Roberta Hupman, Judith Lynne Zaichkowsky (1995), "BRAND IMITATION AND THE CONSUMER: AN ETHICAL PERSPECTIVE", in European Advances

in Consumer Research Volume 2, eds. Flemming Hansen, Provo, UT : Association for Consumer Research, Pages: 418-424.

European Advances in Consumer Research Volume 2, 1995

Pages 418-424

BRAND IMITATION AND THE CONSUMER: AN ETHICAL PERSPECTIVE Roberta Hupman, Simon Fraser University Judith Lynne Zaichkowsky, Simon Fraser University ABSTRACT This research examined consumers' perceptions of the ethical implications of a brand imitation strategy. Consumers were shown product pairs that were similar in appearance and asked to make ethical judgments of brand imitation. A mall-intercept sample heavily weighted by older females showed these respondents felt brand imitation was unethical. A second study used a more educated sample of equal gender and found ethical judgments mainly differed between men and women. INTRODUCTION "Marketing managers are faced with a host of decisions having ethical ramifications regarding the products and services they offer for sale" (Murphy and Laczniak, 1981). These ethical questions may arise in the imitation of a competitor's product. Competitors may attempt to capitalize on the "look" or "feel" of well-known brands in order to increase sales of similar products (Fenby, 1983; Carratu, 1987). The firm that owns the original brand has invested time, effort, and money in establishing a brand identity. Imitators then use the original brand's identity for their own benefit. An imitation strategy therefore reduces the costs involved in launching a brand and creating demand for it (Ward, et al., 1986). When managers were asked what major ethical problems they had to confront with regards to marketing, product strategy was frequently cited by respondents as being a difficult ethical issue. For example, one product manager mentioned: The question of brand infringement due to similar packaging, graphics, or product claims. This is particularly important in my industry because of the 'faddish' nature of the business. Products proliferate as all manufacturers attempt to snare their share of a hot market before it cools (Chonko and Hunt, 1985, p.347). Bone and Corey (1992) examined ethical problems that may occur in packaging. They developed an inventory which included label information (i.e., nutritional value and similar product information), graphics, safety, pricing, and the environment. Graphics is the only category from this inventory that is relevant to brand imitation. Graphics are important because they are used as an information source by consumers during the purchase process. Bone and Corey (1992) question the ethics of the practice of packaging house brands to resemble national brand competitors. However, they recognize that there are two perspectives to this issue. They point out that: the use of similar graphics may violate deontological norms of fairness and equity if the store brand falsely appropriates the national brand's strong consumer reputation, which has required time, effort, and money to develop and maintain. On the other hand, if this benefits the majority of consumers by providing them with materially similar products for less money, the practice may be viewed as teleogically preferable (Bone and Corey, 1992, p.47). The authors surveyed professional packaging practitioners in order to determine what packaging issues were felt to be ethical dilemmas. Practitioners felt that a store brand packaged "to closely resemble a national brand" to be unethical. However, there was a large standard deviation in the responses to this question which they termed an "ethics gap", or a wide range of opinion, among practitioners. This may be the result of situational and environmental influences such as personal experience, organizational norms, industry norms, cultural norms, anticipated economic effects of a particular decision, organizational expectations, effect on stakeholders, individual ethical standards, organizational ethics, and professional ethics (Bone and Corey, 1992).

