A STUDY ON CONSUMERS ATTITUDE TOWARDS COUNTERFEIT PRODUCTS IN MALAYSIA NORASHIKIN NORDIN

Transcription

1 A STUDY ON CONSUMERS ATTITUDE TOWARDS COUNTERFEIT PRODUCTS IN MALAYSIA NORASHIKIN NORDIN FACULTY OF BUSINESS AND ACCOUNTANCY UNIVERSITY OF MALAYA

2 A Study on Consumers Attitude towards Counterfeit Products in Malaysia Norashikin Nordin Bachelor of Information Technology (Hons.) University of Tenaga National 2006 Submitted to the Graduate School of Business Faculty of Business and Accountancy University of Malaya, in partial fulfillment of the requirements for the Degree of Master of Business Administration

3 ABSTRACT The study aims to investigate which of the social and personality factors affects the attitude of the consumers towards counterfeit products. The study is also set out to examine the relationship of consumers attitude towards counterfeit product with purchase intention. A conceptual model is proposed by following the studies of Huang et al. (2004), De Matos et al. (2007) and Phau and Teah (2009). A survey of 270 respondents was conducted in the Malaysian market. Pearson correlation, multiple regression and the Sobel test were used to test the hypotheses postulated and research question. It is discovered that perceived risk, price consciousness, novelty seeking and normative susceptibility are the independent variables that strongly influence consumers attitude towards counterfeit product. Attitude towards counterfeit product was also found significant in influencing purchase intention. This reinforces the mediator role of attitude in its relationship with purchase intentions. By having a better understanding of the consumers behavioral intentions of buying counterfeit products, the manufacturers and marketers of the genuine brand products can make better marketing strategies to entice the consumer to buy the original product and not the counterfeit version. Theoretical contribution of this study is an extension of knowledge of consumers attitude with regards to counterfeit products. 3

4 ACKNOWLEDGEMENT It is with great pleasure that I present you my thesis. This thesis would not have been complete if it was not for a group of individuals whom I truly am grateful for having in my life. My first and deepest thank you goes out to Dr. Yusniza Kamarulzaman for her guidance, comments, sleepless nights, and reassuring words. Her optimism got me through tough times and she never fails to keep me on track. Dr., there was never a stress mode in your presence. Thank you. Special thanks to a dear friend whom had been there from the very beginning. Lau Xue Hao, thank you. To my parents, Dr. Nordin Othman and Norzela Abd. Jalil, for their prayers and constant encouragement. They had faith in me even during the times that I did not. Mama and Abah, I love you. To my siblings, who kept sane and was always cheering me on. Thank you for understanding. Last but definitely not the least, my appreciation goes out to all the respondents who took their time to participate in answering my questionnaire. May the benefits reaped from this thesis help others in the future. 4

5 TABLE OF CONTENTS CHAPTER 1: INTRODUCTION Background Overview of counterfeit products issues in Malaysia Problem Statement Objective of the study Research Scope Research Question Importance of the Study Thesis Structure Summary...11 CHAPTER 2: LITERATURE REVIEW Introduction Definition of Terminology Counterfeit Products Attitude Literature of Variable Information Susceptibility and Normative Susceptibility Price Consciousness Value Consciousness Perceived Risk Integrity Personal Gratification Novelty Seeking Status Consumption Attitude of Counterfeit Products Purchase Intentions Summary...23 CHAPTER 3: CONCEPTUAL FRAMEWORK AND HYPOTHESES Introduction Conceptual Framework Hypotheses Social Factors (Independent Variable)

6 3.3.2 Personality Factors (Independent Variable) Attitude towards counterfeit products (Mediating Variable) Summary...30 CHAPTER 4: RESEARCH METHODOLOGY Introduction Research Design Questionnaire Development Sampling Design Sample Size Sample Selection Data Collection Data Analysis Technique Summary...38 CHAPTER 5: RESULTS AND FINDINGS Introduction Descriptive Analysis Gender Age Citizenship Ethnic Group Marital Status Education level Occupation Monthly Income Preliminary Analysis Data Screening Reversing negatively worded items Normality Reliability and Validity Analysis Factor Analysis Independent Variable Mediating Variable Dependent Variable Bivariate Analysis Multivariate Analysis Assumptions Test

7 5.4.2 Standard Multiple Regression Sobel Test Summary...68 CHAPTER 6: CONCLUSION AND RECOMMENDATION Introduction Discussion of the research result Contribution of the study Managerial Implication Research Limitation Recommendation for future research Summary...78 BIBLIOGRAPHY...80 APPENDIX A QUESTIONNAIRE SAMPLE...88 APPENDIX B HISTOGRAM...92 APPENDIX C CORRELATION TABLE

8 LIST OF TABLES Table 4.1: Source of measurement scale items...34 Table 4.2: Summary of data analysis techniques and objective...37 Table 5.1: Respondents Demographic Profile...41 Table 5.2: The items of each variable and its simplified code...46 Table 5.3: Mean, Standard deviation, Skewed and Kurtosis of each item...48 Table 5.4: Corrected Item-Total Correlation (validity) of each item and Cronbach s Alpha Coefficient (reliability) of each scale...49 Table 5.5: KMO and Bartlett's Test for nine independent variable...52 Table 5.6: Rotated Component Matrix for nine independent variable...53 Table 5.7: KMO and Bartlett's Test for the mediating variable...54 Table 5.8: Component Matrix for the mediating variable...55 Table 5.9: KMO and Bartlett's Test for the dependent variable...55 Table 5.10: Component Matrix(a) for the dependent variable...56 Table 5.11: Correlation between variables...57 Table 5.12: Model Summary of Attitude towards counterfeit products...64 Table 5.13: Coefficients of Dependent Variable: Attitude towards counterfeit products...65 Table 5.14: Sobel/ Aroian/ Goodman tests of mediating effects...67 Table 6.1: Summary of hypotheses and the result

9 LIST OF FIGURES Figure 5.1: Histogram of Dependent Variable: Attitude towards counterfeit products...63 Figure 5.2: Normal Probability Plot of Regression Standardized Residual of Dependent Variable: Attitude towards counterfeit products...63 Figure 5.3: Scatterplot of Dependent Variable: Attitude towards counterfeit products

10 CHAPTER 1: INTRODUCTION 1.0 Background By definition, counterfeits are those products bearing a trademark that is identical to, or impossible to tell apart from, a trademark registered to another party, thus infringing the rights of the owner of the trademark. (Chaudhry and Walsh, 1996; Bian and Veloutsou, 2007) Usually, successful branded products have the highest level of attractiveness to counterfeiters. It is so, because products that do not have a trademark are less appealing and would not be highly sought after, and efforts of counterfeiting the products are futile. It appears that all product categories are affected. Counterfeits of almost anything can be found, from apparels to pharmaceuticals, electrical goods, bleach and dyes, books, food and the list goes on. Clearly, counterfeiting has become a significant economic phenomenon. Past researches have revealed that about one-third of consumers would knowingly purchase counterfeit goods (Tom et al., 1998; Phau et al., 2001). Since demand is always the key driver of a market, a number of researchers have argued that consumer demand for counterfeits is one of the leading causes of the existence and rise in growth of the counterfeiting phenomenon (Gentry et al., 2001; Ang et al., 2001). As a direct result of these arguments, a good deal of research has focused on identifying important factors that influence consumers attitude towards counterfeit products. 1

11 According to the International Anti-counterfeiting Coalition (IACC, 2005) and the International Intellectual Property Institute (IIPI, 2003), considering the countries worldwide, almost five percent of all products are counterfeit. The IACC also estimated that counterfeiting is responsible in at least $200 billion a year for lost jobs, taxes and sales (Furnham and Valgeirsson, 2007). This indicates that the problem, which is already very serious, is growing and is likely to cause much more damages in the future. There seems to be some conscious efforts to eradicate the problem, including implementing processes to trace, detect and prosecute counterfeiting offenders (Nill and Shultz, 1996; Chow, 2000; Prendergast et al., 2002). However, the attempt seems fruitless with the increasingly sophisticated counterfeit syndicates, the intensification in world trade and emerging new markets, fast paced technology advancements, and also the escalation of goods that are worth counterfeiting, making it harder to detect and wipe out these activities. In addition, the lack of serious penalties allows offenders to be increasingly brazen in their illegal pursuits (Hung, 2003; Sonmez and Yang, 2005; Clark, 2006). However, if the government were to take serious measures, it would need to be on a national, regional, and global level for it to be effective, but until now, there are no perceived organized and solid efforts to overcome this problem. It is a sad case for owners of genuine products as the organization has invested huge amount of money in designing, marketing and manufacturing their products, while counterfeit producers use the brand names without having to design or incurring marketing costs but yet able to reap the profits. 2

12 One thing for sure, it is now difficult to differentiate between imitation and genuine goods as modern technology and sophisticated machines enable counterfeit goods to resemble the genuine ones. Hence, it is difficult for the public to differentiate between these two groups of products. The most obvious reason for people to buy counterfeit products is that the counterfeit items are cheaper than the genuine items. It could also be because the counterfeit products are easily accessible and available while genuine products are not. Another factor that contributes to consumers demand for counterfeit products is the pursuit of status goods and the desire of being in tune with fashions and fads (Chang, 1998; Eisend and Schuchert-Guler, 2006). These prestige conscious individuals prefer to own branded items as they assume that these products reflect their "status" in the society but of course it comes with a price and clearly not everybody can afford the branded products in the retail shop. Hence, in order to quench the thirst of such up-scale, high end products, these individuals are willing to buy counterfeit or imitation goods that closely resemble aesthetics and functions of genuine items. With the many factors that are thought to be contributing to the increase of consumers demand towards counterfeit products, a study to explore these factors should be conducted. Is price really the main factor that drives consumer to side the counterfeits? However, if price is the main reason, the consumers should buy a product without a brand or an unknown brand that offers a cheaper price. Why must they opt for an imitated branded product knowing that it is of inferior quality? Therefore, with the increasing sales of counterfeits worldwide today, a comprehensive understanding of the determinants that leads to a counterfeit purchase will contribute 3

13 to the literature and may help the marketers of genuine branded goods to set up a more refined and effective marketing strategies. 1.1 Overview of counterfeit products issues in Malaysia Malaysia has a counterfeit market value of $378 million, with software dominating $289 million of that market value. (Havocscope Global Market Indexes, 2008). Most often the news broadcast on counterfeiting in Malaysia are usually associated with branded goods, and now, these items are circulating in the form of essential products and used on a daily basis. The Domestic Trade and Consumer Affairs Ministry s enforcement division, through their relentless raids in pursuit of these types of goods, have identified imitation products such as garments, electrical items, pharmaceuticals, shoes, bags, leather goods, watches, cigarettes, batteries, sauces, engine oils, toothpastes, detergents and canned food, to name a few. It is clear that anything that has a demand and potential to be copied would invariably attract infringers to resort to reaping profits through producing similar counterfeit items which would then be sold to blind and ignorant consumers. The ease of getting and buying counterfeit products does not help the situation as the sellers of counterfeit products blatantly sell the goods at shopping malls, night markets, and plazas. Globalization has made it relatively easy for imitation products to flow into the local market and efficient logistics allow the counterfeit products to move fast and within a short time frame. Despite constant enforcement, curbing the flood of imitation goods in the local market is not easy. As far as the issue of IP law is 4

