UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyễn Hạo Nhiên WHAT EFFECT CONSUMERS’ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? THE MODERATING ROLE OF PRODUCT INVOLVEMENT AND PRODUCT KNOWLEDGE: EVIDENCE FROM VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2015 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyễn Hạo Nhiên WHAT EFFECT CONSUMERS’ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? THE MODERATING ROLE OF PRODUCT INVOLVEMENT AND PRODUCT KNOWLEDGE: EVIDENCE FROM VIETNAM ID: 22130049 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. Ngô Viết Liêm Ho Chi Minh City – Year 2015 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? i ACKNOWLEDGEMENTS Firstly, I would like to specially thank my supervisor, Dr. Ngo Viet Liem, for his guidance. Without him, this thesis would not have been finished.
Secondly, I would also like to thank my thesis committee, Dr. Nguyen Dinh Tho, Dr. Nguyen Thi Mai Trang, Dr. Nguyen Thi Nguyet Que, and Dr.
Tran Ha Minh Quan, for their insightful comments. Their advices helped me improve this thesis significantly. Thirdly, I would like to acknowledge all the professors and staffs of International School of Business, University of Economics Ho Chi Minh City for providing me the best opportunities to study and develop deep understanding about research and business. Finally, I would like to express my gratitude to my dear family and friends.
This thesis would have never come true without their encouragements and supports. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? ii TABLE OF CONTENTS ABSTRACT. The emerging luxury market. Existing studies on counterfeiting.
Scope of the study. 7 CHAPTER 2: LITERATURE REVIEW. Counterfeit purchase intention. Value-expressive and social-adjustive function.
14 CHAPTER 3: RESEARCH METHODOLOGY. 24 CHAPTER 4: DATA ANALYSIS. 26 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? iii 4. Data collection result and demographics.
Exploratory factor analysis. Confirmatory factor analysis. Composite reliability and average variance extracted. Divergent reliability and Pearson correlation.
Limitations and future research. 68 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? iv LIST OF TABLES Table 2.1: Summary of definitions .2: Summary of hypotheses .2: Summary of research criteria .1: In-depth interview results.4: Item-total statistics for product knowledge scale .5: Item-total statistics for counterfeit purchase intention scale .6: Cronbach‘s alphas after item reduction .7: KMO and Bartlett‘s test .8: Promax rotation with Kaiser Normalization, k=4 .9: Modification indices covariances .10: Composite score and average variance extracted .11: Square root of average variance extracted and correlations .13: Summary of research criteria results .14: Hierarchical multiple regression – Model A .15: Hierarchical multiple regression – Model B .16: Hierarchical multiple regression – Model C .17: Hypothesis test results. 45 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? v LIST OF FIGURES Figure 2.1: Modified confirmatory factor analysis model .2: Moderation effect of product involvement on the relationship between value- expressive function and counterfeit purchase intention .3: Moderation effect of product knowledge on the relationship between social- adjustive function and counterfeit purchase intention. 43 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? 1 ABSTRACT In recent years, luxury market is growing fast worldwide—particularly in Asia.
However, along with the growth is the emerging threat from counterfeits. Despite many works on counterfeiting, more works are needed to investigate the impacts of psychological aspects on counterfeit purchasing intention. Furthermore, the interaction effects of the psychological factors and two important constructs in consumer behavioral studies— product involvement and product knowledge—were also examined to further understand the problem. In order to achieve the research objectives, five respondents took part in in-depth interviews to check the wordings of a 25-item questionnaire.
The revised questionnaire was used in the main survey. 248 respondents participated in the survey, and 201 usable answers were retained. Tests were conducted to examine the validity and reliability of the measurement scales, which resulted in the elimination of an item. The hypotheses were then tested with hierarchical multiple regression method.
The results from the tests indicated that social-adjustive function significantly affected counterfeit purchase intention (p <. On the contrary, the effect of value- expressive function was found to be positive (β =. Regarding to the moderation effects, the interaction between product involvement and value-expressive function negatively and significantly affected counterfeit purchase intention (p = .029), while the impacts of the interaction between product involvement and social-adjustive function turned out to be insignificant (p =. The results also claimed that social-adjustive function was found to be negatively moderated by product knowledge (p =.
It can be inferred from the findings that luxury brands focusing on communicating the social-adjustive functions are more likely to face the risk of counterfeiting than those focusing on the value-expressive functions. In order to reduce customers‘ intention to buy counterfeits, two marketing combinations—value-expressive function focused combined with campaigns strengthening product involvement, and social-adjustive focused combined LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? 2 with campaigns strengthening product knowledge—are advised to be taken into consideration seriously, while other combinations have not been proven to be effective yet and require further investigation. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? 3 Chapter 1 INTRODUCTION This chapter tends to introduce the situation and characteristics of luxury brands, as well as their war against counterfeits. Chapter 1 also summarizes previous studies on the subject, as well as the gaps should be filled.
Research objectives, research questions and research scope are stated. Research structure is also described. Research background This section investigates the growing market of luxury brands and products worldwide, especially in Asian countries. It also gives an overview of battle against counterfeiting of luxury brands.