The examination of practitioners' ethical evaluations of packaging activities raises the question of how others, such as consumers, are affected by packaging, and how they feel about the same issues. A comparison of evaluations would be interesting, in order to find out whether an "ethics gap" exists among consumers, as well as between consumers and practitioners. PURPOSE OF THE PAPER Consumers' perceptions of brand imitation should be of extreme importance to firms who are involved in marketing an imitator brand. How consumers view brand imitation would be a vital piece of information for a firm considering such a strategy. If consumers feel an imitation strategy is acceptable more firms may be encouraged to follow this practice, despite possible legal challenges. If consumers perceive brand imitation negatively, and perceive those who practice this strategy to be unethical, firms may be discouraged from using imitation as it might reflect negatively on their corporate image and profits. However, there is no baseline of how the "average" consumer feels about the practice of brand imitation. For example, some consumers may view brand imitation positively since many imitators are cheaper than the original brand. They are thus provided with a product that represents a "quality" product at a cheaper price. The imitator would thereby provide increased perceived value relative to the original brand. Other consumers may feel that it is unethical or deceitful for a firm to willfully engage in this practice, as do many product managers (Bone and Corey, 1992). This study attempts to determine a baseline of consumers' opinions on brand imitation and to see if these opinions can be segmented based on demographics. THE DIMENSION OF ETHICS The measurement of ethical judgments is a difficult task. What exactly is an "ethical" action? Reidenbach and Robin (1988, 1990, 1991) have developed a multidimensional ethics scale (Appendix). It is argued that the concept "ethical/unethical" has several dimensions and that individuals may use more than one dimension in making ethical judgments. These dimensions are based on concepts developed in moral philosophy. There are five basic ethical theories that are commonly used as the basis for ethical judgments by society: justice theory, relativism, deontology, teleological egoism and teleological utilitarianism (Reidenbach and Robin, 1988). Justice theory, primarily procedural justice, is important to marketing in that its objective is to develop rules that result in fair outcomes. Managers should consider procedural justice in their relationship with customers. Trust can therefore be developed in this relationship (Reidenbach and Robin, 1990). Relativism suggests that "normative beliefs are a function of a culture or individual, and therefore, no universal ethical rules exist that apply to everyone" (Reidenbach and Robin, 1990, p.651). This theory may be used to explain why certain actions, such as bribery, are acceptable in some countries and not in others. Deontology is related to the duties and responsibilities an individual has to fulfill. Marketers must recognize that customers have certain rights and that the firm has certain responsibilities towards customers. These responsibilities of the marketer include: (1) to protect, (2) to fully inform, (3) to provide and allow choice, and (4) to listen (Reidenbach and Robin, 1991). Teleological theories are primarily concerned with the outcome of actions and whether the consequences are "good" (Bone and Corey, 1992). Egoism focuses on the outcomes relative to the individual. In contrast, utilitarianism considers the consequences for society in general (Reidenbach and Robin, 1990). A 33-item scale based on the five theories was developed and subsequently reduced into an eight-item scale. This eight-item scale was divided into three dimensions. Dimension one is a broad-based moral equity construct and contains four items: "fair/unfair", "just/unjust", "acceptable/unacceptable to my family", and "morally/"not morally right". Dimension two is a relativist construct in which actions are judged according to cultural acceptability and tradition: "traditionally acceptable/unacceptable" and "culturally acceptable/not acceptable". The third dimension is the social contract construct which consists of the items "violates/does not violate an unspoken promise" and "violates/does not violate an unwritten contract". There are two main advantages to using a multi-item and multidimensional scale in measuring ethical judgments. First, a single-item measure may be less reliable than multi-item measures. In addition, the multidimensionality of the scale can provide information as to why an action is felt to be unethical or ethical. In other words, the scale helps the researcher understand what ethical perspective the respondent is using in making the evaluation. This cannot be done using a single global measure (Reidenbach and Robin, 1990). Situational Factors

