Chapter 1 Introduction As the development of technology/ counterfeiting has become the one of fastest- growing industry in the world/ The upsurge of counterfeiting does not only violate the intellectual property rights/ but also can create much cost to the society/ The Organization for Economic Co-operation and Development (OECD) publishes a report in 2008/ stating that counterfeited and pirated goods moving through international trade alone equals $200 billion annually/ Among the countries/ China has the most severe problems in producing counterfeits/ It is estimated that as much as 20% of all products sold domestically are counterfeit (Alcock/ et al 2003)/ A wide range of Chinese industries have been affected by counterfeiting/ including computer software/ music movies/ books/ fashion products etc/There are a number of reasons for the increasing counterfeit goods/ Prior researchers mainly blame on the manufactures who produce counterfeit products or retailers who sell counterfeits (e/g/ Olsen and Granzin 1992/ 1993/ Harvey and Ronkainen/1985)/ Recent studies show that although chasing abnormal profits encourages the increase of counterfeiting/ the ever-increasing demand from consumers for counterfeit products is the trigger of producing counterfeits (e/g/ Gentry et al// 2001/ Chan et al//1998)/ This leads to many researchers attentions on studying consumers behaviors and their decision-making on purchasing counterfeits/ The existing researches have demonstrated that the influence of consumers judgments on the attitudes/ social norms and purchase intention towards counterfeits may vary across different product categories/ for example/ the study of Ang e al//(2001) on CDs / Tan(2002) on software /and Maldonado and Hume (2005) on fashion industry/ Therefore/ my study this time contributes much work on examining factors which influence consumers purchase intention on counterfeit mobile phones (CMPs) by testing Chinese consumer market/ CMPs refer to the mobile phones that imitate name-brand mobile phones by illegally copying their features/ styles/ functions etc/ According to the report from a Chinese consulting company/ CMPs have taken up around 12% market shares from total mobile phones sold annually/ ZTE/ one of the biggest Chinese mobile phone manufacturers states that the imitated ZTE mobile phones have eaten up its 2% market share in 2009/ The situation of CMPs in China can not totally blame on the CMPs manufacturers/ consumers huge demands on CMPs also worsen the situation/ This paper will address this issue/In the traditional marketing research/ demographics profiles have been used to study the influence on consumers behaviors that users of products or brands/ Preview papers have indicated that demographics influence consumers purchase intention on different counterfeit goods (e/g/ Tan/ 2002/Ang et al// 2001/ Tom et al// 1998/ Wee et al// 1995)/Therefore / this paper will include demographics to the study of consumers purchase intention on CMPs/ The first research question will be/How demographics influences Chinese consumers purchase intention on CMPs?In addition/ some studies also show that psychographics is also very good factor that study consumers purchase behaviors/ Psychographics consist of a wide range of attributes/ including interests/ attitudes/ values/ personal traits etc/ Those attributes can better present individual difference in their lifestyle and purchase behaviors (Wells/1975)/ Thus/ this paper will consider psychographics as another factor to the study of consumers purchase intention on CMPs/ The second research question will be/How psychographics influences Chinese consumers purchase intention on CMPs?To face with the upsurge of CMPs/ companies who produce genuine mobile phones always are seen as the biggest victim/ It seems that it is rather difficult to change consumers purchase proneness on CMPs/ However/ quality relationship between consumers and organizations have been tested in many studies as a moderator to influence the relationship between consumers attitudes/ values/ and their behavioral actions (e/g/ Morgan and Hunt/ 1994/ Crosby/ Evans and Cowles/ 1990)/ Therefore/ this study also will test/If quality relationship has a moderating effect on the relationship between consumers attitudes/ values/ belief and their purchase intention on CMPs/After those studies/ it is expected to have more valuable insights of what influence consumers purchase intention on CMPs/ Based on the