The brand piracy

Research Objectives:

The research on "Brand Piracy" is worthwhile at this current time because, the research will explore that how counterfeiting products are slaughtering the authentic brand from the market. This study will provide a better understanding of consumers' behaviour towards pirated brands. The aims and objectives of the project are given below:

  1. To corroborate the reason for why consumers buy illicit product.
  2. To examine buyers perception towards pirated products.
  3. How to prevent Brand piracy.
  4. To understand the consumer demand for the non-deceptive pirated product.

The first, second and last objective will be achieved with the help of questionnaire survey. The third objective will be achieved with the help of executive interview which will be conducted in India.

Background:

In spite of the resolve of negotiators at international trade talks and the combined efforts of individual companies and law enforcement agencies, the problem of brand piracy seems to be everlasting feature of the market place. Pirate and counterfeit products are both illicit products yet it is reasonable to argue that the distinction to be made between these terms is based on the intention to deceive and therefore is a matter of the degree of ethicality (McDonald and Roberts, 1994). A counterfeit product is made to bear a resemblance, as intimately as possible, to the authentic product, with the motive of misleading the consumer and deceiving the producer. In the case of a copyright product, such as computer software, video games and sound recordings, duplication technology is so advanced that it is often impossible to distinguish between legitimate and counterfeit products, which in many cases are clones of the original. In the case of high quality counterfeits, neither the packaging nor the product quality provides any clues as to the products authenticity (Papadopoulos, 2004).

The intention of a pirated product is not to trick or deceive the customer but on the contrary, the consumer is well aware of that the product he or she is buying is pirated. The awareness of the customer that the product is fake stems from the purchase motive, i.e., it is a conscious act on the part of the buyer to seek out and purchase a fake product. The realization that he or she is buying a fake product is further evident from the purchase location, pricing or obvious differences in design, quality or features (Roberts and McDonald, 1984).

The piracy of branded goods was originated in the counterfeiting of élite consumer products such as branded clothing and accessories, such activity is now affecting a wide range of industries, including recorded music, video compact disc, fertilizers, pharmaceuticals, aircrafts part and food products such as coffee beans and Chinese herbs (Bush et al., 1989; Phau and Prendergast, 1998a). Products that carry a "marketable and prestigious" logo (such as software and audio and video compact discs) are especially prone to product piracy. The cost of counterfeiting practices is not only affecting the manufacturers of products, brands and goods, but it also affects hundreds of thousands of jobs, it increases the cost of marketing legitimate products, and diminish brand equity and trade mark owner reputation [Source: http://www.fm-kp.si/zalozba/ISSN/1581-6311/5_253-270.pdf].

The press has reported that the quality of counterfeit products is so good that, only an expert can identify the difference between the authentic goods and counterfeit goods. Moreover, counterfeit trade may threaten consumer health and safety such as in the case of amphetamines and tranquilizers, and bogus birth control pills (Source: Chakraborty, Allred and Bristol 1996). The actual motive behind bogus sales is to shun the payment of legitimate taxes and to increase the profit margin without paying royalties.

The reason for this lucrative piracy business is that the margins are high and demand of pirated goods is strong. Duplicating a music compact disk (CD) from an original, for example, can cost as low as US30 cents in some Asian countries. These CDs are then sold at US$6 or more, which is about half the price of the original CDs. It is therefore not surprising that there are consumers who would prefer to buy counterfeit CDs (Tom et al., 1998). By being willing collaborators to buy counterfeits, there is no deception, and they are not the victims of a scam. It would therefore be enlightening to understand the reasons behind their favorable attitude and intention towards piracy and the purchase of counterfeits.

Past studies have identified two drivers of counterfeit-purchase behaviors:

  1. the attractive pricing of fake products; and
  2. the self-image of the consumers who buy such products.

Price plays a critical role in the appeal of fake products. Tom et al., (1998), for example, found that it was the superior price and not the brand, quality, or functions of pirated CDs that attracted consumers to buying fake CDs. Even those who preferred to buy legitimate CDs found the low prices attractive. Research has also shown that compared to non-buyers, buyers of counterfeits had less favorable attitudes towards lawfulness (Cordell et al., 1996). They were also less confident and less successful, and had lower perceived status (Bloch et al., 1993).

