Counterfeit Products and the Role of the Consumer in Saudi Arabia ()
Received 30 April 2015; accepted 25 December 2015; published 28 December 2015
1. Introduction
Counterfeit goods are produced, distributed, and consumed at an alarming rate around the world. Counterfeiting is a deliberate attempt to deceive consumers by copying and marketing inferior goods through emulating the style, design, and packaging of more expensive elite brands and offering them at a lower price [1] [2] . Although the Saudi Customs Department attempts to prevent the import and/or export of counterfeit goods, the system is not as developed, organized, and reliable as it is in other countries. According to the director-general of Saudi Customs, more than 62 million counterfeit products, with a value of approximately US$50 million, were confiscated at ports in Saudi Arabia over the past year in 2014 [3] . United Trademark & Patent Services [4] recently reported that Saudi police raided a number of showrooms and warehouses which had been used for inventory and sales, resulting in the seizure of 55,000 containers of fake ink for Hewlett Packard printers, and more than 5000 fake laptop adapters. Also, in a key move to combat counterfeiting, authorities also confiscated equipment used to manufacture the fake products.
According to Saudi law, the following offences are subject to imprisonment for up to one year and fine of between 50,000 and 1 million Saudi Riyals: imitation or forgery of a registered mark that misleads the public; use of another company’s trademark in bad faith; and offering counterfeit products for sale, or possession of such products with the intention of selling them. A victim of counterfeiting may also claim damages, although Saudi courts tend to be conservative and rarely award high damages. The law for repeat offenders provides for more stringent punishments, including closing the business for up to six months and media announcement of the judgment. Saudi Arabia has signed the Berne Convention for the Protection of Literary and Artistic Works, according to which the Saudi Arabian Copyright Law of 2003 states that any work enjoying protection in its country of its origin, shall be protected in Saudi Arabia to the same extent as in its home country. Despite these laws, counterfeiting represents an increasing problem for legitimate producers of globally branded products, ranging from computer software and pharmaceuticals to fashion merchandise. The focus of Saudi legislation is on deterring the suppliers and sellers of counterfeit goods, but not the consumers or the eventual purchasers of the goods, who face few legal ramifications.
In an academic context, no studies have yet investigated this phenomenon in Saudi Arabia. A review of previous research has revealed some results that indicate a need for further investigation. Norum and Cuno [5] argued that the quantitative designs of such studies did not allow further insights into determinants that the researcher was hitherto unaware of or into underlying mechanisms which could explain consumers’ intentions to purchase counterfeits. Furthermore, studies on the subject have been based on North American or South Asian consumers. Albarq [6] argued that the outcomes of such research could also be influenced by the culture. It is clear that great care must be taken when extending the findings from studies conducted in developed countries such as the United States to countries such as Saudi Arabia. Thus, the aim of this paper is to investigate the key antecedents of Saudi consumer attitudes toward counterfeit products, which can help companies to understand the main factors that influence consumer behavior toward counterfeits and to create effective anti-piracy strategies.
In studies of counterfeit products buying criteria, Figure 1 showed that top categories of detained articles were medicines, which accounted for 24% of the overall amount; this was followed by packaging materials (21%), cigarettes (18%), clothing (4%), accessories for mobile phones and labels, tags and stickers ( [7] , p. 3). According to the Report on EU customs enforcement of intellectual property rights page 3, the total value of detained goods infringing on intellectual property rights (IPR) in 2011 was over 1.2 billion Euros of domestic retail value [7] . On the contrary, China, which is the world’s biggest producer of fake goods, is going in the opposite direction. China produces 70.93% of all counterfeit goods detained in Europe by value, but the counterfeit goods also come, on a minor scale, from European countries such as Germany (2.45%) and Greece (2.12%).
2. Relevant Literature, Theory and Hypotheses
2.1. Consumer Attitude toward Counterfeits
Attitude represents a positive or negative feeling toward something; in other words, the amount of affect [8] . Based on Ajzen and Fishbein, attitude toward behavior has defined “represents the person’s general feeling of favorableness or un-favorableness for the behavior in question” [8] . Ajzen and Fishbein further explained that attitude towards behavior is the estimation of positive or negative self-evaluation regarding a certain behavior. This construct depends on whether behavior is esteemed positively or negatively. Attitude is “determined by a total set of accessible behavioral beliefs linking behavior to various outcomes and other attributes” [8] . In the present study, a consumer’s evaluation of counterfeits is an important predictor of that individual’s intention to buy a counterfeit product, as well as how much agreement he or she will receive from his or her reference group regarding this behavior. In this way, the focus of the investigation becomes the factors that influence consumer evaluation of a counterfeit. Based on the literature review, the main predictors are presented below.
