum

77 March 2008

The Role of Product Involvement,Knowledge, and Perceptions in Explaining

Consumer Purchase Behaviour ofCounterfeits:

Direct and Indirect Effects

XUEMEI BIAN

Centre for Marketing, Communications and International StrategyBusiness School, University of Hull

Cottingham Road, Hull, HU6 7RX, the UKEmail:[email protected]

LUIZ MOUTINHO

University of Glasgow

ISBN 978-1-906422-05-9
mailto:[email protected]:[email protected]


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2008 X Bian, L Moutinho

All intellectual property rights, including copyright in this publication, except for thoseattributed to named sources, are owned by the author(s) of this research memorandum. Nopart of this publication may be copied or transmitted in any form without the prior writtenconsent from the author(s) whose contact address is given on the title page of the researchmemorandum.


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Abstract

This research examines the direct and indirect relationships (mediator andmoderator effects) between product involvement, product knowledge, and

perception on purchase intention of counterfeits in the context of non-

deceptive counterfeiting. Results suggest that (1) perception is not a mediatorof the effects of involvement/knowledge on purchase intention, (2) evidence ofinvolvement as a moderator does not exist, (3) involvement/knowledge has no

significant influence on counterfeit purchase intention, and (4) three out ofseven dimensions of counterfeit perception are significantly influential on

counterfeit purchase intention, with brand personality dimension appearing tohave more explanatory power than the other two dimensions.

Keywords

Counterfeit; product involvement; product knowledge; purchase intention;mediator effect; moderator effect


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INTRODUCTION

Counterfeit products are those bearing a trademark that is identical to, orindistinguishable from, a trademark registered to another party and infringe

the rights of the holder of the trademark (Chaudhry and Walsh, 1996;Kapferer, 1995; Grossman and Shapiro, 1988a,b; Bamossy and Scammon,1985). The International Chamber of Commerce states that counterfeitsaccount for 8 percent of world trade (Freedman, 1999). Globally, the sales ofcounterfeit products are estimated to be about $300 billion (Gentry, Putrevu,Shultz and Commuri, 2001). It is estimated that the value of counterfeit goodsin the global market grew by 1100% between 1984 and 1994 (Carty, 1994;Blatt, 1993). Clearly, counterfeiting has become a significant economicphenomenon in the last two decades (Bian and Veloutsou, 2007).

Despite that fact that selling and manufacturing counterfeits are considered to

be crimes in some countries, for example, the U.S. and the U.K (Hopkins,Kontnic and Trunage, 2003; Bush, Bloch and Dawson, 1989), past researchsuggests that about one-third of consumers would knowingly purchasecounterfeit goods(e.g. Phau, Prendergast and Chuen, 2001; Tom, Garibaldi,Zeng and Pilcher, 1998) regardless of the potential consequences associatedwith counterfeits. Researchers argue that consumer demand for counterfeitsis one of the leading causes of the existence and upsurge in growth of thecounterfeiting phenomenon (Gentry, Putrevu, Shultz and Commuri, 2001;Bamossy and Scammon, 1985), given that demand is always the key drive ofa market. A number of researchers (e.g. Penz and Stttinger, 2003; Wee,Tan and Cheok, 1995; Bloch, Bush and Campbell, 1993) have called for

investigation of consumer behaviour and counterfeits. Nevertheless, theacademic literature displays a strong focus on the supply side, while that onthe demand side - why consumers knowingly buy counterfeits - still appears tobe scarce (Penz and Stttinger, 2005).

Within this paper, we attempt to take a fresh look at the demand side ofcounterfeiting. The current research aims to investigate the effects of self-assessed product knowledge, product involvement, and consumersperceptions of counterfeit branded products (CBP), as well as the interactionbetween these variables on consumer purchase intention of CBP. We wish tohighlight at this juncture that, in contrast to previous research, for example,

Wee, Tan and Cheok (1995) and Nia and Zaichkowsky (2000) who examinedcounterfeit from a product perspective only, this research is one of the fewstudies which brings brand dimensions into the investigation of counterfeits.Inclusion of brand dimensions in the current study is considered to be asignificant contribution to the literature, given that, if branded products did notattract consumers, counterfeiting would not be an issue (Cordell et al., 1996;Bloch, Bush and Campbell, 1993). Therefore, this research is to measureconsumers perceptions of CBP as a product, and also as a brand - acounterfeit one. This research clearly does not address the need for researchon the relationship differences between counterfeit models and theircounterparts, the original brand models, but is nevertheless a useful first step

in that direction.


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Counterfeiting appears in different forms, as deceptive, non-deceptive andblur counterfeiting (Bian and Mouthinho, 2007). With deceptive or blurcounterfeiting, the consumer is either not aware or unsure of the fact thathe/she is purchasing a counterfeit rather than the original product and cannotbe held accountable for this behaviour. This work limits its scope to non-

deceptive counterfeiting, where consumers intentionally purchase counterfeits(Grossman and Shapiro, 1988a). The choice of the non-deceptive counterfeitcontext is considered as important, as only under this circumstance mightconsumers perceptions of counterfeits reflect their demand for theseproducts.

We develop hypotheses for and test the model presented in Figure I. Indeveloping our model, we begin with a discussion of selected variables thatcontribute to consumer purchase intention, and within this context, explainhow these variables may directly associate with each other. We also attemptto show that consumers perceptions may serve as a mediating link between

product involvement/product knowledge and purchase intention, and thatproduct involvement may be a moderator that affects the relationship betweenperceptions and purchase intention in the context of non-deceptivecounterfeiting.

Figure 1. Hypothesized Relationships between Product Involvement,Product Knowledge, Perception of CBP and Purchase Intention of CBP

Consumer

Product

Product

Purchase


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LITERATURE REVIEW AND HYPOTHESES

Product Involvement

Product involvement is commonly defined as a consumers enduring

perceptions of the importance of the product category based on theconsumers inherent needs, values, and interests (e.g. De Wulf, Odekerken-Schrder and Lacobucci, 2001; Mittal, 1995; Zaichkowsky, 1985). Since itwas first introduced to marketing, the concept of involvement has beenextensively used as a moderating or explanatory variable in consumerbehaviour (Dholakia, 1997; 1998). It is regarded as a central framework, vitalto understanding consumer decision-making behaviour and associatedcommunications (Chakravarti and Janiszewski, 2003; Fill, 1999).