findings/ the applicable suggestions on how to control CMPs can be given to public media/ government and mobile phone companies/The rest of paper is organized as/ a/ a literature review illustrating what the research is found so far on the consumers purchase intention on counterfeits/ Additionally/ hypotheses will be developed/ b/ The detailed information on how to carry on the study/ collect sample and analyze the data will be showed/ c/ The results of data analysis will be followed/ d/ The discussion and conclusion will further elaborate the results/ e/ Based on the findings/ appropriate implications will be given for the theoretical and practical uses/ f/ In the end/ the limitations of this study will give the direction to the future research/Chapter 2 Literature Review and Hypothesis Construction In the section/ I firstly introduce two dimensions that may have influence on consumers purchase intention on CMPs/ Followed by an introduction of the quality relationship as moderator that may influence consumers attitudes/ values towards CMPs purchase intention/ In the end/ the conceptual model is presented to illustrate the framework of hypotheses/ 2/1 Two Dimensions According to the definition/ counterfeits are those products bearing a trademark that is identical to/ or indistinguishable from/ a trademark registered to another party/ thus infringing the rights of the holder of the trademark (Bian and Veloutsou/ 2007/ Chaudhry and Walsh/ 1996/ Grossman and Shapiro/ 1988a/b)/Further studies classify counterfeiting into deceptive and non-deceptive counterfeiting (Chakraborty et al/ 1996/ Grossman and Shapiro 1988/)/ Former describes situations where consumers cannot distinguish between fake and genuine products/ They believe they have purchased a genuine product/ Whereas/ non-deceptive counterfeiting refers to the situation where consumers totally realize they are buying the counterfeit goods based on price/ quality and buying location/ This paper mainly focuses on the study of non-deceptive counterfeiting/ it is that consumers knowingly purchase on CPMs/Prior researches dedicate much work on the investigation of deceptive counterfeiting/ Deceptive counterfeiting is derived from supply side/ Due to the lack of commitment/ some members in the supply chain steal intellectual property or get access to the core technology from the affected company in the illicit way and sell the imitation products to maximize their profits (Olsen and Granzin 1992/ 1993/ Harvey and Ronkainen/ 1985) /In the recent work/ demand side of counterfeiting (non-deceptive) drive much attention/ An increasing number of researchers argue that consumer demand for counterfeits is the most crucial causes of dramatic growth of the counterfeiting industry (e/g/Gentry/ Putrevu/ Shultz and Commuri/ 2001/ Chan et al//1998)/ provided that demand is always the key drive of a market/ A lot of researchers have contributed their work to the investigation on the relationship between consumers conceptions or behaviors and their decision-making on purchasing counterfeits (e/g/ Penz and Stttinger/ 2003/ Wee/ Tan and Cheok/ 1995/ Bloch/ Bush and Campbell/ 1993)/With this paper/ it attempts to look into two major dimensions that may influence their purchase intention on CMPs/ demographics and psychographics/2/1/1 Demographics Preview studies have shown that demographic differences among consumers have the impact on their attitude towards buying counterfeiting/ For example/ people of different gender/ ages/ income levels and educational levels tend to differentiate ontheir willingness to buy pirated CDs (Tan/ 2002/Ang et al// 2001/ Tom et al// 1998/ Wee et al// 1995)/Tan(2002) discovers that intentional to buy pirated software is affected by gender and age/ Mostly/ males have much more positive view on piracy than females/ It is consistent with the finding of Ang et al(2001) that males have a higher intention to buy pirated CDs compared to females/ Considering the buying preference/ men are more likely to buy pirated CDs (Kwong et al// 2003/Ang et al// 2001/)/ whereas women are more interested in buying counterfeit clothing(Cheung and Prendergast/2006)/ It leads to the following hypothesis/H1a/ Males have stronger intention to buy CMPs than femalesIn terms of other demographics factors/ studies show that counterfeits buyers tend to come from the younger group (Cheung and Prendergast/ 2006/ Kwong et al// 2003/ Phau et al// 2001/ Tom et al// 1998/ Wee et al// 1995)/ to earn less income and to receive lower education level (Tom et al/ 1998)/ Thus the three following hypotheses are proposed as/H1b/ Younger people have stronger intention to buy CMPs than the old ones/H1c/ The consumers who earn high income have weaker intention to buy CMPs than the consumers with low income/H1d/ The consumers with high education level have weaker intention to buy CMPs than the consumers with low with low education level/2/1/2 Psychographics Besides the investigation on the demographic variables that may influence consumers purchase intention on CMPs/ this paper also studies on consumers purchase behaviors towards CMPs from psychographics perspectives/ as psychographics have been proven to be more efficient than simple demographics in predicating numerous types of behavior and purchasing patterns (e/g/ Burnett and Richard/ 1979/ Darden/ 1974/ Carman/ 1970/ Donnelly/ 1970)/ In this study/ attitudes towards counterfeit mobile phones/ value consciousness and face consciousness are three relevant psychographic variables that may have the effect on consumers purchase intention on CMPs/2/1/2/1 Attitude towards counterfeit mobile phonesIt has been well established that attitude influences behavioral intention (Fishein/ 1970)/ Thus if my study aims at why consumers buy CMPs/ it shall well focus on the association between consumers attitude and their purchasing intention in CMPs/ Based on the a set of attitudinal statements on counterfeiting (Tom et al// 1998) and related research on consumers attitude towards software piracy (Ang et al// 2001/ Kwong et al// 2003)/ my study constructs four attitudinal scales consisting of social cost of counterfeiting/ social benefit of reproduction/ anti-big business mentality/ and ethical belief that may influence consumers purchase intention in the CMPs/Social cost of counterfeiting/ A plenty of studies find out that counterfeits have caused serious economic losses in many ways (e/g/ Deng et al//1996/ Nill and Shultz/ 1996/Tom et al// 1998/ Wang/ Zhang/ Zang Ouyang/ 2005)/ For example/ the legal copyright holders are seriously affected by counterfeiting/ it results in losing sales and decreasing company overall values (Simons/ 1999/ Tom et al// 1998)/ Counterfeiting also discourages firms from investing in innovation and brand building (Nill and Shultz/ 1996)/ Hence if consumers who perceive a higher social cost from counterfeits/ they are less likely to buy such products/ Kwong et al// (2003) finds out consumers who consider buying pirated CDs as costly to the society hold an unfavorable attitude towards it/ Thus/ the following hypothesis is proposed/H2aw/ The more consumers who perceive social costs of CMPs/ the less likely they buy CMPs Social benefits of reproduction/ Counterfeiting on the other side also generate benefits to the society (Feinberg & Rousslang/1990)/ Those social benefits are referred to an increase of knowledge sharing and job opportunity for the poor in developing countries (Kwong et al// 2003)/ Furthermore/ Asian culture (especially Chinese culture) has the traditional view that individual creators are obligated to share their work to the society/ therefore people influenced by that culture do not see that counterfeiting is against propriety right/ but see it as the way of admiring creators work (Swinyard et al// 1990)/ Therefore/ the following hypothesis is carried out/H2ax/ The more consumers perceive CMPs as social benefits of reproduction/ the more willing they are to purchase CMPs/Anti-big business mentality/ Prior researches have observed that some consumers have negative views on the big firms who abuse of market power and engage in “unfair practices” (Kahneman et al// 1986/ Piron and Fernandez/ 1995)/ For example/ if consumers notice the price increases are not corresponding to the cost increases/ they would see it as unfair/ thus it is very likely that those consumers will stop admiring these firms and instead look for alternatives (Piron and Fernandez/1995)/ Purchase counterfeits is the alternative way that consumers are opposed to firms unfair practices/ Shultz (1996) refers this behavior as “Robin Hood syndrome”/ it means that the eagerness of some consumers to act against the interests of intellectual property owners by supporting counterfeiting activities/ Consumers believe that their negative attitudes towards big firms can eventually punish those firms by decreasing their financial performance (Tan/2002)/ This leads to the