14 concerned, the Trademarks Act of 1976 has been amended to contain provisions for border measures prohibiting counterfeit trademark goods from being imported into the country. Aside from legislation imposed, the government of Malaysia, specifically, the Domestic Trade and Consumer Affairs Ministry, regularly holds talks and media advertisements to improve public awareness on imitation goods particularly among low-wage earners and youths. It is hoped that these efforts would increase awareness on the negative effects of buying counterfeit products, as continuous support to the illegal activity would have adverse effects on Malaysia's economy. 1.2 Problem Statement Counterfeiting is a big business and it is rampant in Asia (Asian Wall Street Journal, 1999a). It is not difficult to get hold of a counterfeit product, be it clothes, watches, handbags and many more. What is alarming is that sellers and buyers of counterfeit products do their transactions in the open together with non-counterfeited products. This phenomenon is bad news for the manufacturers of the genuine products as it affects their businesses. The manufacture and sale of counterfeit products is undermining company and brand reputations, hitting profits, devaluing research and development costs, and incurring legal fees (Nash, 1989). The issue remains as to why consumers buy counterfeit products even though they are aware that these products are of lower quality (Albers-Miller, 1999). Is price the main determinant of consumers favourable attitude towards counterfeit products? Are there other underlying attributes, such as, concerned about the opinion and 5

15 expectation of others, or engrossed in keeping up-to-date with the latest fashion, or simply prestige conscious? Many factors that may determine consumers attitude in purchasing counterfeit products, but the question is, which factor and that is the main issue to be answered. There are very limited researches conducted to understand consumers behaviour in purchasing and using counterfeit products particularly in Malaysia. Many of past research have been done in countries such as China, Brazil, Taiwan, Singapore (Wang et al., 2001; Huang et al., 2004; Wang et al., 2005; De Matos et al., 2007; Phau and Teah, 2009). Therefore, in view of this gap, this study is constructed to explore and understand the relationships between the attitude of consumers in Malaysia and the purchase intention of buying a counterfeit product. It is also to examine the factors affecting the attitude. By understanding the factors that influence the attitudes of consumers towards counterfeit products, which in turn lead to the intention of actually buying a counterfeit product would help the manufacturers and marketers of genuine products in understanding the consumers actions. 1.3 Objective of the study This study strives to respond to the call for research to understand the purchase intentions of the consumers who consciously seek out counterfeit brands and indulge in purchase (Bloch et al., 1993; Cordell et al., 1996; Prendergast et al., 2002). It strives to explore the consumers in Malaysia mindset in relation to purchasing counterfeit products. 6

16 Thus, the objectives of this study are as follows: 1) To investigate which social or personality factor affects consumers attitude towards counterfeit products. 2) To examine the relationship of consumers attitude towards counterfeit products with the purchase intention. 3) To explore which of the factors that is dominant in influencing the consumers attitude towards counterfeit products, which then would lead to purchase intention. 1.4 Research Scope The study is to determine the factors that influence the attitude of consumers towards counterfeit products, which is believed to lead to purchase intention. The study will be within the context of Malaysian market and the respondents are consumers residing in Malaysia of the age group of 18 years old and above. The respondents are chosen from those 18 years and above because it is believed that they have a considerable amount of spending power and substantial exposure and knowledge of counterfeit products. 1.5 Research Question The main research questions of this study are: 1. How do the social and personality factors influence consumers attitude towards counterfeit products? 2. What is the impact of consumers attitude towards purchase intention? 7

17 3. What are the dominant factors influencing consumers attitude towards counterfeit products, which leads to purchase intention? By knowing the answer to these questions, the producers of genuine products are able to understand why the consumers would want to buy the imitated or counterfeited version of their products regardless of the genuine products superior quality. The producers and marketers of genuine products could then come up with ways or different strategies in enticing the consumers to buy the genuine products over the counterfeit products. 1.6 Importance of the Study From the theoretical perspectives, this study would help to understand the Malaysian consumers behavioural intentions of buying counterfeit products better. It is an extension of knowledge of consumers with regards to counterfeit products. From the perspectives of marketers, this study would help to understand the consumers attitudes; hence, the marketers can try to fulfil the consumers needs and wants by portraying their products as what the consumer requires. By having a better understanding of the consumers purchase intentions of buying counterfeit products, the marketers of the genuine products can make better marketing strategies to entice the consumer to buy the original products and not the imitations. From the industry perspective, a better understanding of consumers attitude towards counterfeit products can probably help overcome the illegal syndicate. Actions such as making it compulsory for each manufacturer to support anti-counterfeiting firms 8

18 which employ investigators to carry out surveillance and raids against counterfeiters or push the government and authorities to strengthen enforcement of respective laws and regulations or one of which could be a penalty to the seller as well as the buyer to eradicate the illegal trading. 9

19 1.7 Thesis Structure CHAPTER 1: INTRODUCTION CHAPTER 2: LITERATURE REVIEW Background Overview of counterfeit product issue in Malaysia Problem Statement Objective of the study Research Question Research Scope Importance of the study Thesis Structure Summary Introduction Definition of Terminology Literature of Variable Summary CHAPTER 3: CONCEPTUAL FRAMEWORK AND HYPOTHESES CHAPTER 4: RESEARCH METHODOLOGY CHAPTER 5: RESULTS AND FINDINGS Introduction Conceptual Framework Hypothesis Summary Introduction Research Design Questionnaire Development Sampling Design Sample Selection Sample Size Data Collection Data Analysis Technique Summary Introduction Descriptive Analysis Preliminary Analysis Bivariate Analysis Multivariate Analysis (Multiple Regression) Summary CHAPTER 6: CONCLUSION AND RECOMMENDATION Introduction Discussion of the research result Contribution of the study Managerial Implication Research Limitation Recommendation for future research Summary 10

20 This thesis is organized into several chapters: Chapter 1- Discusses about the counterfeit products issue, the problems related, the objectives of this study, the research questions, and the importance of this study. Chapter 2- Presents the definition of terminologies and past literatures of variables. Chapter 3- Presents the conceptual model of the study as well as the postulated hypothesis. Chapter 4- Presents the research design, questionnaire development, sample selection, data collection, and the data analysis technique. Chapter 5- Chapter 6- Discusses the analysis used on the data and its result. Discusses the findings, as well as the contributions, implications, limitations of this study and recommendations for future research. 1.8 Summary This chapter has discussed about counterfeit products in general and in Malaysian context. Apart from that, this chapter has acknowledge the problem statement, objective of this study, research scope, research question and finally the importance of this study and the reason it was carried out. All of this is crucial as it provides the readers a clear picture of what the study is about, in what ways it was done, and how the academicians and marketers will benefit from this study. In the following chapter, the literature review of all factors or variables to be studied is presented. 11

21 CHAPTER 2: LITERATURE REVIEW CHAPTER 1: INTRODUCTION CHAPTER 2: LITERATURE REVIEW Introduction Definition of Terminology Literature of Variable Summary CHAPTER 3: CONCEPTUAL FRAMEWORK AND HYPOTHESES CHAPTER 4: RESEARCH METHODOLOGY CHAPTER 5: RESULTS AND FINDINGS CHAPTER 6: CONCLUSION AND RECOMMENDATION 12

22 2.0 Introduction The previous chapter has highlighted the importance of this study. This chapter will cover previous literatures of each topic area. Literature reviews are secondary sources obtained from published work such as journals, books, master s thesis, conference proceedings, and other reports. It is vital in supporting the derivation of hypothesis, which will be discussed in detail in Chapter Definition of Terminology Counterfeit Products A number of definitions have been used for product counterfeiting. The one given by Cordell et al. (1996) was any unauthorized manufacturing of goods whose special characteristics are protected as intellectual property rights (trademarks, patents and copyrights) constitutes product counterfeiting. This means, that the counterfeiters copied or imitated products that has been patented and trademarked without permission from the manufacturers of the genuine products. The products are seen to look closely similar or identical to genuine products. This would include packaging, labelling, and trademarks, intentionally passing off as the original product (Kay, 1990; Ang et al., 2001; Chow, 2000). Lai and Zaichkowsky (1999) stated that counterfeiting and piracy are in the same essence since they are both the reproduction of identical copies of authentic products. These two terms have been used interchangeably (Wee et al., 1995; Kwong et al., 2003). However, piracy is mainly related to software and fixed medium contents such as films and music recordings (Chow, 2000; Cheung and Prendergast, 2006). 13

23 Furthermore, counterfeiting is dissimilar to other forms of intellectual property infringements like grey market goods. De Matos et al. (2007) have utilized scales that measured grey market products for counterfeits, which is undeniably different in characteristics and definition. Grey market goods are, by definition, overruns from outsourced manufacturers that are distributed through unauthorized channels (Huang et al., 2004; Gentry et al. 2006), whereas counterfeiting involves an illegally produced copy of the original article Attitude Attitude is...a learned predisposition to behave in a consistently favourable or unfavourable manner with respect to a given object. (Schiffman and Kanuk, 1997). It is claimed to be highly correlated with one s intentions, which in turn is a reasonable predictor of behaviour. (Ajzen and Fishbein, 1980) This means that if a person s attitude towards counterfeit products is favourable, it is highly likely that the person would consider purchasing a counterfeit product but if a person s attitude towards counterfeit products is unfavourable, then it is most likely that the person would not consider purchasing a counterfeit product. 2.2 Literature of Variable Information Susceptibility and Normative Susceptibility Social influence refers to the effects that others have on an individual consumer s behaviour (Ang et al., 2001). Two common forms of consumer susceptibility to social influences are information susceptibility and normative susceptibility (Bearden et al., 1989; Wang et al., 2005). Information susceptibility refers to purchase decision based 14

24 on the expert opinion of others (Ang et al., 2001; Wang et al., 2005), meaning that the assurance of other s opinions play an important role as a point of reference especially when consumers have little knowledge of the product category or product brand. If peers or reference groups were to have expert knowledge on the differences between originals and counterfeits (such as in product quality), there are consequences of being perceived to purchase counterfeits which would affect the consumers perception towards counterfeit products. On the other hand, normative susceptibility concerns purchase decisions based on the expectations of what would impress others (Ang et al., 2001; Wang et al., 2005; Penz and Sto ttinger, 2005). The consumers whom are normative susceptibility would purchase a product based on what they assume the others would expect or want them to buy. They are more inclined to satisfy the society s expectations as self-image plays a huge role and they want to make a good impression. Consumers may be informationally susceptible, when expertise from others influences their choice (e.g. when one does not know the product category), and normatively susceptible, they are more interested in making a good impression to others (Bearden et al., 1989). Regarding counterfeits, friends and relatives may act as inhibitors or contributors to the consumption, depending on how much this behaviour is approved by them Price Consciousness Price plays an important role in affecting consumers attitude and it has been studied extensively. According to the range theory, people use the range of remembered price 15