Research shows that under high involvement conditions, buyer decisionprocesses are thought to proceed through extended decision-making, a seriesof sequential stages involving information search and evaluation of criteria(Browne and Kaldenberg, 1997). Celsi and Olson (1988) report that the extentto which a product is viewed as personally relevant, in that it is perceived insome way to be instrumental in achieving their personal goals and values,makes the consumer more likely to be motivated to process information aboutit. Consumers neither wish nor are able to exert a great deal of effort toprocess information in a low involvement situation (Chung and Zhao, 2003).

Based on the above research findings, it is rational to assume that under highinvolvement conditions consumers are more likely to put more effort into andare more capable of evaluating CBP as opposed to its counterpart, theoriginal branded product (BP), in the context of non-deceptive counterfeiting.Deliberative information processing involves the scrutiny of availableinformation and an analysis of positive and negative features, of costs andbenefits (Fazio, 1990). Given that CBP is a low grade of BP (Nia andZaichkowsky, 2000; Penz and Stttinger, 2003), consumers with a higherlevel of product involvement are more likely to be able to distinguish thedifference between CBP and BP, and hence develop less positive perceptionsof CBP and show less preference for the CBP. On the other hand, thedifferences between CBP and BP might not be easily recognised, if the levelof product involvement is low, due to consumers lack of motivation, effort andeven capability in relation to processing information. Consequently,

consumers perceptions of CBP and BP might not differ significantly underthese circumstances, which will lead to more favourable perceptions of CBP.Therefore, existing research, as well as applied findings, leads to the firsthypothesis regarding the effects of product involvement on consumersperceptions of CBP.

H1: There is a negative relationship between product involvement and

consumersperceptions of CBP.

Consumers look for more personal, experimental and symbolic gain, otherthan maximising product functionality, in a high involvement situation than in a

low involvement one (Solomon, Surprenant, Czepiel and Guttman, 1985).Given that consumers in a higher product involvement situation are more


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likely to regard CBP as a product of low price and low quality, consumers areless likely to consider that CBP will satisfy the personal treat, excitement andstatus they desire. Therefore, they will have a lower level of purchaseintention of CBP. Based on this, we predict the following.

H 2 : There is a negative relationship between product involvement andconsumer purchase intention of CBP.

Product Knowledge

Consumer product knowledge has been studied in a variety of different waysin recent years (e.g. Baker, Hunt and Scribner, 2002; Alba and Hutchinson,2000; Brucks, 1986; Park, Mothersbaugh and Feick, 1994; Raju, Lonial andMangold, 1995; Rao and Monroe, 1988). It has been recognised as acharacteristic in consumer research that influences all phases in the decisionprocess (Bettman and Park, 1980).

Consumers with various levels of product knowledge differ in their perceptionsof product attributes (Laroche, Bergeron and Goutaland 2003; Baker, Huntand Scribner 2002;Blair and Innis 1996). Marks and Olson (1981) proposethat consumers with higher levels of product knowledge have betterdeveloped and more complex schemata, with well-formulated decision criteria.In the same vein, Kempf and Smith (1998) suggest that consumers withhigher levels of product knowledge are more diagnostic and better informedthan those who have lower levels of product knowledge. Therefore, thehigher the level of product knowledge a consumer possesses, the less chancethere is that he/she will generate evaluation bias. Given these findings, this

research argues that, in the context of non-deceptive counterfeiting,consumers with higher levels of product knowledge are more likely to be ableto evaluate CBP more accurately, due to higher cognitive capacity. As aresult, they should have less favourable perceptions of CBP. This argumentis reflected in hypothesis 3.

H3: There is a negative relationship between product knowledge and

consumers perceptions of CBP.

Past research results also show that self-perceived knowledge operates as adirect positive influencer of purchase intentions for original branded durable

products (Berger, Ratchford and Haines 1994). Nevertheless, in the contextof non-deceptive counterfeiting, the present study has established thatconsumers with a higher level of product knowledge are more capable ofidentifying the flaws of CBP. Thus, they should give less approval to thegrade of CBP. This research tests for negative effects of product knowledgeon purchase intention of CBP.

H4: There is a negative relationship between product knowledge and

consumer purchase intention of CBP.


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Consumer Perception

Past research asserts that it does not go without saying that the informationfrom the sender (marketer) will definitely get through to the receiver(consumer) (Aaker and Myers 1987), since correct decoding of marketing

information hinges on the consumers perception of the communicationcontent (Koekmoer 1991). The study of perceptions is crucially important tothe marketers, as it can provide marketers with a more detailed picture abouthow their brand is perceived by consumers (Puth, Mostert and Ewing 1999).

In addition, people respond on the basis of their perception of reality, not thereality per se (Puth, Mostert and Ewing 1999; Lewin 1936). It has beenargued that consumer behaviour is, at root, driven by perceptions of a brandeven if they are misconceptions of actual events (Porter andClaycomb1997;Biel 1992; Porter 1976). Previous research suggests that it is perception thatprovides the grounds for purchasing decisions (Friedmann and Zimmer 1988;

Borgers and Timmermans 1987). Analysis of consumer perceptions anddecision-making processes is therefore extremely important in order tounderstand consumer behaviour, since it can help marketers to determinemore readily what influences consumers buying behaviour (Puth, Mostert andEwing 1999; Schiffman and Kanuk 1991). In the context of non-deceptivecounterfeiting, we predict that consumers with more positive perceptions ofCBP are more likely to purchase the counterfeit version. While this seems tobe a somewhat obvious prediction, a model of purchase intention of CBPwould be incomplete without its inclusion. Meanwhile, it will be extremelyvaluable to explore what dimension of perception weighs more in explainingpurchase intention of CBP. This prediction is reflected in Hypothesis 5.

H5: There is a positive relationship between consumers perceptions of CBP

and purchase intention of CBP.

Mediation and Moderator Effects

While the main effects proposed above may exist, in this study, we predictthat indirect effects (mediation effect and moderator effect) between thesevariables exist as well. Mediation effects occur when an independent variableinfluences the dependent through its effects on or as a result of a mediatorvariable (Baron and Kenny 1986). In this case, product involvement and

product knowledge are the independent variables and perception serves asthe mediator variable. Specifically, we predict that product involvement/knowledge affects consumers perceptions of CBP, which in turn affectspurchase intention. That is, the ways in which product involvement/productknowledge affect individual purchase tendency of CBP depend on howconsumers perceive CBP. Following this reasoning, we propose that therelationship between product involvement/knowledge and purchase intentionis mediated by consumers perception of CBP. These predictions arereflected in hypothesis 6 and hypothesis 7.