2.1.1. Price Quality Inference
The two main differences between a counterfeit and an original product, as perceived by a consumer, are lower prices and the lack of quality guarantees. Price and risk constructs are likely to be important factors regarding a consumer’s attitude toward counterfeit products [9] . Studies such as Cespedes et al. and Cordell et al. showed price difference to be an important variable when choosing a counterfeit [10] [11] . Consumers commonly believe that price level implies quality and is an important factor in consumer behavior [12] . In this sense, the tendency of consumers to believe that “high (low) price means high (low) quality” becomes even more important when little information is available regarding the product’s quality or the consumer is unable to determine the product’s quality [13] . As Huang et al. [14] also argued, the fact that counterfeits are usually sold at lower prices suggests that the greater the price-quality relationship for the consumer, the lower that consumer’s perception will be of the quality of the counterfeit product. Thus the following hypotheses can be proposed:
H1: A consumer who more strongly believes in the price-quality inference will have a more negative attitude toward counterfeit products.
2.1.2. Risk Aversion and Perceived Risk in Counterfeits Purchasing
Risk averseness is the propensity of a person to avoid taking risks and is commonly considered to be a personality variable [15] [16] . This psychological trait is an important characteristic with which to discriminate between buyers and non-buyers of a product category, especially a risky one (such as online shoppers and non-shoppers) [17] . In terms of counterfeits, [14] found a significant inverse relationship between risk averseness and attitude. Thus the following hypotheses can be proposed:
H2: Consumers who are more (less) risk-averse will have an unfavorable (favorable) attitude toward counterfeits.
As H2 states, consumers feel that counterfeit products are sold with lower prices and poorer guarantees, which means that the risk variable is just as important as the price-quality inference. The concept of perceived risk, which is commonly used in the marketing literature, defines risk in terms of how consumers perceive the uncertainty and the adverse consequences of purchasing a service or product [18] . Hence, consumers judge the likelihood of a problem occurring, and also the negative consequences of such a problem; this judgment will influence all stages of the consumer’s decision-making process.
Because the nature of these problems varies, the risk could include a range of components, including performance, social, financial, psychological, safety, and time/opportunity dimensions [14] . Albers-Miller [19] found that the risk factor has a significant impact on the purchase of counterfeit products. A consumer may consider that the following points. Firstly, the product may not perform as well as an original equivalent, and the seller does not offer a warranty. Secondly, selecting a counterfeit product will not bring the best possible monetary gain. Thirdly, the product may not be as safe as the original. Fourthly, selecting a counterfeit product will negatively affect how others perceive the consumer. Finally, the consumer may waste time and/or effort and find it inconvenient to have to repeat a purchase due to the poor quality of the counterfeit. On this basis, the following hypotheses can be proposed:
H3: Consumers who perceive more (less) risk in counterfeits will have an unfavorable (favorable) attitude toward counterfeits.
2.1.3. Integrity
A consumer who purchases a counterfeit product is not committing a criminal act. However, because participating in such a transaction supports an illegal activity (that is, counterfeit selling), a consumer’s respect for the law might explain the degree to which he or she will engage in the purchase of counterfeits. Indeed, research has shown that the willingness of consumers to purchase counterfeit products is negatively related to their attitudes toward lawfulness [11] . Consumers with lower ethical standards are expected to experience less guilt when purchasing a counterfeit product [20] . Instead, such consumers rationalize their behavior in order to reduce the cognitive dissonance of an unethical behavior. Based on this rationale, the following hypotheses can be proposed:
H4: Consumers who attribute more (less) integrity toward themselves will have an unfavorable (favorable) attitude toward counterfeits.