25 experiences to set lower and upper bounds on price expectations, such that the attractiveness of a market price is a function of its position within this range (Janiszewski and Lichtenstein, 1999). Reference price has been discussed as a factor that importantly affects a consumer s purchasing behaviour. After adaptation-level theory was integrated into pricing theory, an internal reference price was presented as a degree of adaptation that depends on recent price experiences (Janiszewski and Lichtenstein, 1999). Rajendran and Tellis (1994) have found that within this context, the lowest price is an important cue for a reference price, whereas over the time, the past prices of the actual brand seem to become the most important cue. The fact that consumers use the price in the authorized channel as a reference price is plausible, and so the manufacturers of counterfeit products would take advantage of lower price to attract consumers interest. Most researchers claim that price difference is an important factor when purchasing counterfeit products (Bucklin, 1993; Chang, 1993; Weigand, 1991). When the sellers of counterfeit products sell simultaneously alongside an authorized channel, consumers with a higher price consciousness may prefer to select the counterfeit products sold at the lower price Value Consciousness Perceived value has been defined as "the consumer's overall assessment of the utility of a product based on what is received and what is given" (Zeithaml 1988). Most of the consumers of counterfeit products pursue value for brand, prestige and image benefits, but unwilling to pay a high price for it (Bloch et al., 1993). Therefore, for a lower price and a substandard quality, counterfeits are considered value for money (Bloch et al., 1993; Lichtenstein et al., 1990; Ang et al., 2001; Wang et al., 2005), as 16

26 counterfeit products usually provide the same functional benefits as the genuine, but at a fraction of the price of the genuine products. Value conscious consumers consider themselves as smart buyers. They are concerned of paying a low price but the product is subject to some quality constraint Perceived Risk Perceived risk is one of the main explanatory variables in consumers behaviour (Mitchell, 1999; Mitchell and Boustani, 1993; Gabbott, 1991; Brooker, 1984). Marketing literature has long acknowledged perceived risk as an important issue during buying decisions, proposing that consumers seek to reduce uncertainty and the unfavourable consequences of purchase decisions (Mitchell, 1999; Cox, 1967; Bauer, 1960). Perceived risk comprises of multidimensional constructs (Mandel, 2003; Campbell and Goodstein, 2001; Mitchell and Boustani, 1993; Jacoby and Kaplan, 1972; Roselius, 1971): Functional (associated to the performance of the product) Financial (related with the potential monetary loss) Social (relative to the perception of other individuals about the consumer) Physical (relative to the health or physical well-being) Psychological risk (associated to the individuals self-esteem) Time risk (refers to the time lost as a result of product failure) Each product has a set of these risks associated with its purchase and each consumer has an individual level of tolerance towards each one (Mitchell, 1998). Since the 17

27 outcome of the choice decision made by the consumer can only be known in the future, the consumers are forced to deal with uncertainty till the extent of the consumers realize that the counterfeit products that they have bought did not accomplish all of their buying goals, then, risk is perceived Integrity The influence of basic values like integrity will affect the judgment towards succumbing to unethical activities (Steenhaut and van Kenhove, 2006). Integrity is determined by personal ethical standards and obedience to the law. If the consumers view integrity as critical, the chances of them viewing counterfeit products as favourable would be less, but if the consumers do not feel that integrity is important then they would be in favour of counterfeits (Ang et al., 2001; Wang et al., 2005). Consumers purchase of a counterfeit is not a criminal act, but as consumers participate in a counterfeit transaction that supports illegal activity, consumer s respect for lawfulness might explain how much engagement the consumer will have in buying counterfeit products. Indeed, research shows that consumers willingness to purchase counterfeit products is negatively related to attitudes toward lawfulness (Cordell et al., 1996). In this sense, those consumers who have lower ethical standards are expected to feel less guilty when buying a counterfeit product (Ang et al., 2001). Rather, they rationalize their behaviour in a way to reduce the cognitive dissonance of an unethical behaviour. 18

28 2.2.6 Personal Gratification Personal gratification is the need for a sense of accomplishment, social recognition, and the desire to enjoy the finer things in life (Ang et al., 2001; Wang et al., 2005). Consumers with high sense of personal gratification would be more conscious of the appearance and visibility of fashion products and are probably less prone to accept goods of inferior quality (Phau and Teah, 2009). This is because by buying a counterfeit version of the genuine products, the consumers are seen as not thinking highly of themselves. Buying a counterfeit product does not portray the consumer s accomplishment. There are conflicting results in literatures because Bloch et al. (1993) suggest that consumers choosing a counterfeit product see themselves as less well off financially, less confident, less successful and lower status than non-counterfeit buyers. On the contrary, Ang et al. (2001) reveal that there is no significant influence of personal gratification on consumer attitudes toward counterfeits Novelty Seeking Novelty seeking is the curiosity of individuals to seek variety and difference (Hawkins et al., 1980; Wang et al., 2005). A consumer who is inclined to try new products would probably have positive attitudes towards counterfeits of counterfeit products. Novelty seeking consumers are particularly inclined towards products with low purchase risk. Hence, the low cost of counterfeit products is well suited to satisfy their curiosity and the need for experimentation (Wee et al., 1995). 19

29 2.2.8 Status Consumption Status is a form of power that consists of respect, consideration, and envy from others and represents the goals of a culture and status consumption refers to consumers who are seeking self satisfaction as well as displaying their prestige and status to others usually through visible evidence (Eastman et al., 1997). Status is a position or rank in a society, which is given or awarded to an individual by others. Status consumers seek to possess brands that exude brand symbols that reflect their self-identity. Eastman (1997) suggests that significant levels of status consumption exist in all communities in the world where the utility of products is measured by the social advantage these purchases offer Attitude of Counterfeit Products As counterfeits are the cheaper alternatives to the more expensive genuine products, there might not be a significant difference in perceived quality (Gentry et al., 2006). According to Tom et al. (1998), consumers are more inclined to purchase products with a fashion component attached. Consumers are willing to pay for the visual attributes and functions without paying for the associate quality (Grossman and Shapiro, 1988; Cordell et al., 1996). Consumers are also expected to prefer counterfeit products with a famous brand s name attached that would present some meaning to the consumer (Cordell et al., 1996). This reinforces the concept that only brand s names that are well known or worth counterfeiting, are targeted for illegal production (Eisend and Schuchert-Gu ler, 2006). Past research has examined the economic, quality, and legal or ethical factors that shape and influence attitudes of consumers (Cordell et al., 1996; Ang et al., 2001; 20

30 Wang et al., 2005). Ultimately, the functional benefits are important when purchasing counterfeits products. However, it is also the desire to own the prestige and status symbol that are inherent in the trademarked brand (Cordell et al., 1996; Chadha, 2007). More commonly, price also reflects consumers attitudes towards the value of counterfeit products. The general perception is that the low financial risks provide the added benefit for consumers to purchase counterfeit goods, as prices of counterfeits are relatively advantageous. In addition, because counterfeits are often sold at a lower price, the expectation of quality would not be equivalent to that of the genuine articles. As long as the basic functional requirements are met or the visibility and symbolic value is achieved, consumers will be satisfied (Eisend and Schuchert-Gu ler, 2006). However, the quality of counterfeit products has been improved in recent years due to better technological advancement, bringing a competitive advantage to counterfeit products (Nill and Shultz, 1996). Certain products can be tried before purchase to gauge the functionality or performance, which can encourage consumers willingness to purchase (Cordell et al., 1996; Bian and Veloutsou, 2007). However, unlike genuine products, counterfeit products are still without warranties, adding to greater financial risks of purchases (De Matos et al., 2007). It has been found that if the perceived product attributes between the genuine products and the counterfeit products are similar in terms of quality, the purchase intention will be higher (Wee et al., 1995; Penz and Sto ttinger, 2005). 21

31 Consumers experiencing situational ethics excuse themselves for purchasing counterfeits as justifiable because they perceive themselves to be less unethical or illegal (Cordell et al., 1996; Albers-Miller, 1999; Gupta et al., 2004). Hence, consumers feel less responsible towards their role as a counterfeit patron. The double standards show indifferent attitudes towards the consumption of counterfeit goods, since major corporations might not suffer from the perceived slight loss of profits (Cordell et al., 1996; Ang et al., 2001; De Castro et al., 2007) Purchase Intentions According to the theory of planned behaviour (TPB), purchase behaviour is determined by the purchase intention, which in turn determined by attitudes (Fishbein and Ajzen, 1975). Attitudes towards behaviour instead of towards the product are noted to be a better predictor of behaviour (Fishbein, 1967; Fishbein and Ajzen, 1975; Lutz, 1975; Yi, 1990; Penz and Sto ttinger, 2005). However, the TPB also stated that the opportunities and resources, such as the accessibility of counterfeit products, must be present before purchase behaviour can be performed. Without such circumstances, regardless of how favourable intentions are, it would be difficult to perform a purchase (Chang, 1998). The more favourable consumers attitudes towards counterfeiting are, the higher the chances those consumers will purchase counterfeit brands. Similarly, the more unfavourable consumers attitudes towards counterfeiting are, the less likely are the chances of purchase (Wee et al., 1995). In addition, social and personality antecedents 22

32 have long been established to have an influence on consumers decision-making (Miniard and Cohen, 1983) towards purchase intention. The link attitude-behavioural intentions have been extensively examined in the marketing literature. According to the Theory of Reasoned Action, attitude is positively correlated with purchase intentions, which in turn is an antecedent of the real behaviour (Ajzen and Fishbein, 1980). 2.3 Summary This chapter has covered the literature of past study based on the specific areas that are relevant. These literatures will then support the hypotheses postulated in the following chapter. 23

33 CHAPTER 3: CONCEPTUAL FRAMEWORK AND HYPOTHESES CHAPTER 1: INTRODUCTION CHAPTER 2: LITERATURE REVIEW CHAPTER 3: CONCEPTUAL FRAMEWORK AND HYPOTHESES Introduction Conceptual Framework Hypothesis Summary CHAPTER 4: RESEARCH METHODOLOGY CHAPTER 5: RESULTS AND FINDINGS CHAPTER 6: CONCLUSION AND RECOMMENDATION 24

34 3.0 Introduction The previous chapter discusses the literature review of past study and research. This chapter presents the conceptual framework model of this study, which consists of independent variables, mediating variables and dependent variables. Hypotheses are then postulated based on the model and supported by the literature review in chapter Conceptual Framework SOCIAL FACTORS IS NS H1a PERSONALITY FACTORS PC H1b H2a VC PR H2b H2c ATT H3 PI H2d I PG H2e H2f Figure 3.1: Model of Consumers Attitude towards Counterfeit Product NOVS SC H2g Note: IS information susceptibility; NS normative susceptibility; PC price consciousness; VC value consciousness; PR perceived risk; I integrity; PG personal gratification; NOVS novelty seeking; SC status consumption; ATT attitude towards counterfeit product; PI purchase intentions 25