H6: The relationship between product involvement and purchase intention of

CBP is mediated by consumers perception of CBP.


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H7: The relationship between product knowledge and purchase intention of

CBP is mediated by consumers perception of CBP.

In addition to the proposed mediation effects, we also test for moderatoreffects of product involvement. A moderated relationship occurs when arelationship is found to hold for some categories of a sample but not others(Bryman and Cramer 1999). The search for moderated relationships isimportant as it allows research to avoid inferring that a set of findings pertainsto a sample as a whole, when in fact it only really applies to a portion of thatsample (Bryman and Cramer 1999; Baron and Kenny 1986). In this case, it isrational to assume that consumers may have low purchase tendency of CBPgiven a perceived high level of product involvement regardless of theirperceptions of CBP; in contrast, consumers may be more likely to have a highpurchase tendency of CBP if they perceive a low level of product involvement

and have more positive perceptions of CBP. That is, the ways in whichconsumers apply the influence of their perceptions of CBP to their purchaseintention of CBP will depend on the consumers level of product involvement.This proposition is reflected in hypothesis 8.

H8: Product involvement moderates the relationship between consumers

perceptions of CBP and purchase intention of CBP.

METHODOLOGY

Selected Brand

Counterfeit Rolex watches were investigated in this research. The reasons forthis choice are that this brand figures in the list of the most counterfeitedbrands (Poulter 2006) and the counterfeits of this brand are available(provided by Trading Standards of Glasgow from counterfeits they hadconfiscated) for the use as stimuli. Given that only one brand of one productcategory (watches) was examined in the current study, the findings of thisresearch should be viewed with caution, as they may not be generalisable toother product categories.

Sample Characteristics

This study was conducted in Glasgow, UK. This is because the UK isperceived to be one of the main recipients of counterfeits in the world (Kay1990), and counterfeits are widespread in Glasgow according to the TradingStandards officials. The sample in present study consists of 430 consumersaged 18 years old and above. The analysis reported here is based on 321usable observations. A total of 56.4% are male and 43.6% are female. Some58.8% of the participants having an educational attainment lower than degreelevel, with 26.8% having a Bachelors degree and 14.4% having a Mastersdegree or higher. The age breakdown of the sample is: 21.2% under 20 yearsold, 24.3% between 21 and 30, 19.6% between 31 and 40, 20.2% between 41

and 50, and 14.6% 51 and above.


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Procedure

The first author contacted 20 randomly selected supermarkets from a list ofsupermarkets located in Glasgow by mail, and then followed with a phone callto request help in studying consumer perceptions of CBP and purchase

decision. Four supermarkets gave permission and provided full support to theresearcher for data collection. Two of them are relatively small and located inresidential areas. The other two are medium-sized stores with minimum dailysales of over 35,000. One is located in a shopping centre and perceived asa relatively expensive supermarket, with another one, located at the edge ofthe city, being well known for its low price strategy.

Survey data was collected using a stimulus approach in November andDecember of 2006 by the first author. Specifically, counterfeitRolexwatcheswere presented to respondents. Every 10th shopper aged 18 years old orabove was invited to participate in this research at the exit of the

supermarkets. The incentive method (a box of chocolates worth around2.50) recommended by previous researchers (e.g. Aaker, Kumar and Day1997; Wiseman, Schafer and Schafer 1983), and the gaze and touch methodsuggested by Hornik and Ellis (1988), as well as the appealing expressionrecommended by Hornik (1982) were adopted to improve the response rate.

Measures

The explanatory constructs in our model of purchase intention of CBP includeproduct involvement, product knowledge, and perception. All involvedconstructs were measured using five-point Likert scales (1 = stronglydisagree, 5 = strongly agree). Apart from the measure of perception whichwas developed by the first author of this paper, the rest of the scales utilisedto measure involved constructs were all adopted from existing research withnecessary adaptation. The items for all model constructs were listed inAppendix 1.

Purchase intention was assessed using a 5-item scale developed by Spearsand Singh (2004). Cronbachs alpha (a) for this scale equals 0.95. Productinvolvement was measured using 10-item scale developed by McQuarrie andMunson (1992), with a Cronbachs a of 0.90. There are three distinct butrelated ways in which consumer knowledge is conceptualised and measured:objective knowledge, subjective knowledge, and experience (Flynn andGoldsmith 1999). Here our product knowledge construct is a 4-item scaledeveloped by Smith and Park (1992) that measures an individuals self-assessed ratings of knowledge. The choice of measuring self-assessedknowledge is supported by Meeds (2004) who finds that self-assessedknowledge is a better predictor of participants cognitive responses andgeneral attitudinal evaluation in comparison to other kinds of knowledge.Cronbachs a for thisscale is 0.77, which is just short of the 0.80 criterion ofBryman and Cramer (1999). The average scores of the items related toproduct involvement and product knowledge were calculated for the use offurther analysis. Table 1 presents the description of these constructs,

including means and standard deviations.


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The scale development of the perception construct went through two stages.In the first stage, a master list of items related to consumer perceptions ofCBP was generated. The master list is a combination of items of consumersperceptions of CBP as a product and items of consumers perceptions of CBPas a brand. The items concerning CBP as a product were generated from

past research in the study of counterfeiting, packages, adverting andconsumer reports of the original branded product. To operationalise CBP as abrand, Aakers (1997) brand personality scale was adopted to form the mainpart of the item pool. In addition, the adjectival expressions in relation topersonality, which were generated from product packages, advertising, andconsumer reports, were also included in the list. To ensure the master listwas complete, a free-association task was conducted. Subjects (n = 13, 46%male, mean age = 42) were asked to write down the items that first came tomind when thinking about counterfeit Rolex watches. The items resulting fromthis task were added to the master list of perception items, which resulted in atotal of 89 items.

The perception items were reduced to a more manageable number in thesecond stage. Subjects (n = 12, 50% male, mean age = 39) were asked torate how important and relevant the items were in terms of evaluating thestudied counterfeit Rolex watches (1 = not at all important/relevant, 5 =extremely important/relevant). To isolate the most relevant/important items,the cut-off for the final list of perception items was a scale rating of 4, therebyleaving 28 items for further study.

