Consumer Behavior and Brand Imitation in China - Literature review Example

Introduction

Companies are faced with the challenge of meeting the needs of their consumers in respect of their preferences. It is not easy for these companies to automatically understand the consumer preferences and thus design products and services that that will perfectly appeal to them. It takes a very long process of research and study of how customers behave while selecting products and services in order to come up with the right product and services mix. This is done through consumer behavior, which is the study of consumers as individuals, groups or organizations, focusing on the actual processes they adopt in selecting, securing, using, and disposing of the products and services in satisfying their needs and the impact of such processes on the consumers as well as the contemporary society. Consumer behavior involves understanding whether, why, when, where, how, how much, how often, and for how long consumers will buy, use, or dispose of an offering (Hoyer et al. 2012, p. 5).

Consumers don’t just buy but rather go through a systematic psychological process that revolves around need recognition, how to meet these needs, deciding on whether or not to buy, which brand to buy, where to buy and so on and so forth. Consumer behavior seeks to help understand all these psychological processes so that companies can design the best products and services, not from their point of view but the consumer’s point of view regarding their perceptions. On that note, this paper will present analyses on how brand imitation has impacted consumer behavior in China.

There are four major factors that influence consumer behavior. These include cultural factors, social factors, personal factors and psychological factors. A basic model of consumer behavior suggested by Kotler identifies Cultural, social, personal and psychological factors as the four types of influences shaping consumer behavior, cultural influence being the “broadest and biggest” (Erdener & Manrai 2012, p. 13). Cultural factors relate to the cultural environment in which the consumer belongs. To understand the needs and behavior of consumers, an insight into their cultural background will provide relevant information pertaining to consumer behavior. Culture plays the important role in shaping a person’s values, preferences and other common behavior related to their culture.

An understanding of sub- cultures such as age groups, ethnic groups, religion, gender and nationalities will help organizations to create market segments so as to design products and services as well the communication strategy to the values and needs of the specific segments. Social classes in terms of lower class, middle class, and upper class also from a specific cultural dimension that is relevant to consumer behavior (Kardes et al. 2014, p. 7). With respect to the different social classes, people tend to have different desires and consumption patterns typical of their social classes. Cultural trends will also influence consumer behavior as people widely follow a trend due to conformity and social pressures. A good example of a cultural trend is represented by Facebook which has become a must have especially for people from the younger generation.

Social factors influence consumer behavior in terms of the reference group, family, and social roles as well as status. The reference group refers to the social group to which an individual belongs and is usually related to their place of residence, social origin, workplace, among others. Reference groups that directly influence consumer’s behavior and attitude are called membership groups, while primary groups represent family, friends, co-workers, etc. Secondary groups are people with a more formal interaction. Peer pressure also influences attitudes and behaviors (Sokolowski 2011, p. 4). An organization needs to understand features such as the mindset, values and the lifestyle of the groups in order to target the market segments successfully. The family plays a very important role in influencing an individual’s behavior as the environment within which a person’s personality is shaped and where important values are acquired.

The social roles and status are determined by the position an individual holds in various settings such as the family, work, and other social groups. This influences consumer behavior; as such positions give a person the role of a decision maker and would thus influence purchasing decisions (Sokolowski 2011, p. 4). Personal factors also influence consumer behavior as each individual consumer has different personal characteristics when it comes to purchasing decisions. Such factors include age, lifestyle, purchasing power, personality as well as self-concept.

Psychological influences partly determine people’s general behavior, thus, influencing their behavior as consumers (Pride & Ferrell 2010, p. 216). Psychological factors influence consumer behavior through motivation, perception, learning and beliefs, and attitudes. Motivation is directly related to the consumer’s need and is what provides the drive to make a purchasing decision. When a need becomes pressing enough, the consumer is forced to satisfy it through purchasing. Through perception, a person selects, organizes and interprets the available information to facilitate decision making. Perception is influenced by past experiences, personality, beliefs, etc. Learning happens through actions. A customer will learn through various past experiences that will change the current behavior as a result of learning from mistakes as well as information that has been acquired. Beliefs and attitudes are acquired through past experiences, family influences as well as external influences. These beliefs will influence consumer behavior.

Brand imitation

Brand imitation is used by companies to influence consumer behavior by borrowing substantially on special features from established brands. Such features could include the name, color, shape, etc. The attributes may not be identical but similar in substance to a popularly known product or service. The intention is to capture the consumer’s attention by mistaking it to the established brand so that they can buy it (Maskus 2007, p. 170). Brand imitation is a marketing strategy that some firms may use to create a quick awareness on their products and services. How consumers view, this marketing strategy is important in order to influence their decision as whether to buy a product whose brand is an imitation of another.