35 From past research and literatures in Chapter 2, the conceptual model for this study is as in Figure 3.1, which shows Information Susceptibility, Normative Susceptibility, Price Consciousness, Value Consciousness, Perceived Risk, Integrity, Personal Gratification, Novelty Seeking and Status Consumption as independent variables (IV), Attitude of Counterfeit Products as the mediating variable (MV) and Purchase Intention as the dependent variable (DV). The model adapted and extended from Huang et al. (2004), De Matos et al. (2007), Phau, and Teah (2009). Huang et al. (2004) examined three factors, De Matos et al. (2007) model examined six factors, and Phau I. and Teah M. (2009) model examined eight factors. The combination of all three models has derived a model with nine factors. Price Consciousness was adopted from Huang et al (2004), Information susceptibility, normative susceptibility, value consciousness, novelty seeking and status consumption was adopted from De Matos et al. (2007), and perceived risk was adopted from Phau and Teah (2009). Both integrity and personal gratification were taken from De Matos et al. (2007) and Phau and Teah (2009) model. 3.2 Hypotheses The hypotheses indicated below is tested and discussed in this whole study accordingly: 26

36 3.2.1 Social Factors (Independent Variable) Social influence refers to the effects that others such as family members and/or friends have on an individual consumer s attitude. Two common forms of consumer susceptibility to social influences are information susceptibility and normative susceptibility (Bearden et al., 1989; Wang et al., 2005; Phau and Teah, 2009). Informative Susceptibility and Normative Susceptibility Informative susceptibility concerns purchase decisions, which are based on the expert opinions of others, and normative susceptibility concerns purchase decisions, which are based on the expectations of what would impress others (Ang et al., 2001). As counterfeit products is not legal/ethical and does not have a positive social image, consumers with higher susceptibility to social influence may present negative attitudes towards counterfeit products. It can be hypothesized that: H1a: Information susceptibility has no effects on consumers attitude towards counterfeit products. H1b: Normative susceptibility has no effects on consumers attitude towards counterfeit products Personality Factors (Independent Variable) Personality influence refers to the individual s interpersonal influence without relying on the opinion of others or conforming to the expectation of others. Price Consciousness Perception of the price cue for some consumers can be characterized more narrowly as reflecting price consciousness. According to the term used by Lichtenstein et al. 27

37 (1993), price consciousness refers to the degree to which the consumer focuses exclusively on paying low prices. Consumers whose main concern is paying a low price on a product would opt for counterfeit products. Thus, it can be hypothesized that: H2a: Price consciousness has no effects on consumers attitude towards counterfeit products. Value Consciousness Value consciousness is defined as a concern for paying lower prices but with acceptable standard of quality (Lichtenstein et al., 1990; Ang et al., 2001). As counterfeit products usually provide similar functions to the genuine products but for a lower price, consumers who are value-conscious may choose counterfeit products over the genuine products. Thus, it can be hypothesized that: H2b: Value consciousness has no effects on consumers attitude towards counterfeit products. Perceived Risk Marketing literature has long acknowledged perceived risk as an important issue during buying decisions, suggesting that consumers seek to reduce uncertainty and the inauspicious consequences of purchase decisions (Mitchell, 1999; Cox, 1967; Bauer, 1960). Thus, the greater the perceived risk, the lower is the likelihood of consumers' consideration of a counterfeit product. It can be hypothesized that: H2c: Perceived risk has no effects on consumers attitude towards counterfeit products. 28

38 Integrity Integrity represents the level of consumers ethical standards and obedience to the law (Ang et al., 2001). The more important integrity is to a consumer, the more negative the consumer will feel about counterfeit products. Therefore, it can be hypothesized that: H2d: Integrity has no effects on consumers attitude towards counterfeit products. Personal Gratification Personal gratification concerns the need for a sense of accomplishment, social recognition, and to enjoy the finer things in life (Ang et al., 2001). Consumers with high personal gratification will value the original version of the branded products, thus have a negative attitude towards the counterfeit products. It can be hypothesized that: H2e: Personal gratification has no effects on consumers attitude towards counterfeit products. Novelty Seeking Novelty seeking is the curiosity of individuals to seek variety and difference (Hawkins et al., 1980; Wang et al., 2005). Therefore, consumers who likes keeping up-to-date would like to be seen with the latest products or designs would very likely purchase counterfeit products as they are able to continuously change their style but at a relatively lower price. It can be hypothesized that: H2f: Novelty seeking has no effects on consumers attitude towards counterfeit products. 29

39 Status Consumption Status consumers are more conscious of the display of accomplishment (Phau and Teah, 2009). The consumers would most likely buy and even pay more for a product that has status. Should their peers or family members know that they buy counterfeit products, the status consumers would feel that their image is tarnished thus their attitudes towards counterfeit products would be unfavourable. It is therefore hypothesized that: H2g: Status consumption has no effects on consumers attitude towards counterfeit products Attitude towards counterfeit products (Mediating Variable) According to the theory of planned behaviour (TPB), purchase behaviour is determined by the purchase intention, which is in turn determined by attitudes (Fishbein and Ajzen, 1975). The more favourable consumers attitudes towards counterfeiting are the higher the chances those consumers will purchase counterfeit products. Therefore, it is hypothesized that: H3: Consumers attitude towards counterfeit products has no effects on purchase intention. 3.3 Summary This chapter has presented the conceptual model for this study. The model was derived from past studies of Huang et al. (2004), De Matos et al. (2007), Phau, and Teah (2009). There are nine independent variables, namely, information susceptibility, normative susceptibility, price consciousness, value consciousness, 30

40 perceived risk, integrity, personal gratification, novelty seeking and status consumption, one mediating variable which is consumers attitude towards counterfeit products and one dependent variable namely purchase intention. The hypotheses developed test the effects that one variable has over another variable. Hypothesis 1 tests the effects of social factors on consumers attitude towards counterfeit products. Hypothesis 2 tests the effects of personality factor on consumers attitude towards counterfeit products. Finally, hypothesis 3, tests the effects of consumers attitude towards counterfeit products on purchase intention. All of the hypotheses result will be tested in chapter 5. The next chapter presents the research methodology. 31

41 CHAPTER 4: RESEARCH METHODOLOGY CHAPTER 1: INTRODUCTION CHAPTER 2: LITERATURE REVIEW CHAPTER 3: CONCEPTUAL FRAMEWORK AND HYPOTHESES CHAPTER 4: RESEARCH METHODOLOGY Introduction Research Design Questionnaire Development Sampling Design Sample Size Sample Selection Data Collection Data Analysis Technique Summary CHAPTER 5: RESULTS AND FINDINGS CHAPTER 6: CONCLUSION AND RECOMMENDATION 32

42 4.0 Introduction The previous chapter has presented the conceptual model and discussed the hypotheses that are to be analyzed. The content of this chapter will cover the methods chosen to do the analysis such as how the questionnaire was developed, how the sample was selected, how the data was collected, and what are the analysis techniques that will be used on the data obtained from the questionnaire. 4.1 Research Design The approach of study taken is the quantitative approach. The approach is seen as having objective observations, precise measurements, statistical analysis and verifiable truths. The hypotheses that were constructed in Chapter 3 will be tested by carefully analyzing the data using statistics. A combination of both primary and secondary data collection methods have been used for this study. The primary data for this study is obtained from the data collected through the questionnaire distributed. The secondary data is collected from past literature reviews and relevant articles. 4.2 Questionnaire Development Based on the literature, the researcher assembled the questionnaire, using scales that was already validated in previous research (Huang et al., 2004; De Matos et al., 2007; Phau and Teah, 2009) as can be seen in Table 4.1, which summarizes the items used in each scale, as well as the authors as reference. 33

43 Table 4.1: Source of measurement scale items Variables measurement Information Susceptibility (IS) Normative Susceptibility (NS) Price Consciousness (PC) Value Consciousness (VC) Perceived Risk (PR) Integrity (I) Personal Gratification (PG) Novelty Seeking (NOVS) Status Consumption (SC) Attitudes towards counterfeits (ATT) Purchase Intentions (PI) Source Number of items Type of variable Phau and Teah (2009); Bearden et al. (1989) 4 Independent Phau and Teah (2009); Bearden et al. (1989) 4 Independent Huang et al. ( 2004); Lichtenstein et al. (1993) 4 Independent Phau and Teah (2009); Lichtenstein et al. (1990) 4 Independent De Matos et al. (2007); Dowling and Staelin (1994) 5 Independent Phau and Teah (2009); De Matos et al. (2007); Vinson et al. (1977) 4 Independent Phau and Teah (2009); Wee et al. (1995) 5 Independent Phau and Teah (2009); Rokeach (1973) 4 Independent Phau and Teah (2009); Eastman et al. (1997) 5 Independent Phau and Teah (2009); De Matos et al. (2007); Wang et al. (2005) 5 Mediating Phau and Teah (2009); De Matos et al. (2007); Ang et al. (2001) 6 Dependent There are two parts in the questionnaire (refer to Appendix A). Part I consists of all the variables (independent, mediating, dependent), and part II asks for the respondents demographics. The participants answered the items of each variable in part I using Likert scales varying from 1 (Strongly Disagree) to 7 (Strongly Agree). 34

44 In this study, there is no particular counterfeited product being specified. Questions considered the expression counterfeit products as general because the aim is just to assess consumers attitude towards counterfeit products as an overall. 4.3 Sampling Design Non-probability sampling is used in this study, meaning that the elements in the population have no probability attached to their being selected as sample subjects. The type of probability sampling that was chosen to collect the sample is convenience sampling because the response can be obtained quickly and efficiently. It involves collecting information from members of the population who are conveniently available to provide it. The sampling frame for this study is based on the consumer s age, ethnic group, education level, occupation, and income level. 4.4 Sample Size For this study, Roscoe (1975) rules of thumb are followed for determining the sample size: The sample size is larger than 30 and smaller than 500. A minimum sample size of 30 for each category in the sub samples (e.g. Malay/ Chinese/ Indian, SPM/ diploma/ bachelor/ postgraduate, and others). 35

45 4.5 Sample Selection A survey was conducted among respondents in Klang Valley and the samples selected are of consumers between the age of eighteen and above. The respondents include both male and female, who are students or working professionals from various institutions and organizations, or self-employed or even retirees. 4.6 Data Collection A total of 300 self-administrated questionnaires were distributed through many different channels, namely, via , via mall intercept at a shopping complex, and via direct distribution to students at public and private universities. Data collection was performed over a two-week period on both weekdays and weekends. A ball pen and imported chocolates were given out to the respondents of mall intercept and direct distribution, as a token of gratitude. The researcher felt like it was necessary, as some were hesitant to spend their time answering the questionnaires. Several universities were visited to gather responses for the occupation category of students. For respondents that were approached via , constant reminders had to be given, as some would forget to reply. The questionnaire was also circulated amongst work colleagues of family and friends. This is to ensure that there are no biases. In the end, a total of 270 questionnaires that were completed and returned were used for further analysis in Chapter 5. 36