Dimensions of Consumers Perceptions of CBP

Principal component analysis was used to condense the information obtainedin relation to consumers perceptions of counterfeit Rolex watches. Varimaxrotation revealed 7 factors (all eigenvalues are greater than one) whichaccount for 64.71 percent of the overall variance. The 7 factors were labelledas excitement personality (2 items), competence personality (9 items), generalproduct attribute (5 items), functional attribute (3 items), satisfaction benefit (3items), image benefit (4 items), and functional benefit (2 items) (See Appendix2 for detailed factor analysis results.). Factor scores were calculated for theuse at the modelling stage. A measure of internal consistency of theextracted factors (Cronbachs a, and Pearsons correlation if appropriate) isprovided in Table 1. The Cronbachs a coefficients are all above .70 with the

exception of the satisfactory benefit factor, which has a Cronbachs a of .66.However, the lower value of the Cronbachs a might be caused by the smallnumber of items involved (3 items); it is therefore considered acceptable. ThePearsons correlations are all higher than .25, and so are significant at the .01level.


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Table 1. Description of Indicators Used to Measure Independent,Mediator and Dependent Variables

Counterfeit Rolex

No of items Cronbachs a Mean SD

Independent variables

Product knowledge 4 0.77 2.58 0.87

Product involvement 10 0.90 3.05 0.84

Mediating variables

Excitement 2 0.57* n/a n/a

Competence 9 0.92 n/a n/a

Product attribute 5 0.79 n/a n/a

Functional attribute 3 0.70 n/a n/a

Satisfaction benefit 3 0.66 n/a n/a

Image benefit 4 0.75 n/a n/a

Functional benefit 2 0.31* n/a n/a

Dependent variable

Purchase intention 5 0.95 1.48 0.87

* Pearsons Correlation is significant at the 0.01 level (n= 321)

RESULTS

The direct effects and proposed mediation effects are assessedsimultaneously. Hypotheses are tested with a series of hierarchical regressionanalyses. Results are presented in Table 2 and Table 3. In both tables, thefirst group of models (a) examine the relationship between the independentvariable and the mediators. A separate regression equation is used for each

perception factor. The second group of regression models () examine therelationship between the proposed mediators and the outcome variable. Thethird group of regression models () look at the relationships between theindependent variables and the outcome variable.

Hypothesis 1 proposed that product involvement would be negatively relatedto consumers perceptions of counterfeits. The results in Table 2 suggest nosupport for this hypothesis. None of the coefficients on consumer perceptionrelated factors is statistically significant at the level of p< .05. Hypothesis 2posited a negative relationship between product involvement and consumerpurchase intention of CBP. The results reject this hypothesis ( = .08, p >


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.05), suggesting that product involvement has no significant effect onconsumer purchase intention of CBP.

Table 2. Regression Analysis of Relationships between ProductInvolvement, Perception, and Purchase intention

Estimate a(Sig) Estimate(Sig) Estimate (Sig)

Mediators

Competence .008 (.880) .342 (.000)* n/a

Product attribute -.058 (.300) .079 (.158) n/a

Image benefit .016 (.766) .053 (.349) n/a

Satisfaction benefit .092 (.098) .131 (.018)* n/a

Functional attribute -.017 (.759) .118 (.034)* n/a

Excitement -.005 (.930) .064 (.255) n/a

Functional benefit -.035 (.527) -.105 (.060) n/a

Outcome variable

Purchase intention n/a n/a .08 (.152)

* P < 0.05

Hypothesis 3 proposed a negative relationship between product knowledge andconsumers perceptions of CBP. Table 3 reveals a partial support for this hypothesis.Product knowledge is negatively associated with consumers perceptions of productattribute ( = -.110, p < .05), but is unrelated to other perception factors.Hypothesis 4 proposed that product knowledge would be negatively related toconsumer purchase tendency of CBP. The coefficient suggests a rejection for thishypothesis (= .086,p> .05) (see Table 3 ).

Hypothesis 5 proposed that consumers perceptions of CBP would be positivelyassociated with purchase intention. In this case, Table 2 reveals partial support forthis hypothesis. Consumer purchase intention of CBP is not influenced by theirperceptions of product attribute, image benefit, excitement personality and functionalbenefits, but is positively and significantly influenced by their perceived competencepersonality (= .342,p< .05), satisfaction benefit (= .131, p< .05) and functionalattribute (= .118,p< .05) of counterfeit Rolex.

A mediator variable is one that is both a product of the independent variable and acause of the dependent variable. The search for mediator variables is often referredto as explanation and it is easy to see why. Bryman and Cramer (1999) assert thatone is able to gain some explanatory leverage on the bivariate relationship, if it isfound that a test variable acts as a mediator variable. According to MacKinnon,Lockwood, Hoffman, West, and Sheets (2002) and Baron and Kenny (1986), fourconditions are needed to show evidence of mediation. First, the independent variableis related to the outcome variable (). Second, the independent variable has a


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statistically significant effect on the presumed mediator (a). Third, the hypothesizedmediator is associated with the outcome variables (). Finally, when the proposedmediator is entered into a regression equation after the independent variable, themediated effect (a) is statistically significant, but the regression weight for theindependent variable should be reduced either significantly or to zero.

In the case of mediation effects related to the independent variable of productinvolvement, since the research results demonstrate that the independent variable isnot significantly related to the outcome variable, or to any of the proposed mediators(Table 2), as a result, the first two conditions necessary for mediation effect are notmet. Therefore, there is no need to conduct further mediation effect tests. Themediation hypothesis 6 is not supported. Although product knowledge is significantlyassociated with one of the proposed mediators (product attribute, = -.110,p< .05),nevertheless, this mediator does not appear to have a significant influence on theoutcome variable. In addition, product knowledge is not significantly associated withthe outcome variable either (see Table 3). Thus, the first and the third conditions ofmediator effect are not met. Consequently, the mediation hypothesis 7 is rejected.