The emerging luxury market In recent years, the market for luxury products is expanding faster and faster. Though there are still disagreements in estimating luxury market size due to different methods, researchers all agree on the fast increase of the market (Heine & Phan, 2011; Ho, Moon, Kim, & Yoon, 2012; Truong, McColl, & Kitchen, 2008). According to Truong et al (2008), this fast increase of the luxury market is due to two main reasons: Firstly, the economy has been better recently with improved business environment, resulting in lower unemployment rates (which lead to higher income and consumption) and lower production costs (which understandably lead to production expansion). Secondly, the market of luxury products now does not contain only wealthy consumers, but also lower-class ones.
Truong et al (2008) summarize that the low-class consumers nowadays tend to purchase luxury products to imitate the high-class, to gain good feelings for the purpose of self-rewarding, or simply due to the high-quality. This results in a new kind of luxury brand—which Truong et al (2008) call the masstige—a portmanteau of mass market and prestige market, indicating that the luxury market is now open to the mass. Moreover, Cavender and Kincade (2013) also state the role of lower entry barriers. Thanks to globalization, the level of managing and conducting business raises consequently, which enables potential players to join the luxury- LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? 4 brand game—a game used to be available to a limit number of companies who possess the best technologies and resources to produce luxury products.
The emerging market of luxury products does not solely happen in Western countries, but also in the East, for example China (Langlois & Barberio, 2013), India (Gupta, 2009), Korea (Ho et al, 2012) and many other Asian countries. Therefore, the need of conducting researches on luxury products, especially in Asian countries, is never ceased to grow. However, rapid growth has its own flip side. It creates new serious challenges for the luxury brands.
Hennigs, Wiedmann, Behrens, and Klarmann (2013) raise the question about the balance between the brand expansion and its rarity, since as the brand grows, it becomes more common to the mass, reducing its ―luxury‖ state. Furthermore, luxury brand managers do not only have to balance their own quality and quantity, but also have to struggle with a special competitor: the counterfeits. Hennigs et al (2013) point out the threat of counterfeits to luxury brands, as the costs to produce counterfeits are getting lower and lower recently. Counterfeits threaten the brands‘ revenue, profit, and especially flood the market with products, lowering brands‘ rarity and make them less ―luxury.
Counterfeiting Counterfeiting has become a critical issue in branding, especially studies of luxury brands as mentioned in the previous section. According to Hardy (2014), the value of counterfeit market will increase to 1.7 million USD in 2015, ranging from casual goods to luxury brands. Despite many efforts to enforce intellectual laws as well as anti- counterfeiting activities, counterfeiting is still an international problem in various regions— China, Sub-Saharan African, Southeast Asian, and Western Balkans (Meiring, 2014; Mijatovic, Marenovic, Kliska, & Kompari, 2014; Phau & Teah, 2009; Vachanavuttivong et al, 2014). In luxury categories, brands have to face bigger threats from counterfeits, as they are easily produced with low costs (Phau & Teah, 2009).
Staake, Thiesse and Fleisch (2009) claim that companies in many categories experience sharp decreases in revenue, which in LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? 5 turn puts great pressure on the company financial situation and sets high entry barriers to the industry. Furthermore, consumers of highly-counterfeited brands consider the brands less attractive (Staake et al, 2009). To make it worse, many luxury brand consumers intentionally buy counterfeits as an inexpensive alternative to real products, despite the risks they may face, as well as the efforts brands have made to distinguish their products from counterfeits (Perez, Castaño, & Quintanilla, 2010). Therefore, it is essential to investigate counterfeit consumers‘ motivations, in order to minimize the threats of luxury brand counterfeits.
Existing studies on counterfeiting According to the review of Staake et al (2009), many researches have tried to figure out the factors affecting consumers‘ intention to buy counterfeits in many aspects— especially supply-side. However, little has been done to investigate demand-side reasons, as many researchers expect counterfeit purchasing activities to be the results of untruthful sellers (Penz & Stöttinger, 2005). Nonetheless, as stated above, in many cases, consumers knowingly buy counterfeits (Perez et al, 2010), hence demand-side aspects must be investigated more carefully. Among the works examining demand-side aspects of counterfeit purchasing, little has been done focusing on the psychological aspects of intentional counterfeit purchasing— particularly value-expressive and social-adjustive aspects of the activities (also called self- expressing and self-presenting)—the most important values of luxury brands (Nia & Zaichkowsky, 2000).
Wilcox, Kim and Sen (2009) have conducted research on the value- expressive and social-adjustive function, however, their research does not focus on investigating the significance of the impacts of the two functions on counterfeit purchase intention. Furthermore, although works have been done on the psychological aspect of counterfeit purchasing, little examines the moderating effects of many important factors— specifically product involvement and product knowledge, two widely recognized variables in predicting consumers‘ behaviors (Bian & Moutinho, 2011). Bian and Moutinho (2011) LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com WHAT EFFECT CONSUMERS‘ INTENTION TO BUY COUNTERFEIT LUXURY BRANDS? 6 even state the importance of product involvement as follow: ―product involvement is a central framework, vital to understanding consumer decision-making behavior and associated communications‖ (p. Hence, it is worth studying what are the effects of these two important concepts in consumer behavior study in our model of counterfeit purchase intention.