Academic insights on successful product design and counterfeit brand consumption
For close to 10 years, the BizInsight@HKUST series of lunchtime presentations has provided a great platform for leading academics to share their research findings with the broader business community and welcome feedback and questions.
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The latest event, held in Central on May 8, proved once again that this is a winning formula, as two experts from HKUST Business School addressed topics which help to explain customer choices and certain types of consumer behaviour.
The starting premise for Professor Yonghoon Lee, Assistant Professor of the school’s Department of Management, was that successful product designs in all kinds of fields are worth millions. Therefore, it is important to understand what factors come into play during the design process and how the market, which should be taken to include shareholders and end users, evaluates any new designs.
This, of course, has particular relevance for items like mobile phones where competition for sales is so intense and where some models unexpectedly fall flat when they reach the stores – or even before.
Lee suggested that, in the area of product design, the key is to be innovative, but in a specific way that he calls “anchored differentiation”.
For uniqueness, [reflecting] the contemporary cohort is more relevant... For the guidance aspect, we found that having a design similar to the past cohort from one or two years ago leads to a positive market evaluation
The objective is to create an item which is easily distinguishable from the competition and will be “picked up” by consumers. But it should also give them “guidance” by having familiar features which mean people have no concerns about using it.
Over the years, being able to combine those two determinants has become an important strategic resource for many companies, but even so they don’t always get things right.
“Firms experiment and compete around product design and learn to develop what consumers most value,” Lee said. “New designs are difficult to evaluate if there is no prior information or way to compare. There are, though, two clear value drivers.” One, he explained, is a uniqueness which is not just aesthetic, but signals identity and satisfies intrinsic needs. The other is sufficient similarity to previous products, so that consumers feel they can draw on their knowledge and experience and, in that way, feel a sense of compatibility.
In essence, the challenge for designers is to come up with products that are different compared with what’s already in the market, but at the same time similar to well established models from a couple of years back, rather than incorporating all the latest advances.
“For uniqueness, [reflecting] the contemporary cohort is more relevant,” Lee said. “For the guidance aspect, we found that having a design similar to the past cohort from one or two years ago leads to a positive market evaluation.”
In contrast, the presentation by Professor Jiewen Hong, Associate Professor of HKUST Business School’s Department of Marketing centred on counterfeit goods and, specifically, the psychology at work when consumers buy or use such products.
Her recent research has focused on the “antecedents and consequences of counterfeit consumption”, a very important subject when one considers the trade in such products is on the rise around the world and, by 2020, will have a total estimated value of US$2 trillion. That would represent an increase of 100 per cent in a decade.
Part of the problem is consumer demand; people actively want these goods... So we need to understand why consumers knowingly buy counterfeits, what psychological consequences there are, and how to curb that demand
She explained that past research has shown that demographics and education play a part, with people at the lower end of the income scale being more likely to buy counterfeit items. However, other factors also come into the reckoning. For example, she studied the effect of “crowding” in a typical urban environment leads to higher purchasing intensity and a feeling of resources being scarce, which in turn increases the chance of people buying counterfeits.
She also discussed the psychological consequences of using counterfeit products and how they can offer implications for designing anti-counterfeit advertising. “Past research has shown that using counterfeit products can lead to a feeling of inauthenticity of the self,” Hong said, “And this has important implications for intervention strategies.”
To understand this phenomenon better, she and her colleagues conducted a survey with self-identified counterfeit users. “We found that consumers talked about the value of using counterfeit products, but also expressed their concerns about quality, morality,” Hong said, “Interestingly, they also mentioned that their concerns about being judged by others as a fake, especially when using counterfeit products in public, which we call the salience of social evaluation.”
She added that in designing anti-counterfeit advertising campaigns, the typical themes are to raise awareness, educate people on how to identify fakes, or emphasise the immorality of links to child labour or organised crime.
“But the key is to highlight social evaluation concerns,” Hong said. “We have found it is the least used strategy, but the most effective.”