Table 3. Regression Analysis of Relationship between ProductKnowledge, Perceptions, and Purchase Intention

Estimate a(Sig) Estimate (Sig) Estimate (Sig)

Mediators

Competence -0.049 (0.380) 0.342 (0.000)* n/a

Product attribute -0.110 (0.049)* 0.079 (0.158) n/a

Image benefit -0.009 (0.875) 0.053 (0.349) n/a

Satisfaction benefit -0.007 (0.894) 0.131 (0.018)* n/a

Functional attribute 0.028 (0.618) 0.118 (0.034)* n/a

Excitement -0.058 (0.303) 0.064 (0.255) n/a

Functional benefit -0.002 (0.975) -0.105 (0.060) n/a

Outcome variable

Purchase intention n/a n/a 0.086 (0.123)

* P < 0.05

To test the moderating effects of product involvement, we dichotomized themoderator at the neutral point of the 5-point scale. The results of the moderatingeffects of product involvement are shown in the regression presented in Table 4.None of the interactions of low involvement with perception related factors issignificant (p< .05), which means that the effect of consumers perceptions of CBPon CBP purchase intention for low involvement consumers are no different than theyare for high involvement ones. Therefore, the results show no evidence that productinvolvement can moderate the effects of consumers perceptions of CBP on theirpurchase intention. These findings rejected hypothesis 8.


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TABLE 4: Regression Model of Purchase Intention of CBP

Variable Std. e Std. T Sig.

(Constant) .063 23.638 .000

Competence .062 .414 5.839 .000

Product attribute .063 -.001 -.017 .987

Image benefit .068 .039 .498 .619

Satisfaction benefit .062 .059 .824 .411

Functional attribute .063 .078 1.072 .285

Excitement .063 .153 2.110 .036

Functional benefit .062 -.167 -2.349 .019

Low involvement .090 -.036 -.688 .492

Low involvement x competence .093 -.107 -1.501 .134

Low involvement x product attribute .090 .128 1.750 .081

Low involvement x image benefit .091 -.007 -.090 .928

Low involvement x satisfactory benefit .090 .093 1.303 .194

Low involvement x functional attribute .091 .032 .436 .663

Low involvement x excitement .089 -.111 -1.532 .126

Low involvement x functional benefit .091 .100 1.403 .162

aDependent Variable: Counterfeit Rolex intention

CONCLUSIONS AND IMPLICATIONS

The major objective of this study is to investigate direct relations between thethree most exploratory constructs of consumer behaviour (productinvolvement, product knowledge and perception) and purchase intention in

the context of non-deceptive counterfeiting. We also investigate indirecteffects, namely whether relations between product involvement/productknowledge and purchase intention of CBP are mediated by consumersperceptions of CBP, and whether effects of consumers perceptions of CBPon purchase intention are moderated by product involvement. The results ofthis study reject the proposed relationship between product involvement andperceptions of CBP, and the relationship between product involvement andpurchase intention of CBP.


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These findings imply that consumers who have a high level of productinvolvement may also purchase counterfeits willingly. At the same time, it isunnecessary to add that they have more negative perceptions of CBP. Onepossible explanation for these results could be that consumer purchasebehaviour of CBP may vary according to different usage situations. For

example, they might buy CBP for the use at home, but buy BP for use inpublic places. In the future, it would be interesting to investigate whetherusage situations moderate the relationship between product involvement andpurchase intention of CBP.

The findings related to product involvement and consumers perceptions ofCBP are more than a little surprising. We have to admit that we failed to findany sound explanation from any existing theoretical framework that we areaware of. In view of this, a premise we would like to make here is that thecounterfeiting phenomenon might provide fresh challenges to existingliterature developed without presence of counterfeits. It may be worthwhile

replicating the current research design in other product categories and furtherexploring the underlying reasons for product involvement effect on purchasebehaviour.

The results of this study provide no support to the proposition that productknowledge influences purchase intention of CBP, but partial support to theproposed relationship between product knowledge and perceptions of CBP.Specifically, it is difficult, to draw conclusions about the direction of causalityhere, particularly in the relationship between self-assessed product knowledgeand reported purchase intention. There is evidence that more knowledgeableconsumers are more likely to have less favourable perceptions of general

product attributes of CBP. Nevertheless, the support appears to be marginal.In addition, it is important to note that despite evidence of statisticalsignificance, the regression coefficient is relatively small and thus themagnitude of the effects reported here are small. Product knowledge doesnot appear to have significant influence on other perception related factors.

These results can be interpreted in the light of the fact that with advancementsin watch technology, the accurate time-telling function of watches is no longerdifficult to achieve. In other words, in terms of telling the time, counterfeitwatches can be similar to their counterpart original branded watches. Themore knowledgeable the person is about watches, the more he or she is

aware of this fact. As a result, although more knowledgeable consumers canjudge the differences between the two versions of one brand, and thereforeperceive less positive perceptions of product attributes of CBP, their purchasetendency of counterfeit watches is not significantly affected by theseperceptions.

Perception is the only explanatory variable out of three that shows a directeffect on consumer purchase intention of CBP. However, our findingssuggest that only three out of 7 dimensions of the perception construct appearto be significantly influential, with the personality related dimension having thelargest coefficient, which indicates the greatest explanatory power on

consumer purchase tendency of CBP. For the first time in the literature on


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counterfeits, our findings provide empirical evidence to support the commonlyaccepted notion that CPB-prone consumers are seeking the positive brandpersonality associated with BP. More importantly, this research is also thefirst to establish that perceived brand personality plays a more dominant rolein explaining consumers purchase intention of CBP than other influential

factors (e.g. benefit and product attribute). Nia and Zeicksey (2000) reportthat both counterfeit owners and non CBP owners perceive satisfactorybenefit related to CBP. This research moves one step forward by suggestingthat there is more chance that non CBP owners will knowingly purchase CBPin the future if they perceive the CBP to be satisfactory.

The results of this study provide no support to the premises related tomediation effect and moderator effect. Given these results, we can concludethat product involvement does not moderate the effects of consumersperceptions of CBP on consumer purchase intention. There is no evidencethat perceptions of CBP mediate the effects of both product involvement and

product knowledge on purchase tendency of CBP.