46 4.7 Data Analysis Technique To fulfil the objectives of the study, a number of analyses were used on the data obtained from the questionnaire as the summary of the analyses seen in Table 4.2 Table 4.2: Summary of data analysis techniques and objective Analysis Methods Objective Descriptive Analysis Frequencies To see the pattern of respondents demographics Normality Test Histogram Boxplot To ensure that the data collected are normally distributed Skewness Kurtosis Normal Q-Q plot Detrended Q-Q plot Reliability Test Cronbach s alpha To confirm the internal consistency of all measured items in the questionnaire Validity Test Corrected Item-Total Correlation To assess whether the item measures what it is supposed to measure Factor Analysis (Dimensionality) Principal Component Analysis (PCA); To verify the dimensionalities of measured constructs Bivariate Analysis Pearson Correlation To analyze the strength and direction of the relationship between two continuous variables Multivariate Analysis (Multiple Regression) Standard multiple regression SOBEL test To explore the predictive ability of a set of independent variables on one continuous dependent variable To test whether a mediator carries the influence of an independent variable to a dependent variable 37

47 4.8 Summary This chapter has discussed the approaches taken to do the study. The items in the questionnaire were taken from different sources such as Phau and Teah (2009), De Matos et al. (2007), Wang et al. (2005), Ang et al. (2001), and others. The data analysis to be done on the data obtained from the questionnaire was also presented; complete with the method to be taken and its objective. In the next chapter, the data analysis technique that had been mentioned will be performed on the data obtained from the questionnaire. 38

48 CHAPTER 5: RESULTS AND FINDINGS CHAPTER 1: INTRODUCTION CHAPTER 2: LITERATURE REVIEW CHAPTER 3: CONCEPTUAL FRAMEWORK AND CHAPTER 4: RESEARCH CHAPTER 5: RESULTS AND FINDINGS CHAPTER 6: Introduction Descriptive Analysis Preliminary Analysis Bivariate Analysis Multivariate Analysis (Multiple Regression) Summary CONCLUSION AND RECOMMENDATION 39

49 5.0 Introduction In the previous chapter, the research methodology was presented along with a summary of data analysis that is to be performed in this chapter. Thus, the content of this chapter looks into the analyses tested on the data and its result. The analyses are divided into four sections. In the first section, descriptive analysis was done to see the pattern and frequency of respondents demographic. In the second section, preliminary analysis such as normality, reliability, validity and factor analysis were assessed. Normality tests is to see whether the data obtained were normal, reliability test is to see whether the items that make up a scale are all measuring the same underlying construct, validity test is to see whether the item measures what it is supposed to measure, and factor analysis is to verify the dimensionalities of measured constructs. In the third section, Bivariate analysis was done by using Pearson correlation to test the hypotheses made in Chapter 3. In the final section, Multivariate analysis was used to see the predictive ability of the set of independent variables on the dependent variable and whether, the mediator carries the influence of an independent variable to a dependent variable. 5.1 Descriptive Analysis A total of 300 questionnaires were distributed and only 270 completed questionnaires were returned and taken as the sample. The 90 per cent response rate included both male and female, out of which, 119 were male and 151 were female. There were no missing values coded when the data was typed in the SPSS system. The respondents demographic profile, which consists of gender, age, citizenship, ethnic group, marital status, education, occupation and monthly income, were 40

50 analyzed and summarized as in Table 5.1. It is hope to contribute in explaining the findings of this study for deeper understanding Gender A large portion of the respondents were female with 55.9% and the rest male making 44.1%. The difference in frequency is 32 respondents and it is not found to be significant as the researcher finds it to be almost equal Age The majority of the sample comprised of people aged in the range of years old which contributed 61.9%, followed by those aged in the range of and those below 21 years of age with 20.0% and 12.6% respectively. One of the methods used were mailing the questionnaire via the Internet, which explains why the majority falls within the range of years old as they are considered more technology savy, thus responding via is of not problem to them. Another method that were used, was distributing the questionnaires at universities, targeting both undergraduate and postgraduate students. Again, this could explain as to why most of the respondents falls within the age of years old. Table 5.1: Respondents Demographic Profile Variable Category Frequency Percent Gender Male Female Age Below

51 Citizenship Ethnic group Marital status Education Occupation Monthly income Malaysian Others Malay Chinese Indian Others Single Married Divorced/Widow SPM Diploma Bachelor degree Postgraduate Professional Top management Manager Executive Clerical/Admin Student Self-employed Not working Retiree Below RM2, RM2,000-RM4, RM4,001-RM6, RM6,001-RM8, RM8,001-RM10, RM10,001 and above Citizenship Almost all of the respondents were Malaysian citizen with 95.6% and only 12 respondents were of other citizenship contributing to only 4.4%. Other citizenship were of the respondents from Iran, Sudan and Oman. All of them are students studying in Malaysia Ethnic Group Ethnicity were divided into four categories with Malay, contributing 63%, Chinese, 17.4%, Indian, 12.2% and others, 7.4%. The result coincides with the overview 42

52 statistics of Malaysia with Malays contributing the highest number of population, followed by the Chinese, then the Indians and finally others Marital Status For marital status, a huge number of respondents are single with a frequency of 209 respondents, followed by married respondents of 59 and only 2 divorcee or widow. The justification for this is due of that 74.4% or 201 of the respondents are of 30 years old and below. It is very likely that these respondents are not married yet as the norm for males to get married is 30 years old and above, and for females, 27 years and above Education level Looking at the education segment, the sample has 38 SPM holders, 30 diploma holders, 145 bachelor degree holders, and 57 postgraduates with their percentages of 14.1%, 11.1%, 53.7%, and 21.1% respectively. Therefore, it can be concluded that 85.9% of the respondents are of people with higher education Occupation In the occupation segment, the majority of the respondents are students with 38.9%, followed by executives with 20.7%, professionals with 18.1% and others such as managers, self-employed, not working, clerical or admin, top management and retiree. As mentioned earlier, a large portion of the respondents had a higher formal education, therefore it is not surprising that a huge percentage goes to Student (those 43

53 who are still studying), Executive, Professional, Manager and Self-employed who are mostly businessman or businesswoman Monthly Income Monthly income of the respondents was also looked into with a majority having below RM2,000 contributing 44.1%, followed by respondents having RM2,000- RM4,000 with 36.3% and those having RM4,001-RM6,000 with 14.1%. A total of 119 respondents has an income of below RM2,000 because they are students and those having an income of RM2,000-RM4,000 is due to the respondents age which falls in the range of years old and have only started building a career. It can be concluded that the majority of these samples are Malaysian respondents, falling in the range of years old, Malay, single, has a bachelor degree, with an income of RM4,000 and below. 5.2 Preliminary Analysis Data screening, normality test, reliability test, validity test, and factor analysis were all done in order to ensure that the data is ready for use to conduct analyses and to test the hypotheses derived in Chapter 3. 44

54 5.2.1 Data Screening Reversing negatively worded items Before any statistical analysis were performed, the negatively worded items in the data set were reversed. Only 1 worded item were reversed from the status consumption construct: SC_4 - The status of a product is irrelevant to me Normality There are a number of tests, which one could do to see whether the data obtained is normally distributed. It is important for the data to be normally distributed in order to carry out tests such as Pearson correlation and multiple regressions. One way to test the normality of data is by using histogram and Box Plot (refer to Appendix B). As can be seen, the data is normal which allows for further analyses. Another way is to look at the skewed and kurtosis of each item as can be seen in Table 5.3. The skewed value provides an indication of the symmetry of the distribution whereas the kurtosis provides information about the peakedness of the distribution. All items complied with the skewed and kurtosis level, by having values below 2 and 3, indicating that all items within the normality curve. Table 5.2 states the items of each variable and its simplified code to know which item is which, in table 5.3, whereas in table 5.3, the mean, standard deviation, skewed and kurtosis of each item in the questionnaire is presented. 45

55 Table 5.2: The items of each variable and its simplified code Variable Item Item Code Informative I observe what others are buying and using before buying IS_1 susceptibility a product If I have little experience with a product, I ask around IS_2 I consult other people to help choose the best alternative IS_3 available from a product class I gather information from friends or family about a IS_4 product before I buy Normative It is important that others like the products and brands I NS_1 susceptibility buy If other people see me using a product, I often purchase NS_2 the brand they expect me to buy I like to know what brands and products make good NS_3 impressions on others If I want to be like someone, I often try to buy the same NS_4 brands that they buy Price consciousness I usually purchase the cheapest items PC_1 Value consciousness Perceived risk I usually purchase items on sale only I often find myself checking prices A person can save a lot by shopping for bargains I am concerned about price and product quality I compare prices for the best value for money I like to be sure that I get my money worth I try to maximize the quality for the money spent The risk that I take when I buy a counterfeit product is high There is high probability that the product doesn t work PC_2 PC_3 PC_4 VC_1 VC_2 VC_3 VC_4 PR_1 PR_2 Spending money with counterfeit products might not be PR_3 wise Buying counterfeit products make me feel PR_4 unhappy/frustrated If I buy counterfeit products, it may negatively affect what PR_5 others think of me Integrity I value honesty I_1 I value politeness I value responsibility I value self control I_2 I_3 I_4 46

56 Personal gratification A comfortable life is important to me An exciting life is important to me A sense of accomplishment is important to me I value pleasure I value social recognition PG_1 PG_2 PG_3 PG_4 PG_5 Novelty seeking I am always one of the firsts to try new products NOVS_1 I am excited to purchase some interesting products I own a lot of popular products I keep up with fashion NOVS_2 NOVS_3 NOVS_4 Status consumption I am interested in new products with status SC_1 Attitude towards counterfeit product Purchase intentions I would buy a product just because it has status I would pay more for a product if it had status The status of a product is irrelevant to me A product is more valuable to me if it has high status appeal Counterfeit products are as reliable as the genuine products Counterfeit products have similar quality to the genuine products Counterfeit products provided similar functions to the genuine products Considering price, I prefer counterfeit products Generally speaking, buying counterfeit products is a wise choice I would think about a counterfeit products as a choice when buying something I will buy counterfeit products I will consider purchasing counterfeit products for a friend I would recommend counterfeit products to friends and family I will buy counterfeit products from peddlers I would say favourable things about counterfeit products SC_2 SC_3 SC_4 SC_5 ATT_1 ATT_2 ATT_3 ATT_4 ATT_5 PI_1 PI_2 PI_3 PI_4 PI_5 PI_6 47

57 Table 5.3: Mean, Standard deviation, Skewed and Kurtosis of each item INDEPENDENT VARIABLE Constructs Item Mean Standard Skewed Kurtosis Deviation Informative susceptibility IS_ IS_ IS_ IS_ Normative susceptibility NS_ NS_ NS_ NS_ Price consciousness PC_ PC_ PC_ PC_ Value consciousness VC_ VC_ VC_ VC_ Perceived risk PR_ PR_ PR_ PR_ PR_ Integrity I_ I_ I_ I_ Personal gratification PG_ PG_ PG_ PG_ PG_ Novelty seeking NOVS_ NOVS_ NOVS_ NOVS_ Status consumption SC_ SC_ SC_ SC_ SC_ Attitude ATT_ ATT_ ATT_ ATT_ ATT_