2.1.4. Subjective Norm
Subjective norm is a social factor that refers to the social pressure that a person feels to perform or not perform a given behavior [8] . A consumer may be informational susceptible when their choice is influenced by the expertise of others (for example, when the person in question does not have a lot of knowledge about the product category), or normatively susceptible, when he or she is primarily concerned about making an impression on others [21] ). With regard to counterfeits, a consumer’s friends and/or relatives can act as inhibitors or contributors to the consumption, depending on the degree to which they approve of the consumer’s behavior. Therefore, the following hypotheses can be proposed:
H5: Consumers who perceive that their friends/relatives approve (do not approve) of their purchase of a counterfeit will have favorable (unfavorable) attitude toward counterfeits.
2.1.5. Behavioral Intentions
The marketing literature has examined the attitude?behavioral intentions link extensively. According to the theory of reasoned action, attitude is positively correlated with behavioral intentions, which is an antecedent of real behavior [8] . Indeed, support has been found for this relationship [22] . In the context of counterfeits, therefore, the following hypotheses can be proposed:
H6: Consumers with more favorable (unfavorable) attitudes toward counterfeits will have more favorable (unfavorable) behavioral intentions toward these products. Figure 2 shows the model that was proposed in the present study and submitted to empirical test.
3. Materials and Methods
The researcher conducted a survey of consumers in Riyadh, a city in Saudi Arabia, in the streets close to places where counterfeited products were being sold. Researcher had to confront several challenges in Saudi Arabia, especially in terms of designing sampling procedures, as male strangers cannot legally or socially approach fe-
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Figure 2. Theoretical framework adopted from Matos et al. (2007).
males. Because of these difficulties, researcher utilized a convenience sample. The questionnaire had to be translated from English to Arabic and use equivalent language. Two bilingual lecturers at the Al Imam language center translated the questionnaire into Arabic, employing the double-translation method to ensure the proper translation of the survey, both to avoid confusion or misinterpretation and also to make sure that the Arabic questionnaire accurately represented the English version [23] .
The survey also included a question concerning whether participants had already purchased any counterfeited products. Data collection was conducted on weekend days. A total of 520 responded to the survey and their answers were used in the data analysis. The authors used scales that had been validated in previous research to build the survey instrument. Table 1 summarizes the items that were used for each construct, as well as the sources upon which they were based. Participants responded to the items using Likert scales that ranged from 1 (completely disagree) to 7 (completely agree). The only scale to use a different format was behavioral intentions, which had anchors that ranged from 1 (very unlikely) to 7 (very likely). The study did not specify any particular counterfeit product. Questions used the general expression “counterfeited products” because the aim was to assess consumers’ overall attitudes toward counterfeited products. The collected data was coded and saved into SPSS version 21.0 and analyzed using AMOS version 20.0. After the data collection phase, the following aspects were analyzed: (1) descriptive statistics for both the scale items and the demographic variables; (2) detection of missing values and outliers; (3) linearity between the scale items; (4) dimensionality using exploratory factor analysis (EFA); (5) validity and reliability of the scale items using the internal consistency coefficient (Cronbach’s alpha), in addition to extraction of the composite reliability and average variance, as suggested in the measurement literature [24] . Finally, the model parameters were estimated and interpreted.
4. Results
Table 2 shows the results obtained after the recorded demographic variables were analyzed using descriptive statistics. The frequency and percentage for each variable is listed according to the survey categories in this table. Most of the participants (463, or 89 percent) affirmed that they had purchased a counterfeit product at some time. No significant differences were found between man mean and women, or between different ranges of age, education, or income.
Table 3 shows the factor analyses were diagnosed and found to have met the necessary statistical assumptions as indicated by their high KMO measure in conjunction with the diagonals of the anti-image correlation matrix, which possesses values > 0.50. According to the reliability test, all the scale has a Cronbach’s alpha coefficient of above 0.7. This indicates that the items in each scale are all measuring the same underlying construct [23] [25] . Table 3 shows all the constructs used in this study are based on well-established instruments with high reliability scores.
Discriminant Validity was performed in Table 4 by comparing the shared variance between each pair of construct with the average variance extracted in each one of the pair [24] . Using the maximum likelihood estimation, the results reveal that the fit indexes approximate acceptable levels. The resulting statistical estimates of the model are shown in Table 5. All indexes indicate that the model achieves a good level of overall fit.
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Table 1. Countries of provenance of counterfeit goods by value.
Source: EU customs enforcement of intellectual property rights.
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Table 2. Personal profile of respondents (n = 520).