For marketers of BP, the findings offer two main practical implications. First,regardless of it having been reported that improving consumers knowledge ofBP is a means commonly adopted by BP owners to hamper CBP (Green andSmith 2002), this studys findings advise against devoting resources toimproving consumers knowledge of a product with an aim to curb demand forCBP. This is because, while it is not necessary to say that consumers whoare more knowledgeable are less CBP- prone, at the same time they do notprocess less favourable perceptions of CBP than less knowledgeableconsumers. Secondly, one course of action that firms can take to address

counterfeiting is to conduct marketing campaigns to stress brand personalitydifferences between CBP and BP. Marketing campaigns could meet withremarkable success if they took the approach of highlighting the negativepersonality of the typical users, brand endorsers, company employees andCEO of the company of CBP, as these people are regarded as the directlyinfluential factors on consumer perceived brand personality (Aaker 1997).

Surprisingly and interestingly, the research results of the current study rejectthe majority of our research hypotheses. Rejections of the proposedhypotheses which were developed based on previous literature might be anindication of serious challenges to existing theoretical work established over

years in the context of lack of CBP presence. Clearly, there is still a long wayto go before we achieve any sound understanding of counterfeit relatedbehaviour. Considering the important role played by perception on purchasetendency of CBP, what have yet to be explored are the antecedents ofperception of CBP, and differences between perceptions of CBP and BP.Future research should replicate the current study with other widelycounterfeited brands, in an effort to test the applicability of the currentresearch findings in other contexts. Given that it is still not quite clear whetherthe overall consumers perceptions of BP are affected or not after the entry ofCBP, a before-after experimental design with control would enableresearchers to observe the potential change in perceptions of BP as a result

of the entry of CBP. This type of design has been used by a number of


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previous studies in the study of brand extension (e.g. Diamantopoulos et al.2005; Morrin 1999) due to its high level of control in accounting for extraneousfactors which can assist in enhancing the internal validity of the research(Calder et al. 1981).

In addition, future research could test more brands (for example, around tenbrands in one product category), including generic brands, using bothsimilarity judgement and attribute-based multidimensional scaling techniquesto explore where CBP and BP are located in the spatial map. This isconsistent with Malhotra (1999), who suggested that eight brands or stimulishould be included to obtain a well-defined spatial map. Direct similarityjudgement may be used for obtaining the spatial map, and attribute ratingsmay be used as an aid to interpret the dimensions of the perceptual map.Similar procedures can be used for preference data. These efforts will assistmarketers to obtain a clear view as to where their brands stand in the marketplace where the counterfeits exist.


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APPENDIX 1 Consumer Purchase Intention of CBP Survey Variables

How interested are you in watches?

Please Tick one appropriate number (1: strongly disagree, 2: disagree, 3: neutral, 4: agree, 5:strongly agree) to express your level of agreement.

Strongly Neutral Strongly

disagree agree

1 Watches are important to me. 1 2 3 4 5

2 I get bored when people talk to me about watches. 1 2 3 4 5

3 Watches mean a lot to me. 1 2 3 4 5

4 I perceive watches as exciting products. 1 2 3 4 5

5 I like watches. 1 2 3 4 5

6 Watches matter to me. 1 2 3 4 5

7Watches are interesting products.

1 2 3 4 5

8 Watches are great fun. 1 2 3 4 5

9 Watches are appealing to me. 1 2 3 4 5

10 I care about the watches I buy. 1 2 3 4 5


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How knowledgeable are you about watches?



disagree agree

1 I feel very knowledgeable about watches. 1 2 3 4 5

2 I can give people advice about different brands ofwatches.

1 2 3 4 5

3 I only need to gather very little information in order tomake a wise decision.

1 2 3 4 5

4 I feel very confident about my ability to tell thedifference in quality between different brands of

watches.

1 2 3 4 5


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What are your views about the presented counterfeit Rolex watches?



disagree agree

1 I can get the size I want. 1 2 3 4 5

2 It is expensive. 1 2 3 4 5

3 The packaging is good. 1 2 3 4 5

4 The watch is waterproof. 1 2 3 4 5

5 It is Swiss made. 1 2 3 4 5

6 The materials are good. 1 2 3 4 5

7 They have the style I like. 1 2 3 4 5

8 The product is practical. 1 2 3 4 5

9 This product is a statement of your self-image. 1 2 3 4 5

10 This product can bring you fun. 1 2 3 4 5

11 The quality of the product merits the price. 1 2 3 4 5

12 In buying this product, you get value for money forthe status it brings you.

1 2 3 4 5

13 You can throw it away after a while. 1 2 3 4 5

14 This product brings you exclusivity. 1 2 3 4 5

15 This product can make you attract other peoplesattention.

1 2 3 4 5

16 This product can bring you prestige. 1 2 3 4 5

17 This product may not function well. 1 2 3 4 5


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What characteristics would the counterfeit Rolex watches have if theywere people?

We would like you to think of counterfeit Rolex watches as if they were persons. Think of the set ofhuman characteristics associated with them.. for example, you might think that the human characteristics

associated with Mercedes Benz are smart, successful, and prestigious. Please Tickone appropriatenumber (1: strongly disagree, 2: disagree, 3: neutral, 4: agree, 5: strongly agree) to indicate the levelof descriptive of the adjectives provided.


disagree agree

1 Young 1 2 3 4 5

2 Independent 1 2 3 4 5

3 Reliable 1 2 3 4 5

4 Hardworking 1 2 3 4 5

5 Secure 1 2 3 4 5

6 Successful 1 2 3 4 5

7 For leader 1 2 3 4 5

8 Confident 1 2 3 4 5

9 Glamorous 1 2 3 4 5

10 Classic 1 2 3 4 5


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Do you intend to buy these watches?



disagree agree

1 I have intention to buy these watches. 1 2 3 4 5

2 I intend to buy these watches. 1 2 3 4 5

3 I have high purchase interest of these watches. 1 2 3 4 5

4 I buy these watches. 1 2 3 4 5

5 I probably buy these watches. 1 2 3 4 5


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APPENDIX 2 Factor Analysis Results

No Items Counterfeit Rolex

1 2 3 4 5 6 7

1 I can get the size I want. CR .690

2 It is expensive. CR .625

3 The packing is good. CR .652

4 The watch is waterproof. CR .776

5 It is Swiss-made. CR .807

6 The materials are good. CR .672

7 They have the style I like. CR .716

8 The product is practical. CR .720

9 The product is a statement of your self-image. .476

10 This product can bring you fun .604

11 The quality of the product merits the price. .690

12 In buying this product, you get value for money for thestatus it brings you.

.673

13 You can throw it away after a while. .845

14 This product brings you exclusivity. .581

15 This product can make you attract other people'sattention.

.762

16 This product can bring you prestige. .815

17 This product may not function well. .674

18 Cheerful .781

19 Young .868

20 Independent .572 .402

21 Reliable .789

22 Hardworking .800

23 Secure .808

24 Successful .847

25 For leader .811

26 Confident .709

27 Glamorous .603

28 Classic .794

KMO 0.89

Cumulated variance explained % 64.71

Eigenvalue 8.16 2.70 2.38 1.49 1.24 1.13 1.03

% of variance 29.12 9.63 8.50 5.33 4.41 4.05 3.66

Cronbach Alpha 0.92 0.79 0.75 0.66 0.70 0.57* 0.31*

% of non-redundant residuals with absolute values greater than0.05.