With counterfeit merchandise cutting across various industries in business-to-consumer and business-to-business markets in industrialized and emerging economies alike, trademark infringement cannot be ignored. Such illegal practices can be reduced by cutting into either of the two sides in the exchange: the supply side of counterfeits or the demand side of counterfeits. While the supply side of counterfeiting has received a considerable attention in the literature, investigations focusing on the demand side are still scarce (Ang, Cheng, Lim, and Tambyah 2001; Bloch, Bush, and Campbell 1993; Dubinsky, Nataraajan, and huang 2005; Stoettinger and Penz 2003).

Generally, academic studies differentiate between two types of transactions involving fake products, i.e., deceptive and non-deceptive counterfeiting (Grossman and Shapiro 1988; Chakaraborty et al. 1996). The former represents situations in which consumers believe that they have bought an authentic product or brand when in fact it is a fake product. On the other hand, the non-deceptive counterfeits refer to situations when consumers are fully aware (based on price, quality and the type of outlet from which the product is purchased) that they are buying a pirated product or perfect duplicate (clone) at the time of purchase.

According to current estimates of the DIHK (German chamber of industry and commerce), product and brand counterfeiting cause, every year, and economic losses totaling approximately 29 billion Euro. More than 70,000 jobs have been destroyed in the last few years, due to this form of economic crime. Brands and images, as well as the company name are substantial components of what constitutes the entire enterprise value [Source: http://www.iprguard.de/en/case_studies.php]. Due to all this product and brand piracy it can affect to the German economy and can endure massive damage to their economy.

The counterfeiting activities are mostly widespread in clothes, traveling bags, watches, electronic devices and most commonly in computer software, downloading music, videos and movies. Approximately 7 % of world trade is in counterfeit goods, according to the International Chamber Of Commerce (ICC) and 40% counterfeited are composed of a list of only 25 brands. [Source: http://www.intangiblebusiness.com/Brand-Services/Marketing-Services/Press-Coverage/Brand-Piracy~245.html]

The development of effective strategies in the fight against international piracy necessitates a clear identification of the causes of the phenomenon. In 1999 the EU Commission on Intellectual and Industrial Property produced a Green Paper on combating counterfeiting and piracy. In this paper the commission sought responses to a series of questions relating to the economic, legal and administrative issues surrounding international trade in IPR infringing products. In its response, the International Chamber of Commerce (ICC) cites the following as the main causes of counterfeiting and piracy

(ICC, 1999, p. 1):

  • Huge profits;
  • Low risk of detection;
  • Weak deterrent (fines and prison sentences are minimal);
  • Advances in technology (tools for reproduction of copyright product);
  • Public perception that piracy is socially acceptable; and
  • Courts view of IPR infringement as a "low grade" or soft crime.

2008 Dollar losses by Region

The above figure shows the dollar losses by many different regions in 2007-08. The above figure also shows the negative impact of piracy in the world. Piracy have got more negative impacts like losing tax revenues, losing jobs, decrease in profits for the authentic brand companies, decrease in business productivity and many more. This will lead to decrease in Gross Domestic Product (GDP). The research will explore that how new technologies are helping to give base for pirated products in the market and how it has created the increase in demand of counterfeit brand which are renown all over the world.

Methodology:

Research Method:

Marketing research has been defined as "The information required to address these issues (of linking the consumer, customer and public to the marketer); designs the method for collecting information; manages and implements the data collection process; analyses the results; and communicates the findings and their implications" (Malhotra and Birks, 2007). Gathering secondary data (literature review) is beneficial in order to gain knowledge and understand theories and past findings relating to the subject area. In return primary research is essential to legalize subject of the secondary research.

Secondary Research:

Secondary data consist of information that has already been gathered or collected and might be relevant to the problem in hand. "Secondary data is an important resource when undertaking a research investigation as it enables the researcher to define their own research objectives, draw upon established data already collected and analyzed and question this data, so that the researcher's own research findings can be substantiated" (Source: Saunders et al, 1997).

Secondary sources includes literature gathered from research reports, journal articles, documentary, newspapers, electronic resources and magazines to gain addressing issues like determination of centre of gravity for these activities and the reasons for counterfeiting activities. This method of collection shall save lot of time and prevent duplication of effort. Secondary research will also provide relevant information, which is subtle to the nature of study. A key performance area in secondary research is the full citation of original sources, usually in from of a complete listing (Asia Market Research Dot Com).