following hypothesis/H2ay/ The more consumers have anti-business attitude/ the more willing they are to purchase CMPsEthical belief/ Ferrel & Fraedrich(1991) includes the view from previous researches and formally defines business ethics as principles and standards that guide behavior in the world of business/ Sellers and buyers are both involved into the business ethicalissues/ Former researches primarily study on the ethical behaviors from sellers point of view and overlook the buyers side/ Murphy and Laczniak(1981) indicate that the studies of buyers ethical behaviors only account for 5% of total business ethical studies/ Yet/ as the consumers are becoming the leading roles in the business practices/ the studies on buyers ethical behaviors have drawn much attention in the past twenty years/ Muncy & Vitell(1992) defines consumers ethics as the moral principles and standards that guide behavior of individuals or groups as they obtain/ use/ and dispose of goods and services/ Rallapalli et al//(1994) further points out that consumers ethical belief and behaviors have the significant influence on their purchase decision/ Since buying counterfeits is questionable behaviors/ the decision to buy partly depends on the ethical framework of the customer who judges the degree of rightness of this behavior (Dodge et al// 1996/ Fullerton et al// 1996)/ Many consumers do not consider counterfeits purchase as unethical behaviors (Ang et al// 2001)/ This suggests that/H2az/ The more consumers consider CMPs purchase to be unethical behavior/ the less likely they are to buy it/2/1/2/2 Value consciousness By its definition/ it is a concern for paying low prices/ subject to some quality constraint (Lichtenstein et al// 1990)/ Consumers value consciousness depends onhow the perceived value of the product is achieved/ According to previous literature/ perceived value is derived from a comparison between the expected benefits of a product and the sacrifices that a consumer would have to make in order to assure those benefits (Monroe and Krishnan/ 1985)/ In this sense/ consumers tend to believe that high (low) price means high (low) quality( Tellis and Gaeth/ 1990)/They buy counterfeit goods because/ it gives them tremendous cost savings benefit as well as famous brand image/ Despite their sacrifice in quality/ counterfeit goods satisfy their needs for which they cannot afford the high-quality genuine products/Empirical research has shown that value consciousness has a positive relationship between value consciousness and attitude toward counterfeit music CDs (Ang et al/ 2001)/ The same result is observed by Ian and Min(2009) / and Hyejeong and Elena(2010) in the fashion industry/ It is further confirmed that with the development of counterfeiting technology (e/g/ Kara and al/2009/ Brian/ Chong and Stephen/ 2004)/ consumers will be more propend to buy counterfeit goods carrying relatively good quality and much lower price/ Hence/ consumers value consciousness will lead to much higher level of counterfeits purchase intention/ It leads the hypothesis to be/H2b/ The more value-conscious consumers have more favorable attitudes towards CMPs 2/1/2/3 Face consciousness Face refers to sense of favorable social self-image that a person wants others to have in a relations and network contest (Ting-Toomey and Kurogi/ 1998)/ As an imperative part of social context/ people not only want to maintain and enhance their “face” image so that they can obtain prestige/ recognition from others/ The same time/ they also seek to defend and avoid losing face/ Therefore/ face consciousness is defined as the desire to enhance/ to maintain and to avoid losing faces in relation to significant others in social activities (Bao/ Zhou/ and Su/ 2003)/ However the way people shape the meaning of face may differ from one culture to another/ Prior researches have observed that Eastern countries highly influenced by Confucianism are more concerned with others perceptions of them and maintenance of their own self-image/ thus more focus on their “face-building” than Western countries (Ho/ Fu/ and Ng/ 2004/ Abe/ Bagozzi/ and Sadarangani/ 1996/ Ho/ 1977) /Wong and Ahuvia(1998) also stresses that greater concern for face leads Southeast Asian consumers to place more emphasis on publicly visible possessions compared to Western consumers/ Thus the consumers in the Asian countries with the high face consciousness like t
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