58 DEPENDENT VARIABLE Purchase intentions PI_ PI_ PI_ PI_ PI_ PI_ Reliability and Validity Analysis Reliability is done to confirm the internal consistency of all measured items in the questionnaire. In other words, it is to see whether the items that make up a scale are all measuring the same underlying construct. To check whether or not the items are measuring the same underlying construct, by referring at the Cronbach s alpha coefficient scale, the commonly accepted alpha is 0.7 and above. Validity is done to assess whether the item measures what it is supposed to measure. To check whether the item is measuring what it is supposed to measure, refer to the Corrected Item-Total Correlation. The figure in this column gives an indication of the degree to which each item correlated with the total score. Low values (less than 0.3) indicate that the item is measuring something different from the scale as a whole. Table 5.4: Corrected Item-Total Correlation (validity) of each item and Cronbach s Alpha Coefficient (reliability) of each scale INDEPENDENT VARIABLE Constructs Item Corrected Item-Total Correlation Informative susceptibility IS_ IS_ IS_ IS_ Normative susceptibility NS_ NS_ NS_ Cronbach s Alpha Coefficient

59 DEPENDENT VARIABLE NS_ Price consciousness PC_ PC_ PC_ PC_ Value consciousness VC_ VC_ VC_ VC_ Perceived risk PR_ PR_ PR_ PR_ PR_ Integrity I_ I_ I_ I_ Personal gratification PG_ PG_ PG_ PG_ PG_ Novelty seeking NOVS_ NOVS_ NOVS_ NOVS_ Status consumption SC_ SC_ SC_ *SC_ SC_ Attitude towards counterfeit products ATT_ ATT_ ATT_ ATT_ ATT_ Purchase intentions PI_ PI_ PI_ PI_ PI_ *Item deleted **The Cronbach s alpha value if item deleted PI_ **

60 According to the reliability test, all the scale except for Price Consciousness 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. Although the Cronbach s alpha coefficient for Price Consciousness is below 0.7, all the figures in the column marked Corrected Item-Total Correlation has values above 0.3, therefore not supporting the lack of reliability of this scale. The scale will remain. The only item that is to be taken out of its scale is item SC_4 because it has extremely low Corrected Item-Total Correlation value with only 0.078, which indicates that items were measuring something different from the scale. To support, the Cronbach s alpha value, if item deleted is higher than the final alpha value. Therefore, item SC_4 will no longer be included in further analysis. Another round of reliability and validity test was done on the Status Consumption scale. The new Cronbach s alpha coefficient for Status Consumption is affirming the reliability of the scale and each item in the scale had Corrected Item- Total Correlation of more than 0.3, affirming the validity of the scale Factor Analysis Factor analysis is a multivariate technique, which would confirm the dimensions of the concept that have been properly defined, as well as indicate which of the items are most appropriate for each dimension. Factor analysis is also known as a data reduction technique. It takes a large set of variables and looks for a way to reduce or summarize the data using a smaller set of factors or components. 51

61 Kaiser-Meyer-Olkin (1970), suggested that threshold for KMO statistic is a value below which is unacceptable or not appropriate for factor analysis to be performed Mediocre Good Great >0.9 Superb Independent Variable A total of 38 items from the 9 independent scales were subjected to principal components analysis (PCA) using SPSS Version Prior to performing PCA, the suitability of data for factor analysis was assessed. Inspection of the correlation matrix revealed the presence of many coefficioents of 0.3 and above. The Kaiser-Meyer- Oklin value was 0.844, exceeding the recommended value of 0.6 and the Bartlett s Test of Sphericity reached statistical significance (p=.000), supporting the factorability of the correlation matrix. Table 5.5: KMO and Bartlett's Test for nine independent variable Kaiser-Meyer-Olkin Measure of Sampling Adequacy..844 Bartlett's Test of Sphericity Approx. Chi- Square Df 703 Sig

62 Principal components analysis revealed the presence of nine components with eigenvalues exceeding 1 (7.881, 5.478, 3.085, 2.427, 1.679, 1.606, 1.513, 1.309, 1.165), explaining per cent, per cent, 8.12 per cent, 6.39 per cent, 4.42 per cent, 4.23 per cent, 3.98 per cent, 3.45 per cent, 3.07 per cent of the variance respectively. These nine components explained a total of per cent of the variance (see Appendix II). Once the factors have been determined, the factors were then extracted and rotated as seen in Table 5.6. Varimax rotation was performed. The rotated solution revealed presence of simple structure (Thurstone, 1947), with components showing a number of strong loadings and most variables loading substantially on only one component. Table 5.6: Rotated Component Matrix for nine independent variable Component SC_3.846 SC_2.817 SC_5.766 SC_1.743 I_2.852 I_3.850 I_1.843 I_4.797 VC_2.863 VC_3.824 VC_1.716 VC_4.686 PG_4.790 PG_5.748 PG_3.734 PG_2.731 PG_1.624 PR_4.810 PR_3.768 PR_

63 PR_5.630 PR_1.615 IS_2.817 IS_3.796 IS_4.782 IS_1.629 NS_2.825 NS_1.820 NS_3.645 NS_4.602 NOVS_1.787 NOVS_2.732 NOVS_3.625 NOVS_4.544 PC_2.830 PC_1.802 PC_3.554 PC_4.431 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 7 iterations Mediating Variable Factor analysis for the mediating variable, Attitudes towards Counterfeit Products has 5 items. The Kaiser-Meyer-Oklin value in Table 5.7, is 0.824, exceeding the recommended value of 0.6 and the Bartlett s Test of Sphericity reached statistical significance (p=.000), supporting the factorability of the correlation matrix. Table 5.7: KMO and Bartlett's Test for the mediating variable Kaiser-Meyer-Olkin Measure of Sampling Adequacy..824 Bartlett's Test of Sphericity Approx. Chi- Square Df 10 Sig

64 Principal components analysis revealed the presence of one component with eigenvalues exceeding 1 (3.382), explaining per cent of the variance. Table 5.8 shows that the mediating items of attitude towards counterfeit products loaded on one component. Table 5.8: Component Matrix for the mediating variable Component 1 ATT_1.858 ATT_5.824 ATT_4.821 ATT_2.815 ATT_3.793 Extraction Method: Principal Component Analysis. a 1 components extracted Dependent Variable Factor analysis for the dependent variable, Purchase intentions (6 items) was done the same way as other variables. The Kaiser-Meyer-Oklin value is 0.895, exceeding the recommended value of 0.6 and the Bartlett s Test of Sphericity reached statistical significance (p=.000), supporting the factorability of the correlation matrix. Table 5.9: KMO and Bartlett's Test for the dependent variable Kaiser-Meyer-Olkin Measure of Sampling Adequacy..895 Bartlett's Test of Sphericity Approx. Chi- Square Df 15 Sig

65 Principal components analysis revealed the presence of only one component with eigenvalues exceeding 1 (4.399) explaining per cent of the variance. Table 5.10 shows that the dependent items of purchase intention loaded on one component. Table 5.10: Component Matrix(a) for the dependent variable Component 1 PI_4.920 PI_2.881 PI_6.869 PI_5.851 PI_3.813 PI_1.798 Extraction Method: Principal Component Analysis. a 1 components extracted. 5.3 Bivariate Analysis Bivariate analysis is the analysis between two variables. In this study, Correlation analysis or specifically the Pearson product-moment is used because it is able to describe the strength and direction of the linear relationship between two variables. The sign at the front of the value indicates whether there is a positive correlation (as one variable increases, the other variable increases) or a negative correlation (as one variable increases, the other variable decreases). The size of the absolute value provides an indication of the strength of the relationship. Pearson correlation coefficients can only take values from -1 to +1. From the Correlation table, the hypothesis derived earlier in Chapter 3, can be assessed whether to accept the hypothesis or reject it. 56

66 Table 5.11: Correlation between variables TIS 1. TNS.193(**) 1 TIS TNS TPC TVC TPR TI TPG TNOVS TSC TATT TPI TPC.345(**) TVC.401(**) (**) 1 TPR.123(*) (**) 1 TI.242(**) (**).496(**).387(**) 1 TPG.233(**) (**).432(**).234(**).489(**) 1 TNOVS.120(*).312(**) (**) 1 TSC (**) (*).485(**) 1 TATT (**).164(**) (**) -.224(**) -.123(*) TPI (**).191(**) (**) -.193(**) (*).149(*).625(**) 1 ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). Note: TIS Information Susceptibility; TNS Normative Susceptibility; TPC Pirce Consciousness; TVC Value Consciousness; TPR Perceived Risk; TI Integrity; TPG Personal Gratification; TNOVS Novelty Seeking; TSC Status Consumption; TATT Attitude towards counterfeit products; TPI Purchase Intention Information Susceptibility and Attitude towards counterfeit products H1a: Information susceptibility has no effects on consumers attitude towards counterfeit products. The correlation analysis reveals that information susceptibility has a weak relationship on consumer s attitude towards counterfeit products. Therefore, H1a is accepted. Normative Susceptibility and Attitude towards counterfeit products H1b: Normative susceptibility has no effects on consumers attitude towards counterfeit products. 57

67 The correlation analysis reveals that normative susceptibility has a significant positive relationship on consumer s attitude towards counterfeit products. Therefore, H1b is rejected. Price Consciousness and Attitude towards counterfeit products H2a: Price consciousness has no effects on consumers attitude towards counterfeit products. The correlation analysis reveals that price consciousness has a significant positive relationship on consumer s attitude towards counterfeit products. Therefore, H2a is rejected. Value Consciousness and Attitude towards counterfeit products H2b: Value consciousness has no effects on consumers attitude towards counterfeit products. The correlation analysis reveals that value consciousness has a weak relationship on consumer s attitude towards counterfeit products. Therefore, H2b is accepted. Perceived Risk and Attitude towards counterfeit products H2c: Perceived risk has no effects on consumers attitude towards counterfeit products. The correlation analysis reveals that perceived risk has a significant negative relationship on consumer s attitude towards counterfeit products. Therefore, H2c is rejected. 58

68 Integrity and Attitude towards counterfeit products H2d: Integrity has no effects on consumers attitude towards counterfeit products. The correlation analysis reveals that integrity has a significant negative relationship on consumer s attitude towards counterfeit products. Therefore, H2d is rejected. Personal Gratification and Attitude towards counterfeit products H2e: Personal gratification has no effects on consumers attitude towards counterfeit products. The correlation analysis reveals that personal gratification has a significant negative relationship on consumer s attitude towards counterfeit products. Therefore, H2e is rejected. Novelty Seeking and Attitude towards counterfeit products H2f: Novelty seeking has no effects on consumers attitude towards counterfeit products. The correlation analysis reveals that novelty seeking has a weak relationship on consumer s attitude towards counterfeit products. Therefore, H2f is accepted. Status Consumption and Attitude towards counterfeit products H2g: Status consumption has no effects on consumers attitude towards counterfeit products. 59