Primary Research:

Primary research is the collection of data and other information gathered specifically for the purpose of the study, usually conducted by the person interested in the particular subject (Malhotra et al., 2003). The design of the primary research analysis is based on the major objectives of the study. To collect descriptive information, a quantitative study- Questionnaire will be undertaken and for the purpose to get new ideas, qualitative approach- Executive interview will be done. (Source: Shiffman & Kanuk, 2004). Qualitative research is often less costly than surveys and is extremely effective in acquiring information about people's communications needs and their responses to and views about specific communications. [Source: http://uk.geocities.com/balihar_sanghera/ipsrmehrigiulqualitativequantitativeresearch.html].

Quantitative Research:

Quantitative research is research involving the use of structured questions where the response options have been predetermined and a large number of respondents are involved. By definition, measurement must be objective, quantitative and statistically valid. Simply put, it's about numbers, objective hard data. [Source: http://uk.geocities.com/balihar_sanghera/ipsrmehrigiulqualitativequantitativeresearch.html]. Questionnaire will be structured for conducting a self-administered survey for investigating the determinants of consumer intention of buying counterfeit products. A study of pirated brand will be done to understand the consumer demand for the non deceptive pirated product.

Questionnaire Design:

Questionnaire is set of questions designed to generate the data necessary to accomplish the objectives of the research project and it is also called interview scheduled or survey instrument (McDaniel and Gates, 2007). The following figure shows the important role of questionnaire in the research project.

Questionnaire's role in Research process:

A survey of a questionnaire will be conducted because a questionnaire will provide accurate information. A questionnaire is easily analyzed and interpreted into marketing objectives; there is a very less chance of errors in it. A pilot questionnaire will be made first and will be distributed to few respondents so as to know if some questions are missing to add on or need to be deducted before making a final questionnaire for the respondents.

Questionnaire limitations:

The data collected from the questionnaire cannot be 100% representative since it will be taken only during specific times and will be conducted at specific areas of London. It is said that, "there is always a gap between what people say and what they actually do" (Clarke and Critcher, 1985).

Qualitative Research:

Qualitative Research is collecting, analyzing, and interpreting data by observing what people do and say. Qualitative research is much more subjective than quantitative research and uses very different methods of collecting information, mainly individual, in-depth interviews. The nature of this type of research is exploratory and open-ended and people are interviewed in-depth. [Source: http://uk.geocities.com/balihar_sanghera/ipsrmehrigiulqualitativequantitativeresearch.html']. An in-depth interview is an unstructured, direct, personal interview in which a single participant is probed by an interviewer to uncover underlying motivations, beliefs, attitudes and feelings on a topic (Malhotra and Birks, 2007). If quantitative research aimed at close ended question and if respondents did not get chance to express its own views and opinions. To overcome this problem open ended executive interviews will be set up to achieve the objective about prevention of brand piracy.

Executive Interview:

Executive are mostly used by marketing researchers as the industrial equivalent of door to door interviews. This type of survey involves interviewing business people at their offices concerning industrial products or services (McDaniel and Gates, 2007). To achieve the objective 'how to prevent brand piracy', one industrial professional will be interviewed for the recommendation and strategies to prevent brand piracy. Due to fewer contact in UK and India being one of the largest counterfeit markets, I decided to conduct executive interview in India. Conducting an executive interview is a highly complex and expensive task, but due to my source it can be easy task for me. A professional has more knowledge and ideas to reduce or prevent brand piracy as compared to common people, so I have decided to interview a professional person from Music Company who is a senior executive of Planet M. With the help of secondary research it has been proven that this is the most common counterfeit product (DVDs) and I can assume that the executive will be proficient of answering the objective question with more comfort.

Data Analysis:

Both primary and secondary research data will be analyzed to achieve the aims and objectives of this project. The primary data gathered will be analyzed properly and will be converted into tables and graphs which will display the clear understanding of the objectives.

Value of Research:

Brand piracy is becoming a growing concern for Multi-national Corporations and never ending pain for the marketers of today. Even though the norms for dealing with piracy are very strict but still it is a growing sector. The research will provide with a detailed insight of those aspects of brand piracy which if dealt properly and effectively will ensure brand reputation and stability by eliminating its fake.

Research Limitations:

The market research is restricted to Londoners itself and by this accurate information cannot be concluded in this research project. Various types of cost were incurred on printing, stationary, travelling etc for conducting primary research. Money was also spent in buying relevant materials. Time restraint is the most common problem for all the research. Lot of primary and secondary data has to be collected till the deadline, which is a difficult task. Taking up the challenge, I will do this difficult task as an opportunity & will make the optimum utilization of time to complete the task. Problems incurred due to limited books and articles on the dissertation topic. Some other local libraries were used for collecting data and relevant material for the Topic.

References:

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