Ethics must also be considered in terms of the buyer-seller relationship. Often consumers and businesses perceive actions taken in market transactions differently (Dornoff and Tankersley, 1975). Little research has been conducted on this topic. Vitell and Muncy (1992) conducted one of the few studies which consider the buyerseller relationship. Consumers were surveyed on their ethical judgments of situations they might face and on their attitudes towards business, salespeople, government, and people in general. The respondents were presented with a number of situations in which they might find themselves as consumers. These included: "observing someone shoplifting and not saying anything about it"; "using a coupon for merchandise you did not buy"; and "returning merchandise after trying it and not liking it". They were also given ten statements pertaining to general opinions and attitudes (Vitell and Muncy, 1992). It was found that a number of factors may contribute to how a consumer makes ethical judgments: (1) whether or not the buyer or the seller is at fault; (2) whether or not the activity is perceived as illegal; (3) whether or not there is direct harm to the seller; (4) whether or not the consumer has a negative attitude towards business; and (5) whether or not the consumer equates unethical with illegal (Vitell and Muncy, 1992, p.596). Therefore, besides the general multidimensional ethics, some specific ethics questions to the context of brand imitation cases would seem prudent. STUDY 1 Method The mall intercept method was used in order to collect data from average consumers. A total of 80 consumers were surveyed in a large metropolitan area. In order to reduce bias, interview times were staggered throughout the day and week. Data were gathered during three time periods: morning (10:00 a.m. to noon), afternoon (2:00 to 4:00 p.m.), and evening (6:00 to 8:00 p.m.). About one-third of respondents were interviewed on Monday, Tuesday or Wednesday; one-third were interviewed on Thursday or Friday; and one-third were interviewed on Saturday or Sunday. Data collection was conducted over a period of one week. The respondents were approached as they entered the shopping center and asked if they would take a few minutes to participate in a study on product perceptions. The respondents were shown four product pairs to demonstrate the concept of brand imitation. Each brand pair consisted of a national brand and an imitator competitor. Prior to completing the questionnaire, the respondents were informed that none of the brand pairs share a common manufacturer. Knowledge of this fact was felt to be key to the ethical judgments they were to make. The respondents subsequently completed a questionnaire containing the two ethics scales. Demographic information was also collected. Dependent Measures Ethical judgments of the respondents were measured by both Reidenbach and Robin's (1990) Multidimensional Ethics Scale (see Appendix) and four other ethical judgments. These other questions consisted of seven-point scale questions on how ethical they felt brand imitation is (1=unethical, 7=ethical, a replication of the Bone and Corey (1992) question) and whether or not the respondent felt that legal action should be taken against the imitator firm (1=strongly disagree to 7=strongly agree), given three different conditions: 1) any company; 2) a big corporation; and 3) a small business. Study 1 Results A demographic profile of the sample is shown in Table 1. The sample was well distributed on age. However, the majority of respondents were female (78.8 percent). In terms of occupation, the largest group consisted of those working in clerical, sales and service industries (41.3 percent). Included in Table 1 is a comparison of local Census data with the sample's demographic profile. The sample is overrepresented by older females with higher incomes. The respondents were asked directly whether or not they felt that brand imitation was ethical. In order to compare results with Bone and Corey (1992), the sample mean of 2.81 was compared to the hypothesized mean of 4, the midpoint of the seven-point scale. The test was significant, t(79)=-7.34, p<.01, indicating that on average, the respondents felt that brand imitation was at least somewhat unethical. The sample mean was 2.81 (SD=1.45), somewhat lower than the mean of 3.38 (SD=1.80) found by Bone and Corey (1992) in their sample of packaging practitioners, perhaps indicating these consumers felt brand imitation was even more unethical than packagers.