Consumers may view it as an unethical practice, and such a negative view will negatively influence their purchase decision. Brands that market their brands globally quite often find themselves to be victims of brand imitation which result in significant loss of revenue as a result of cheaper, similar looking products which are of inferior quality. Obstructions to imitation are an essential determinant of the rate of imitation. They are factors that make it difficult for a competitor to copy a company’s distinctive competencies; the greater the barriers to imitation, the more sustainable are the company’s competitive advantage (Hill & Jones 2014, p. 104).

Brand Imitation in China

Brand imitation and pilfering proceeded all through China's history, bringing about shoppers' increased affectability to the nearness and wisdom of counterfeit brands, as has been noted for China’s semi-colonial period (Ttian & Dong 2010, p. 38-40). China is one of the countries in which brand imitation is so notorious. Clever proprietors of imitated products and service settings are increasingly targeting Chinese consumers with established brands’ experiences using products and services that are extremely similar to the original products with the aim of positively capitalizing on consumer behavior. The reason is that the country has a high manufacturing capacity resulting from the fact that it is often commissioned by companies from different countries. The country is popular for its cheap imitation brands which more or less looks like the original.

This results into fake products and service establishments that not only threatens the country’s future but nurtures a culture that discourages creativity and innovation as well as the creation of products and services that the global customer does not need. Many companies in the country are mirror images of ideas that have been developed from other countries and more particularly the West. The negative implication is that the country’s competitiveness is reduced since it discourages foreign direct investment. Foreign companies will be forced to leave the country due to IP theft, and the fear of brand imitation will cause the foreign companies not to bring their most IP-Sensitive products (Ttian & Dong 2010, p. 38-40). China-based service firms and technologies will also lose their credibility as foreign companies will be discouraged to use their services.

Why China Imitates Brands from the West

At present, there is a phenomenon in China that brand imitation is prevailing. According to the phenomenon, experts point out sharply that domestic luxury brands of China are entirely westernized (Berlin 2013, p. 1075). Brand imitation is done with the intention to confuse the consumer in relating to the original product and thus affect the consumer behavior positively so as to eventually buy the imitation. There are various driving forces which make brand imitation the best option for companies using such a strategy. The quest to get rich quickly handicaps the businessmen in China to innovate especially after the negative effects of communism in the country for several decades. Companies are yet to internalize the full meaning of modern capitalism which entails a responsible way of wealth creation by respecting property rights. Communism meant that many commodities belonged to the society and could thus be shared by all.

This mentality has resulted in the belief that intellectual property, just like other properties can be shared and thus, brand imitation may not be considered as an unethical practice involving stealing of someone else’s property. There is also a weak enforcement of property rights in China as violators are not effectively prosecuted or punished, leading to a weak protection of the property (Berlin 2013, p. 1075). The other reason for brand imitation stems from the way Chinese companies approach entrepreneurship. Instead of approaching it from the consumer’s perspective and carry out enough research so as to come up with products that appeal to consumers, it is approached from the supplier’s side by investing more in production but little on preliminary research and development.

Service and customer experience have become crucial features of branding and companies in China have realized this fact. A customer experience is an interaction between an organization and a customer as perceived through a customer’s conscious and subconscious mind. It is a blend of an organization’s rational performance; the senses stimulated and emotions evoked and intuitively measured against customer expectations across all moments of contact (Shaw et al. 2010, p. 3). Customer preferences are trending towards the awareness of features like design and experiences. Creating a successful brand with sensational customer experiences takes lots of investment on research and development on consumer behavior which takes time. The pressure to meet the market demand, as well as competition from other companies has led to brand imitation by Chinese companies who have not been successful in creating their brands. China being the world’s most important growth market for consumer goods makes brand imitation a immense challenge especially for multinational companies with globally known brands.

Cases of brand imitation in China

With the rising instances of brand imitation in China, there is bound to be grievances from the affected parties who have suffered as a result of their brands being imitated by Chinese companies. In China’s “fake world”, consumers can shop for furniture at an imitation IKEA store, eat a six-inch sandwich at an outlet strikingly similar to Subway, and then grab dessert at “ Dairy Fairy”- where they might knock back an Oreo-flavored “Ice Storm” whose, thick, creamy texture takes unabashed inspiration from the famous Dairy Queen “Blizzard” (Burkitt & Chao 2011, p. 1-4). This presents a number of sentiments expressed in response to the various brand imitations taking place in China. Various cases have been filed by the affected companies emerging in both successful as well as unsuccessful outcomes.

In 2011, a foreign blogger posted photos of a store selling products including iPhones and iPads in a setting that was significantly similar to Apple Inc.’s trademark. The store not only imitated but went as far as identifying itself as an Apple store without the required permission from the United States Company (Burkitt & Chao 2011, 1-4). IKEA, a Swedish furniture manufacturer, is yet to expand in cities like Kunming where it suffers brand imitation from another company called 11 furniture. This company has extremely imitated most features of IKEA ranging from the blue and yellow colors, special golf pencils, and in-store room displays as well as crinkling plastic bags.