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Table 3. Factor analysis and reliability results.
Extraction Method: Principal component analysis. Rotation Method: Varimax with Kaiser Normalization; rotation converged in 5 iterations.
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Table 4. Discriminant validity by squared correlations and AVE.
Notes: Numbers between brackets are the AVE for the construct.
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Table 5. Hypothesized model (Goodness-of-fit indices).
Based on Hair [25] [26] state that regression weights are present each parameter’s unstandardized estimate, (S.E.), and (C.R.), where estimation of the critical ratio (C.R.) by divided into S.E. If the result is above ±1.96, (Null hypothesis): Then C.R is 0. It is rejected. Table 6 shows estimate, S.E., and each parameter’s C.R.
5. Discussion and Conclusions
The results from the framework model showed that perceived risk was the most important variable for predicting consumer attitude toward counterfeits. The finding that consumers who perceived greater risk in purchasing counterfeits had unfavorable attitudes toward such products is in line with previous research into perceived risk [18] . Those consumers who had purchased counterfeit products previously had favorable attitude toward them. Consumers whose friends and relatives approved of their decision to purchase counterfeits had favorable attitudes; this result is consistent with the predictions of the theory of planned behavior [8] . Consumers who considered values such as honesty, responsibility, and politeness to be important tended to have more negative attitudes toward counterfeits; this is also consistent with earlier studies [11] [20] . However, those consumers who sought a sense of accomplishment tended to have positive attitudes about counterfeit products, in contrast with Ang et al.’s study, which found a positive but non-significant effect.
Finally, those consumers who considered price to be an indication of quality had favorable attitudes toward counterfeits, which contradicts the findings of [14] and the prediction made in H1. In the case of the price-quality inference, where hypothesized that consumers who considered that high price equates to high quality and low price equates to low quality would have unfavorable attitudes toward counterfeit products because of their inferior price. However, our results suggest that this is not the case, or at least that consumers who are used to purchasing counterfeits might apply the same rule within the gray market (that is, lower-priced counter-
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Table 6. Regression weight for hypotheses testing result.
Notes: SMC: attitude = 0:741; behavioral intentions = 0:811.
feits are perceived as being of lower quality than the higher-priced ones). This could be an important alternative explanation, especially considering that 89 percent of the respondents in the present study had purchased counterfeit products previously.
The risk averseness construct was the only one that did not have a significant influence on attitudes. This finding, which differs from [14] , is interesting considering that perceived risk was the most important predictor. One possible explanation for the finding is the difference in meaning between them and the ease with which respondents related the perceived risk items to the context of the research, after perhaps having found it difficult to do so in the risk averseness items. However, this difference should be considered in future investigations. The relative importance of these predictors can also be of use to policy makers and managers of international brands [27] . Such individuals should use perceived risk as the main appeal in messages intended to discourage the consumption of counterfeits. Also, those consumers who have purchased counterfeit products have more favorable attitudes toward such products than those who have not. This is a real threat for the original brands, because once consumers experiment counterfeits, they tend to have a favorable attitude and subsequently have positive behavioral intentions. However, the results of our study suggested that this experience did not have a direct effect on behavioral intentions.
Thus, it is possible to influence the attitudes that consumers have toward counterfeit products through other variables, such as by influencing the (negative) perceived social acceptance that consumers will have when buying a counterfeit [28] . This study has made a significant contribution to the academicians, marketers, and manufacturers of branded genuine goods and the industry as a whole. It has found that normative susceptibility, price consciousness, novelty seeking and perceived risk are dominant in influencing consumers to purchase counterfeit products through the mediation of attitude. From the theoretical perspective, it is an extension of knowledge of consumers concerning counterfeit products. However, for the marketers and manufacturers of genuine branded products, the findings can serve as a reference in developing better marketing strategies to entice the consumers to purchase genuine products and not the counterfeit version. Knowing that attitude plays a role in determining the purchase intention of a customer, manufacturers and marketers can work on finding ways to change consumers’ attitudes and beliefs. Although this research tried to arrive at some conclusions but the questionnaire used a convenience sampling method, thus the sample could not be treated as representative of all the intention of the Saudi consumer. Second, this study has been conducted only in Riyadh. Therefore, future studies can be conducted in other parts of Saudi Arabia.