69 The correlation analysis reveals that status consumption has a weak relationship on consumer s attitude towards counterfeit products. Therefore, H2g is accepted. Attitude towards counterfeit products and Purchase Intention H3: Consumers attitude towards counterfeit products has no effects on purchase intention. The correlation analysis reveals that attitude towards counterfeit products has a significant positive relationship on consumer s attitude towards counterfeit products. Therefore, H3 is rejected. Out of the ten hypotheses, four were accepted and six were rejected. Hypothesis H1a H1b H2a H2b H2c H2d H2e H2f H2g H3 Result Accepted Rejected Rejected Accepted Rejected Rejected Rejected Accepted Accepted Rejected 5.4 Multivariate Analysis The multivariate analysis is done using standard multiple regression to explore the relationship between one dependent s variable and a number of independents variables or predictors. It is able to show how well a set of variables are able to predict a particular outcome and which variable in a set of variables is the best predictor of an outcome. 60

70 In this study, multiple regressions are used to test on the nine independent variables (information susceptibility, normative susceptibility, price consciousness, value consciousness, perceived risk, integrity, personal gratification, novelty seeking, and status consumption) in relation with the consumers attitude towards counterfeit products. It is expected that the multiple regressions will provide information about the model as a whole and the relative contribution of each variables that make up the model Assumptions Test Prior to performing the multiple regression tests, a few assumption tests by Tabachnick and Fidell (2001) have to be done, namely: Multicollinearity Normality Outliers Linearity Homoscedasticity Independence of Residuals. One way of checking the multicollinearity is by looking at the correlations table. Multicollinearity exists when the independent variables are highly correlated (r=0.9 and above). The independent variables in the Correlation table (refer to Appendix C), show some relationship with the independent variable by having values above 0.3 and none is above 0.9. This indicates that the variables are not multicollinearity. 61

71 Normality can be checked by looking at the Histogram (Figure 5.1). The variable is seen normal as the distribution of scores are symmetrical and bell-shaped curve, which has the greatest frequency of scores in the middle, with smaller frequencies towards the extremes. Normality is also checked by looking at the Normality Probability Plot (Figure 5.2). The points lie in a reasonably straight diagonal line from bottom left to top right. This suggests no major deviations from normality. Outliers can be detected from the Scatterplot (Figure 5.3). Outliers are cases that have a standardized residual of more than 3.3 or less than This is not seen in the Scatterplot, which indicates that there are no outliers. Linearity, Homoscedasticity and Independence of Residuals are checked by looking at the Scatterplot of the standardized residuals (Figure 5.3). The residuals are seen roughly rectangularly distributed, with most scores concentrated in the centre (along the 0 point). This is good and does not violate the assumptions. 62

72 Figure 5.1: Histogram of Dependent Variable: Attitude towards counterfeit products Figure 5.2: Normal Probability Plot of Regression Standardized Residual of Dependent Variable: Attitude towards counterfeit products 63

73 Figure 5.3: Scatterplot of Dependent Variable: Attitude towards counterfeit products Standard Multiple Regression The result of regression is an equation that represents the best prediction of a dependent variable from several independent variables. Evaluating the model The value given in the column R Square, in Table 5.13, tells how much of the variance in the dependent variable (Attitude towards counterfeit products) is explained by the model. Table 5.12: Model Summary of Attitude towards counterfeit products Model R R Square Adjusted R Square Std. Error of the Estimate 1.465(a) a Predictors: (Constant), Status Consumption, Integrity, Price Consciousness, Perceived Risk, Information Susceptibility, Novelty Seeking, Personal Gratification, Normative Susceptibility, Value Consciousness b Dependent Variable: Attitude 64

74 A total of nine independent variables together explain 21.7% variance (R square) of consumers attitude towards counterfeit products. Evaluating each of the independent variables The values in the Beta column under Standardised Coefficients in Table 5.13, show which of the variables, contributed to the prediction of the dependent variable. The largest Beta value (ignoring the negative and positive signs) means that the variable makes the strongest contribution to explain the dependent variable. Table 5.13: Coefficients of Dependent Variable: Attitude towards counterfeit products Model Unstandardized Standardized t Sig. Coefficients Coefficients B Std. Error Beta 1 (Constant) Information Susceptibility Normative Susceptibility (**) Price Consciousness (*) Value Consciousness Perceived Risk (**) Integrity Personal Gratification Novelty Seeking (*) Status Consumption ** Significant at 0.01 level *Significant at 0.1 level Look upon the Standardized Beta Coeffiecient column to see which of the variables that are making a significant unique contribution or in other words, to see which of the variable makes the strongest contribution in explaining the dependent variable when the variance explained by all other variables in the model is controlled for. The largest Beta is (ignoring any negative signs out the front), that belongs to Perceived Risk, followed by Normative Susceptibility with 0.258, Price 65

75 Consciousness with and Novelty Seeking with Only these four independent variables are making a statistically significant unique contribution to the equation, as the maximum acceptable Sig. value is less than 0.1. The other six independent variables have a significant value of more than 0.1 concluding that the variables are not making a significant unique contribution to the prediction of the dependent variable. To come up with an equation for the model, the B value under column Unstandardized Coefficients is taken. It is seen that Normative Susceptibility and Price Consciousness, Value Consciousness and Novelty seeking have a positive relationship towards the dependent variable. Informative Susceptibility, Perceived Risk, Integrity, Personal Gratification and Status Consumption have a negative relationship towards the dependent variable, however only four of the variables have an acceptable significant values which are Normative Susceptibility, Price consciousness, Perceived Risk and Novelty Seeking. From the findings shown in Table 5.13, the regression equation is stated as follows: *Attitude = (normative susceptibility) (price consciousness) (perceived risk) (novelty seeking) *Attitude towards counterfeit products When comparing the B value of all independent variables, normative susceptibility and price consciousness have the largest significant positive relationship with consumers attitude towards counterfeit products, both with B value, followed 66

76 by novelty seeking with On the other hand, perceived risk has the largest significant negative relationship with consumers attitude towards counterfeit products with B value. The B value indicates that 1 unit increase in normative susceptibility will result in increases in consumers attitude towards counterfeit products Sobel Test Sobel test is developed to test whether a mediator carries the influence of an independent variable to a dependent variable (Baron and Kenny, 1986; Goodman, 1960; MacKinnon et al., 1995). These tests will check whether the indirect effects of independent variable in dependent variable (i.e. via mediator) are significantly different from zero. The tests were conducted by using a web-based online calculator with the input value of coefficient and standard error for the path of independent variable mediator and mediator dependent variable. Table 5.14: Sobel/ Aroian/ Goodman tests of mediating effects Factors Attitudes Attitudes Purchase Intention Sobel test Aroian test Goodman test Coefficients Test Statistics Standard Error Sig

77 From Table 5.14, the result shows that consumers attitude towards counterfeit products has significantly affected the relationship between the independent variables (social and personality factors) and the dependent variable (purchase intention). 5.5 Summary This chapter has presented the result of the analysis done from the data obtained. After the factor analysis, the original scale with nine components remains as nine components. The hypotheses postulated in Chapter 3, were tested by Pearson correlation. Out of the ten null hypotheses, four were supported and accepted, six were rejected. Then, through multiple regressions, Normative Susceptibility, Price Consciousness, Novelty Seeking and Perceived Risk were found to be dominant thus is part of the regression equation. Finally, the Sobel test has confirmed that the mediator variable (attitude towards counterfeit products) carries the influence of the independent variables to a dependent variable (purchase intention). In the next chapter, the result in this chapter is discussed in greater depth and length. 68

78 CHAPTER 6: CONCLUSION AND RECOMMENDATION CHAPTER 1: INTRODUCTION CHAPTER 2: LITERATURE REVIEW CHAPTER 3: CONCEPTUAL FRAMEWORK AND HYPOTHESES CHAPTER 4: RESEARCH METHODOLOGY CHAPTER 5: RESULTS AND FINDINGS CHAPTER 6: CONCLUSION AND RECOMMENDATION Introduction Discussion of the research result Contribution of the study Managerial Implication Research Limitation Recommendation for future research Summary 69

79 6.0 Introduction In the previous chapter, results based on specific analyses were presented. Out of which, four hypotheses were accepted and six were rejected. Through regression analysis, a regression equation was derived. Finally yet importantly, the Sobel test had managed to confirm the mediating role of consumers attitude towards counterfeit products. The contents of this chapter will discuss the mentioned findings, along with the contributions of this study, the managerial implications, the limitations, and recommendations for future research. 6.1 Discussion of the research result The research question that was highlighted in Chapter 1 would guide the discussion of this study s findings. 1. How do the social and personality factors influence consumers attitude towards counterfeit products? The researcher had chosen to do the Pearson correlation between each independent variables and consumers attitude towards counterfeit products. Four out of the ten hypotheses were accepted and six were rejected. Table 6.1 lists a summary of the 10 hypotheses the result. Table 6.1: Summary of hypotheses and the result Hypotheses H1a: Information susceptibility has no effects on consumers attitude towards counterfeit products. H1b: Normative susceptibility has no effects on consumers attitude towards counterfeit products. H2a: Price consciousness has no effects on consumers attitude towards counterfeit products. Result Accepted Rejected Rejected 70

80 H2b: Value consciousness has no effects on consumers attitude towards counterfeit products. H2c: Perceived risk has no effects on consumers attitude towards counterfeit products. H2d: Integrity has no effects on consumers attitude towards counterfeit products. H2e: Personal gratification has no effects on consumers attitude towards counterfeit products. H2f: Novelty seeking has no effects on consumers attitude towards counterfeit products. H2g: Status consumption has no effects on consumers attitude towards counterfeit products. H3: Consumers attitude towards counterfeit product has no effects on purchase intention. Accepted Rejected Rejected Rejected Accepted Accepted Rejected The null hypotheses of informative susceptibility, value consciousness, novelty seeking and status consumption was accepted, meaning that these factors had no effects on consumers attitude towards counterfeit products. Hypothesis of normative susceptibility was rejected. It has a significant positive relationship with attitude. This means that consumers with high normative susceptibility would act favourable towards counterfeit products. Hypothesis of price consciousness was rejected. It has a significant positive relationship with attitude. This means that consumers with high price consciousness would act favourable towards counterfeit products. The result is supported by the finding of Huang et al. (2004) Hypothesis of perceived risk was rejected. It has a significant negative relationship with attitude. This means that consumers with high-perceived risk would act unfavourable towards counterfeit products. The result is supported by the finding of De Matos et al. (2007) 71