23

* Pearson Correlation is significant at the 0.01 level (2-tailed)


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The Business School

Research Memorandum Series

Please note that MANY of these are available at:

http://www.hull.ac.uk/hubs/05/research/rm.htm

76 A Lindgreen (2008) Do Different Marketing Practices Require DifferentLeadership Styles? An Exploratory Study

75 S J Armstrong (2007) Rethinking Management Education: From Cognition, ToAction, To Learning

74 J Simon (2007) Concept Maps and Accounting Curriculum Development

73 J Atkins, K Bhattarai and S Trotter (2007) Modelling the Impact of Low-Carbon Electricity

72 T Campbell and S J Armstrong (2007)An Empirical Study of the Relationship

between Organisational Learning and Organisational Effectiveness usingCausal Cogitive Mapping

71 M Antioco, R K Moeneart and A Lindgreen (2007) Reducing On-goingProduct Design Decision-Making Bias

70 F Maon, V Swaen, A Lindgreen (2007) Corporate Social Responsibility atIkea: commitment and communication

69 P Drake, S Clarke (2007) Embedding a Systems/Lifeworld Approach inInformation Security (Risk) Management and Broadening its Application

68 A Lindgreen, V Swaen, W S Johnston (2007) Corporate Social Responsibility:an empirical investigation of US organisations

67 J Headlam-Wells, J Craig, J Gosland, J Holdsworth (2007) Mentoring for

Management Development: An evaluation of new communication models forE-mentoring

66 A Dobele, A Lindgreen, M. Beverland, J Vanhamme, R van Wijk (2007) WhyPass on Viral Messages? Because they connect emotionally

65 M Beverland, J Napoli, A Lindgreen (2007) Industrial Global BrandLeadership: a capabilities view

64 K R Bhattarai (2007) Capital Accumulation, Growth and Redistribution:General equilibrium impacts of energy and pollution taxes in the UK

63 A Rashid Malik (2007) The WTO Agreement on Textile and Clothing (ATC):An Impact Analysis with Reference to Pakistan

62 L Han (2007) Signalling Process and Self-Selection Mechanism inEntrepreneurial Finance

61 K R Bhattarai (2007) Is There Any Evidence on Unemployment-InflationTrade-off in OECD Countries in Recent Years?

60 J B Simon (2006)A Framework for Business Research: Using the KnowledgeVee

59 G Mengesha and R Common (2006) Civil Service Reform in Ethiopia:Success in Two Ministries

58 D Kumala (2006) The Achievements and Challenges of the New East AfricanCommunity Cooperation

57 T Butcher (2006) The Socio-technical Impact of RFID Technologies in SupplyChain Management
http://www.hull.ac.uk/hubs/05/research/rm.htmhttp://www.hull.ac.uk/hubs/05/research/rm.htm


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56 J G Cegarro, J R Crdoba-Pachn (2006) Assessing and Developing e-government use by SMEs

55 R Common (2006) Globalisation and the Governance of Hong Kong

54 C Hammond (2006) Technical Efficiency and Organisational Change in UKPublic Library Systems: A Stochastic Distance Function Approach

53 K R Bhattarai, E Okyere (2005) Welfare and Growth Impacts of Taxes:Applied General Equilibrium Models of Ghana

52 K. R. Bhattarai, M K Armah (2005) The Effects of Exchange Rate on theTrade Balance on Ghana: Evidence from Cointegration Analysis

51 A. Aritzeta, S. Swailes, B. Senior (2005) Team Roles: PsychometricEvidence, Construct Validity and Team Building

50 G F Lanzara, M Morner (2005) Making and Sharing Knowledge at ElectronicCrossroads: The Evolutionary Ecology of Open Source

49 W Robson, J R Crdoba-Pachn (2005) What Research Methodology SuitsCollaborative Research

48 K R Bhattarai (2005) Economic Growth: Models and Global Evidence

47 P Mould, T Boczko (2004) Standard-setting and the Myth of Neutrality:Boundaries, Discourse and the Exercise of Power

46 P Murray (2005) Learning with Complexity: Metaphors from the NewSciences

45 D Kamala (2004) The Voices of the Poor and Poverty Eradication Strategiesin Tanzania

44 M R Ryan (2003) Vertical Integration Results and Applications to theRegulation of Supermarket Activity

43 M A Nolan, F R Fitzroy (2003) Inactivity, Sickness and Unemployment inGreat Britain: Early Analysis at the Level of Local Authorities

42 K R Bhattarai (2003) An Analysis of Interest Rate Determination in the UK

and Four Major Leading Economies41 K R Bhattarai (2004) Macroeconomic Impacts of Consumption and Income

Taxes: A General Equilibrium Analysis

40 J Paez-Farrell (2003) Business Cycles in the United Kingdom: An Update onthe Stylised Facts

39 J Paez-Farrell (2003) Endogenous Capital in New Keynesian Models

38 P Kitchen, L Eagle, L Rose, B Moyle (2003) The Impact of Gray Marketingand Parallel Importing on Brand Equity and Brand Value

37 M Afanassieva (2003) Managerial Responses to Transition in the RussianDefence Industry

36 J R Crdoba-Pachn, G Midgley (2003) Addressing Organisational andSocietal Concerns: An Application of Critical Systems Thinking to InformationSystems Planning in Colombia

35 J Evans, R Green (2003)Why Did British Electricity Prices Fall After 1998?

34 C Hemingway (2002) An Exploratory Analysis of Corporate SocialResponsibility: Definitions, Motives and Values

33 P Murray(2002)Constructing Futures in New Attractors

32 S Armstrong, C Allinson, J Hayes (2002) An Investigation of Cognitive Styleas a Determinant of Successful Mentor-Protg Relationships in FormalMentoring Systems