Another culprit of imitation is Dairy Fairy, a national franchise that is imitating Dairy Queen in most of its marketing strategies. For example, it offers Blizzard-like “Ice-Storm”, serving it upside down just like the way Dairy Queen does. It uses cups that are marked with ‘DF’ in colors red and blue, with its employees dressed in blue and red attires, all resembling Dairy Queen (Blake 2015). Jambo Juice, a company in Beijing, uses green signs and tropical colors while providing smoothies made on-the-spot for customers to add energy boosters and antioxidants, concepts which all reflect on the US-based company; Jamba Juice. There have been serious cases involving court cases as wellFollowing quite a while of claims against a Chinese imitator appropriating his name and brand, Michael Jordan, the previous Chicago Bulls player generally hailed as one of the best ball players ever, lost a trademark suit to Qiaodan Sports in China's most noteworthy court after various bids (Blake 2015). The company was alleged to using the player’s Chinese name; Qiaodan, number 23 which was the number used by Michael Jordan as a player, as well as a silhouette logo that looks like the Jumpman used by Nike. The company manufactures sportswear and uses all these features to deceive consumers into purchasing the products that imitated the players’ endorsements.

In 2013, there was a remarkable ruling on a court case involving Moncler and Nuoyakate a company from Beijing. Nuoyakate Garment Co., Ltd was accused of manufacturing and selling down jackets, a product sold by Moncler. The company used Moncler’s logos and tried to register imitated trademarks and domain names both in China as well as in other countries. As a result, Moncler brought a court action against Nuoyakate in 2014 for trademark infringement as well as unfair competition. The court ruled in favor of Moncler and awarded the maximum statutory damage of RMB 3 million (US$480,000) under China’s new trademark law, a significant increase from the previous maximum statutory damages of RMB 500,000 (US$80,000) (Abraham 2016). In 2012, Apple took a Chinese company; Xintong Tiandi to the trademark Commission and later to court but lost the case. Apple accused the company of using its iPhone trademark by branding it on its leather handbags. On appeal, the Beijing Municipal higher people’s court ruled that Apple had failed to prove that the iPhone brand was “familiar to the public and widely known” in China before the leather company registered it (Gibbs 2016).

Targeted Customers on Brand Imitation in China

The reason behind brand imitation is to affect consumer behavior positively so as to increase sales. What matters is the customer's perception. What is unacceptable to one customer may be perfectly acceptable to another. It all boils down to how a customer perceives the product or service available for consumption (Dodds 2003, p. 5). Some consumers may see it as unethical behavior while some may see it as an opportunity. Companies adopting such a marketing strategy in China seek to target such consumers who have a positive attitude towards the strategy. These customers include the insouciants, the dupes, the happy-go-luckies, the cheapskates, and the wannabes. Insociants refer to those consumers who are not aware of the brands and are not particularly sensitive, such that, as long as a product meets their needs, the brand name doesn’t matter to them at all. Dupes are those consumers who are tricked into thinking they are buying the original product while they are in fact being sold imitated products.

The happy-go-luckies are those consumers who are young and come from the middle class who understand very well that what they are buying is not original, but they do it deliberately because they want to make a statement in order to fit in their group. To them, this is an alternative to the real thing, and they would want people to think that their products are real. Cheapskates are those consumers who can afford to buy the real brands but deliberately buy the fake ones in order to save money (Dodds 2003, p. 5). They know that since they have money, no one will suspect their fake products. Wannabes are just like the happy-go-luckies with the difference being that the happy-go-luckies will not suffer any embarrassment if they are discovered as using fake products while the wannabes will face a serious loss of face as they associate themselves with people above their social class who can afford the real brands.

Conclusion

Brand imitation is done by some companies as a marketing strategy to instantly bring their products to the customer’s attention at the expense of other companies. Companies spend a substantial amount of resources to create and sustain a brand name. Some companies, however, lack the ideas, patience and resources to create a sustainable brand and find brand imitation as the easy way out. This results into infringement of property rights. Most court cases are lost by the affected companies on grounds that they lack enough proof for the said violation. However, the government of China is trying to clear itself by improving the way it handles such cases as can be seen in the Macler vs. Nuoyakate Co. Ltd.

Companies can fight brand imitation through registering their brands through trademarks. Trademarks are the relevant legal part of a brand that can be used to fight brand imitation. China is one of the countries where brand imitation has become notorious as companies reflect nothing less than a mirror image of other established brands, especially from the west. Consumer behaviour involves all customer exercises connected with the buy, use, and transfer of products and services. The consumer behavior is in favor of popular brands which have become household names and automatically appeal to customers’ preferences. Brand imitations work by instantly confusing the consumer to relate the imitated products with the original brand and thus make a purchase decision immediately.