81 Hypothesis of integrity was rejected. It has a significant negative relationship with attitude. This means that consumers with high integrity would act unfavourable towards counterfeit products. The result is supported by the findings of Phau and Teah (2007) and De Matos et al. (2007). Hypothesis of personal gratification was rejected. It has a significant negative relationship with attitude. This means that consumers with high personal gratification would act favourable towards counterfeit products. The result is supported by the finding of De Matos et al. (2007) Lastly, H3 hypothesized that consumers attitude towards counterfeit products has no effects on purchase intention. The hypothesis was rejected. It has a significant positive relationship, meaning that consumer s attitude has effects on purchase intention. If the consumers attitude is favourable towards counterfeit products then they will purchase the counterfeit. If the consumers attitude is unfavourable towards counterfeit products then they will not purchase the counterfeit. This result corresponds to the findings of past research (Phau and Teah, 2009; De Matos et al., 2007; Huang et al., 2004). It is evident that consumers attitude towards counterfeit products play an important role in leading or driving the consumer purchase intention. 2. What is the impact of consumers attitude towards purchase intention? The Sobel test was used to test whether the mediator variable (consumers attitude towards counterfeit products) carries the influence of an independent variable to the dependent variable (purchase intention). The result shows that consumers attitude towards counterfeit products has a significant impact on purchase intention. 72

82 This means that the consumers attitude of whether they are in favour or not in favour of counterfeit products affects the consumer s purpose or objective to purchase counterfeit products. 3. What are the dominant factors influencing consumers attitude towards counterfeit products, which leads to purchase intention? Standard multiple regressions were used to determine the dominant variables that influences consumers attitude towards counterfeit products. It is found that normative susceptibility, price consciousness and novelty seeking, contributed significantly positive influence on consumers attitude. Perceived risk on the other hand, contributed to a significant negative influence on consumers attitude. The result indicates that consumers in Malaysia are very likely to consider other people s opinions and thoughts when buying a particular product. The consumers feel that it is important that others like the products and brands that they buy. They want to make a good impression on others and would often purchase the brand that others expect them to buy. The consumers seems to be equivalently price conscious, meaning that they purchase products based on the price that is offered, normally going after the less expensive products. Price conscious consumer tends to buy items that are on sale or bargains, which usually are cheap. 73

83 The consumers are to an extent novelty seeker, which means they like to keep up with fashion and trends. They like to be the first to try out new products and they get excited in purchasing interesting, unique products. Perceived risk is dominant and the only factor contributing to a significant negative influence on consumers attitude. It is pleasing to know that consumers do think of the risks involved if they were to purchase counterfeit products. There are some consumers who thinks that spending money on counterfeit products is not wise and would even make them feel unhappy or frustrated, and some thinks about the negative effects of what others think if they were to be caught buying counterfeit products. 6.2 Contribution of the study This study is conducted based on past research of Phau and Teah (2009), De Matos et al. (2007) and Huang et al. (2004). Each of the research was done in a different country with different setting such as different behaviour and different culture of consumers. This study contributes in enabling others to understand the attitudes of consumers in Malaysia. The study has verified that the intention to purchase a counterfeit product is very much reliant on the attitude that the consumers have towards counterfeit products. These attitudes were strongly influenced by perceived risk, normative susceptibility and price consciousness and novelty seeking. The result differs from the past research (Phau and Teah, 2009; De Matos et al., 2007; Huang et al, 2004), but it is acceptable due to the nature of the study with its own set of setting. 74

84 The outcome of this study can be used as reference and knowledge in the educational institution. Moreover, the findings can be beneficial to the manufacturers and marketers of branded genuine products in understanding the consumers behaviour or attitude towards counterfeit products. 6.3 Managerial Implication From the result in Chapter 5, it is found that both social factor (normative susceptibility) and personality factor (price consciousness, novelty seeking and perceived risk) have significant impact on consumers purchase intention towards counterfeit products. Manufacturers and marketers of genuine products in Malaysia must keep in mind of these factors and use it to their advantage. Manufacturers and marketers can work to change consumers behaviour through shaping attitudes and beliefs with strategies such as below: Normative susceptibility these consumers care about what other people think of them because they want to make a good impression of themselves. They buy products that they feel others expect them to buy. Since the consumers are concerned about what other people think of them, the marketers should directly address counterfeit issue in advertising programs. Emphasize the importance of buying the real thing and that if they buy the counterfeit version, it means that the consumers do not think highly of themselves. Another strategy is to use celebrity endorsers, as consumers with 75

85 high normative susceptibility like to purchase the same product and brand of someone they like or admire. Price these consumers only want products that are not expensive if not those that are on sale. The manufacturer should try to consider lowering their price through the introduction of brand extensions and special licensed products. Else, perhaps encourage consumers to purchase by introducing a membership card that awards the consumers privileges such as huge discounts after a number of purchases, or points of the consumer were to bring family and friends as customers. Novelty seeking these consumers seeks variety and difference. Manufacturer of genuine branded products should differentiate their products by emphasizing style, design, quality and appearance differences. Create products that would have the consumer eager of owning and that they will not be able to wait for the counterfeiters to produce and sell. Perhaps, it creates limited number of products, thus, the consumer who bought it will feel grand and one of a kind. Perceived risk these consumers seek to reduce uncertainty and unfavourable consequences when making a purchase. 76

86 Marketers should highlight their genuine products is of superior quality, functionality and reliability, and if they are really confident of their products, warranties are issued or if for some reason the customer is not satisfied, have a guarantee that they will serve the customer till they are satisfied. Marketers can capture the consumers who have high-perceived risk of counterfeit products by stressing their after-sale services. After all, the after-sale services are something that would differentiate their genuine products from the counterfeits. It is with hope that in time, the suggestions mentioned would be able to lessen the purchases of counterfeit products among consumers in Malaysia. 6.4 Research Limitation A few limitations have been identified throughout the study: Time limitation and resource constraints have led to limited geographical area being covered in the study. Utilizing the survey results gathered within the Klang Valley and generalizing it across the Malaysian population may not be convincing. To achieve the general objective, studies should be done in other parts of Malaysia. Factors such as product involvement, perceived benefit, price quality inference, brand image and more were not included in the study. As such, its effects and influences on consumers attitude towards counterfeit products are unknown. 77

87 There was no predetermined indication as to what constitute a counterfeit product for this particular survey to the respondents. Different categories of products have its own set of variables for measurement. Counterfeit issue is a sensitive subject. Getting respondents to voluntary participate in answering the questionnaire was a challenge as for some fear that their image reputation or status will be affected. 6.5 Recommendation for future research A number of recommendations that can be considered and done for future research: Sample selection should be distributed more evenly rather than concentrating on one particular area. The result will be more representative and convincing. Other variables should be looked upon, as there is no finite and definite measurement of determining consumers attitude towards counterfeit products. Clear, specific indication of the product categories that can be constituted as counterfeit products should be highlighted, thus taken into judgment and deliberation by the consumers. 6.6 Summary 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 to be dominant in influencing consumers to purchase counterfeit products through the mediation of attitude. From the theoretical perspective, it is an extension of 78

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97 APPENDIX A QUESTIONNAIRE SAMPLE Instruction: Please indicate the degree of your agreement or disagreement with each statement by marking (X) in the box provided below: Moderately Slightly Not sure Slightly Moderately Disagree Disagree Agree Agree Strongly Disagree Strongly Agree Section A Information susceptibility I observe what others are buying and using before buying a product If I have little experience with a product, I ask around I consult other people to help choose the best alternative available from a product class I gather information from friends or family about a product before I buy Section B Normative susceptibility It is important that others like the products and brands I buy If other people see me using a product, I often purchase the brand they expect me to buy I like to know what brands and products make good impressions on others If I want to be like someone, I often try to buy the same brands that they buy Section C Price quality inference The old saying you get what you pay for is generally true The price of a product is a good indicator of its quality You always have to pay a bit more for the best Generally speaking, the higher the price of a product, the higher the quality Section D Value consciousness I am concerned about price and product quality I compare prices for the best value for money I like to be sure that I get my money worth I try to maximize the quality for the money spent Section E Risk averseness I do not like to take risks I like to gamble on things I like to live life on the edge I like to be sure the product is good before buying it I don t like to feel uncertain when I buy something I would rather be safe than sorry Section F Perceived risk

98 The risk that I take when I buy a counterfeit product is high There is high probability that the product doesn t work Spending money with counterfeit products might not be wise Buying counterfeit products make me feel unhappy/frustrated If I buy counterfeit products, it may negatively affect what others think of me Section G Integrity I value honesty I value politeness I value responsibility I value self control Section H Personal gratification A comfortable life is important to me An exciting life is important to me A sense of accomplishment is important to me I value pleasure I value social recognition Section I Novelty seeking I am always one of the firsts to try new products I am excited to purchase some interesting products I own a lot of popular products I keep up with fashion Section J Status consumption I am interested in new products with status I would buy a product just because it has status I would pay more for a product if it had status The status of a product is irrelevant to me A product is more valuable to me if it has high status appeal Section K Attitudes towards counterfeit products Part I Social consequences Buying counterfeit products infringes intellectual property Buying counterfeit products will hurt the luxury goods industry Buying counterfeit products damages rights of legitimate Manufacturer Purchasing counterfeit products is illegal 89

99 Section K Attitudes towards counterfeit products Part I Perceptions of counterfeit products Counterfeit products are as reliable as the genuine products Counterfeit products have similar quality to the genuine products Counterfeit products provided similar functions to the genuine products Considering price, I prefer counterfeit products Section L Purchase intentions I would think about a counterfeit products as a choice when buying something I will buy counterfeit products I will consider purchasing counterfeit products for a friend I would recommend counterfeit products to friends and family I will buy counterfeit products from peddlers I would say favorable things about counterfeit products Section M Respondent profile Instruction: Please tick ( ) for the answer and fill in the blanks when necessary 1. Gender Male Female 2. Age Below 21 years years years years years Above 60 years 3. Citizenship Malaysian Others (please specify) 4. Ethnic group Malay Indian Chinese Others (please specify) 5. Marital status Single Married Divorced / Widow 6. Highest level of education SPM Bachelor Degree Diploma Post Graduate Degree 7. Occupation Professional Executive Self-employed Top Management Clerical / Admin Not working Managers Student Retiree 8. Monthly income 90

100 Below RM2,000 RM2,000 - RM4,000 RM4,001 RM6,000 RM6,001 - RM8,000 RM8,001 - RM10,000 RM10,001 and above 9. What is your favorite expensive brand? 10. What is your favorite shopping mall? 11. Why do you purchase branded products? Please rank 1 to 7 in the column below, with number 1 as the most important reason and 7 the least important reason in purchasing branded products Quality Prestige Image Social influence Design Style Others (please specify) 12. How much price difference between original and counterfeit product is good for you? (Assuming the price is reflecting the quality of the counterfeit products) Below RM 100 RM RM 300 RM RM 500 RM 501 and above 13. If you have ever bought a counterfeit product, what are they and what brand? (e.g. Watch, Tag Heur ) ~ Thank you for your time and cooperation ~ 91

101 APPENDIX B HISTOGRAM Informative Susceptibility Normative Susceptibility 92

102 Price Consciousness Value Consciousness 93

103 Perceived Risk Integrity 94

104 Personal Gratification Novelty Seeking 95

105 Status Consumption Attitude towards counterfeit product 96

106 Purchase Intention 97