31 N O'Neill (2001) Education and the Local Labour Market


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30 A Zakaria, Z Osemy, B Prodhan (2001) The Role of Accounting InformationSystems in Rationalising Investment Decisions in Manufacturing Companiesin Egypt

29 A Meja (2001) The Problem of Knowledge Imposition: Paulo Freire andCritical Systems Thinking

28 P Maclagan (2001) Reflections on the Integration of Ethics Teaching into theBA Management Degree Programme at The University of Hull

27 N R Romm (2001) Considering Our Responsibilities as Systemic Thinkers: ATrusting Constructivist Argument

26 L Hajek, J Hynek, V Janecek, F Lefley, F Wharton (2001) ManufacturingInvestment in the Czech Republic: An International Comparison

25 Gerald M, J F Gu, D Campbell (2001) Dealing with Human Relations inChinese Systems Practice

24 Z Zhu (2000) Dealing with a Differentiated Whole: The Philosophy of theWSR Approach

23 W J Gregory, G Midgley (1999) Planning for Disaster: Developing a Multi-

Agency Counselling Service22 L Pinzn, G Midgley (1999) Developing a Systemic Model for the Evaluation

of Conflicts

21 G Midgley, A E Ochoa Arias (1999) Unfolding a Theory of SystemicIntervention

20 M Brown, R Packham (1999) Organisational Learning, Critical SystemsThinking and Systemic Learning

19 G Midgley (1999) Rethinking the Unity of Science

18 P Keys (1998) Creativity, Design and Style in MS/OR

17 G Midgley, A E Ochoa Arias (1998) Visions of Community for Community OR

16 G Midgley, I Munlo, M Brown (1998) The Theory and Practice of Boundary

Critique: Developing Housing Services for Older People15 J Clayton, W Gregory (1997) Total Systems Intervention or Total Systems

Failure: Reflections of an Application of TSI in a Prison

14 L Pinzon, N Valero-Silva (1996) A Proposal for a Critique of ContemporaryMediation Techniques - The Satisfaction Story

13 R L. Flood (1996) Total Systems Intervention: Local Systemic Intervention

12 R L. Flood (1996) Holism and Social Action Problem Solving

11 P Dudley, S Pustylnik (1996) Modern Systems Science: Variations on theTheme?

10 W Ulrich (1996) Critical Systems Thinking for Citizens: A Research Proposal

9 G Midgley (1995) Mixing Methods: Developing Systems Intervention

8 J Thompson (1995) User Involvement in Mental Health Services: The Limitsof Consumerism, the Risks of Marginalisation and the Need for a CriticalSystems Approach

7 P Dudley, S Pustylnik (1995) Reading the Tektology: Provisional Findings,Postulates and Research Directions

6 W Gregory, N R Romm (1994) Developing Multi-Agency Dialogue: TheRole(s) of Facilitation

5 N R Romm (1994) Continuing Tensions between Soft Systems Methodologyand Critical Systems Heuristics

4 P Dudley (1994) Neon God: Systems Thinking and Signification

3 M C Jackson (1993) Beyond the Fads: Systems Thinking for Managers


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2 S M Green (1993) Systems Thinking and the Management of a Public ServiceOrganisation

1 M C Jackson and R L Flood (1993) Opening of the Centre for SystemsStudies


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Centre for Economic Policy Research Papers

(prior to merging with the Business School in August 2002)

283 Naveed Naqvi, Tapan Biswas and Christer Ljungwall (2002) Evolution ofWages and Technological Progress in Chinas Industrial Sector

282 Tapan Biswas, Jolian P McHardy (2002) Productivity Changes with MonopolyTrade Unions in a Duopoly Market

281 Christopher Tsoukis (2001) Productivity Externalities Tobins Q andEndogenous Growth

280 Christopher J Hammond, Geraint Johnes and Terry Robinson (2000) TechnicalEfficiency under Alternative Regulatory Regimes: Evidence from the Inter-WarBritish Gas Industry

279 Christopher J Hammond(2000) Efficiency in the Provision of Public Services: AData Envelopment Analysis of UK Public Library Systems

278 Keshab Bhattarai (2000) Efficiency and Factor Reallocation Effects and

Marginal Excess Burden of Taxes in the UK Economy277 Keshab Bhattarai, Tomasz Wisniewski (2000) Determinants of Wages and

Labour Supply in the UK276 Taradas Bandyopadhay, Tapan Biswas (2000) The Relation between

Commodity Prices and Factor Rewards275 Emmanuel V Pikoulakis (2000) A Market Clearing Model of the International

Business Cycle that Explains the 1980s

274 Jolian P McHardy (2000) Miscalculations of Monopoly and Oligopoly WelfareLosses with Linear Demand

273 Jolian P McHardy (2000) The Importance of Demand Complementarities in theCalculation of Dead-Weight Welfare Losses

272 Jolian P McHardy (2000) Complementary Monopoly and Welfare Loss271 Christopher Tsoukis, Ahmed Alyousha (2000) A Re-Examination of Saving

Investment Relationships: Cointegration, Causality and International CapitalMobility

270 Christopher Tsoukis, Nigel Miller (2000) A Dynamic Analysis of EndogenousGrowth with Public Services

269 Keshab Bhattarai (1999) A Forward-Looking Dynamic Multisectoral General-Equilibrium Tax Model of the UK Economy

268 Peter Dawson, Stephen Dobson and Bill Gerrad(1999) Managerial Efficiency inEnglish Soccer: A Comparison of Stochastic Frontier Methods

267 Iona E Tarrant (1999)An Analysis of J S Mills Notion of Utility as a Hierarchical

Utility Framework and the Implications for the Paretian Liberal Paradox266 Simon Vicary (1999) Public Good Provision with an Individual Cost ofDonations

265 Nigel Miller, Chris Tsoukis (1999) On the Optimality of Public Capital for Long-Run Economic Growth: Evidence from Panel Data

264 Michael J Ryan (1999) Data Envelopment Analysis, Cost Efficiency andPerformance Targeting

263 Michael J Ryan (1999) Missing Factors, Managerial Effort and the Allocation ofCommon

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Documents