Who Cares? Counterfeits and Consumer Behavior – Kogod Now
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Kogod Now / Faculty Research  / Who Cares? Counterfeits and Consumer Behavior
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Who Cares? Counterfeits and Consumer Behavior

Picture two handbags. Both are made of the same materials by the same workers in the same factory, but they have one crucial difference: one is official merchandise while the other was produced off-the-clock during an unsanctioned “ghost shift.”

Are both handbags authentic? Is the ghost-shift bag counterfeit? And what does it matter to the original brand if it is?

This is one of the central questions behind Assistant Professor Nelson Amaral’s research in the past few years.

The answer to the question of whether or not the ghost shift bag is counterfeit depends on how “fake” is defined, a harder task than one might think. Amaral and his research partner Steven Chan, an assistant professor at Sy Syms School of Business at Yeshiva University, have been trying to define the term since 2009.

Amaral and Chan’s research started with a friendly debate in a hotel.

“It seemed like such a simple question, a silly argument really, but we just could not resolve it,” Amaral said. “We kept coming back to it and knew that we had an authenticity study on our hands.”

The pair realized the root of their difference of opinion was in their cultural backgrounds. Amaral was raised with North American and Western Euro- pean roots; Chan is Chinese-American.

“I was seeing real versus fake in very black- and-white terms,” Amaral said. “To me there was a very concrete distinction, and Steven was looking at context, at all the shades of gray in between my concrete definitions.”

These different views are a microcosm of dialectical thinking—the measure of how comfortable an individual is with situational ambiguity and change—and its prevalence in Eastern culture compared to the West.

“We were trying to answer ‘What defines authenticity?,’ ” Chan said. “This is a very philosophical and difficult thing to study.”

“Applying these cultural differences to views of counterfeits became a tangible way to examine this intangible definition and philosophical view.”

Amaral and Chan set out to see what impact dialectical thinking had on consumer attitudes towards counterfeits. For the study, funded by a grant from the Institute on Asian Consumer Insight, the pair surveyed 402 students of various cultural backgrounds at multiple US universities.

The surveys were designed to measure each student’s comfort level with ambiguity and what role context played the student’s purchasing decisions. The researchers presented participants with counterfeit goods, labeled as both counterfeit and ghost shift, and asked how likely they were to purchase each item.

The results confirmed what Amaral and Chan had already seen play out between themselves: consumers did see a difference between blatant forgeries and ghost-shift products, and it did impact their behavior. Participants from Western back- grounds were more likely to buy a ghost-shift item than a true counterfeit, but they were uncomfortable with both. Participants from Eastern backgrounds saw little difference between the two, and they were equally comfortable with both purchases.

“It’s not simply black or white, real or fake,” the researchers wrote. “Counterfeits have many layers, and those layers interact with a tolerance for change that is systematically different across cultures.”
Another of those layers, Amaral found, covers how social classes view counterfeit products and what impact the class has on the status of a brand.

“The manufacturers of luxury brands have always been concerned about losing their most valuable asset: prestige,” Amaral said. “Lots of research has been done to try to determine how counterfeits undermine that prestige, and yet no one has been able to find clear evidence that they do.”

It’s this lack of evidence that guided another of Amaral’s research studies. He and Barbara Loken, professor of marketing at the Carlson School of Management at the University of Minnesota, examined how different social groups view counterfeits.

They found that who was carrying a counterfeit handbag revealed why previous research failed to find effects from counterfeit use in the genuine brand.

“It’s all about the perceived in-groups and out-groups,” Amaral explained. “When someone on your level or someone you aspire to be carries a fake, the signal is sent that this brand must mean something to that social group; therefore, it should mean something to you.”

The pair conducted multiple studies with multiple participant groups, and each targeted the behavior patterns linked to in- and out-groups.

Amaral and Loken showed the same photo of a young woman with a handbag to four groups of participants, but each group read a different caption. Two groups were told the handbag was authentic while the remaining two groups were told the bag was a fake. Within those groups, half were told the woman was a waitress and the other half that she was a recent medical school graduate.

Their responses indicated that the social class of the person in the photo only impacted the overall brand perception when the handbag was declared counterfeit; authentic products were unaffected by the relationship between the handbag’s user and the study participant.

Participants indicated they assumed in-group or aspiring-group members would have an authentic bag, while out-group members were unlikely to have purchased the authentic themselves, making the point moot.

“What we’ve found, in both studies, is that it’s the observer of a counterfeit that impacts a luxury brand’s bottom line, not the counterfeit itself,” Amaral said.

While Amaral and his research partners are closer to understanding why cultural or social background impacts the view and definition of “counterfeit,” that doesn’t mean their own views have changed.

“Steven and I still disagree about what it means for a product to be counterfeit, even after years of research,” Amaral said. “We each still believe our own point of view, but now we know why.” KN mark

“Not All Fakes are Created Equal: Cultural Differences in Considering Counterfeits,” Nelson Amaral and Steven Chan, and “Effects of Counterfeit Use by In/Out-Group Members,” Nelson Amaral and Barbara Loken, are currently under review.
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