MANOVA was then used to analyze ethical judgments based on demographic differences. These results are summarized in Table 2. For the occupation variable, it was found that only homemakers and those in clerical/sales/service occupations differed significantly in their ethical judgments on both scales (Scheffe's test at the .10 level). Clerical/sales/service occupations felt that imitation strategies were more ethical than homemakers. The remaining three questions asked about legal action to protect brands if the imitator was 1) any company; 2) a large corporation or 3) a small business. Generally respondents felt legal action should be taken against large corporations more so than small businesses. When responses were analyzed by demographics, no differences were found across age categories (younger as well as older consumers had similar opinions), across education levels, or gender. However, when occupation was examined, housewives again consistently thought brand imitation was more unethical than any other group and were more supportive of legal action, regardless of the size of the company. When we looked at income, generally those with lower incomes thought legal action should be taken against imitations. TABLE 1 DEMOGRAPHIC PROFILE OF STUDY 1 SAMPLE The three dimensions of the moral ethics scale were then analyzed against the general sample and specific demographics. The respondents, as a whole, found the practise of brand imitation to be morally inequitable (5.71), somewhat neutral on cultural acceptability (4.08), and generally to violate the social contract of society (5.06). Analyzing the responses across demographics, no differences were found across age groups, or income levels. When looking at occupation, housewives again were more likely to express the opinion that brand imitation was morally inequitable, not culturally acceptable, and prone to violate the social contract of society. Females appeared to be the fairer sex in that they saw more moral inequity and less cultural acceptable behavior in brand imitation. In summary, results of the analyses showed lower income housewives felt brand imitation was more unethical than others in the sample. STUDY 2 Study 2 was conducted in order to replicate Study 1 in an academic environment. This study may indicate if there is a difference in ethical judgments between genders given equivalent levels of education. Method The sample consisted of subjects drawn from the university campus, both students and non-students. A total of 75 respondents were surveyed. Data were collected during two hour time periods, in the morning and in the afternoon, over the course of one week. Subjects were approached as they passed the research station located in a high-traffic area and asked for their cooperation in a study examining brand perceptions. If they agreed, they were shown the display of product packages and presented with a self-administered questionnaire. Study 2 Results The sample was almost evenly split on gender, with 53.3 percent being female; about half (50.7 percent) of the sample was under the age of twenty-five; the majority of the sample consisted of students (62.7 percent); and 60 percent of the sample were born in Canada. In terms of income, twenty-eight percent of respondents had an income over $30,000, and almost half of the respondents had an income under $10,000. This corresponds to the occupation results of students and non-students. TABLE 2 RESULTS OF STUDY 1 ON PERCEIVED ETHICALNESS OF IMITATION STRATEGY AND SUPPORT OF LEGAL ACTION AGAINST IMITATOR The results for the question that asked for direct ethical judgments were compared with the Bone and Corey (1992) results. The mean for Study 2 was 3.60 with a standard deviation of 1.35.

A test of the sample mean (3.6) against the hypothesized mean (4.0) indicated no differences. Therefore these respondents from the university environment did not perceive brand imitation as negatively as the previous sample of average consumers. MANOVA was used to test the relationships among demographic variables. Except for gender, no relationship were found among demographic groups of the sample and their responses to the ethics scales. These results are summarized in Table 3. Females tended to rate brand imitation strategies as being less ethical (3.91) than did males (4.61) (F(1,73)=7.11 p<.01). Both genders were likely to believe legal action should be taken against large corporations who engage in an imitation strategy. The second part of the study which focused on the moral issues also found similar results. Females consistently found brand imitation to be more morally inequitable and more likely to violate the social contract than males. No differences were found on the dimension of cultural acceptability. DISCUSSION AND SUMMARY The results from Study 1, which weighted females of average education and occupation, considered brand imitation to be unethical. Respondents of Study 2, which weighted a more educated population, viewed brand imitation as less of an unethical issue. An ethics gap among respondents was not apparent in either study as their responses did not vary widely. TABLE 3 STUDY 2: PERCEIVED ETHICALNESS OF IMITATION STRATEGY AND SUPPORT OF LEGAL ACTION AGAINST IMITATOR The Bone and Corey (1992) sample was drawn from a professional association of packaging practitioners. These practitioners had diverse backgrounds in terms of education and experience and also worked in various industries. In contrast, the sample for Study 2 was drawn from one university campus. The level of education of respondents is fairly high, and the more educated the respondent, the less likely he/she was to find a problem with brand imitation strategies. The results for both studies regarding the legal questions indicated that the respondents were more sympathetic towards small businesses and harsher towards large firms. Perhaps they feel that large businesses should "know better", that small firms lack the resources to develop totally different products, or that small firms need to practice cost-saving measures such as brand imitation in order to survive. An analysis of the ethical judgments and demographic variables found several significant results in Study 1. Homemakers tended to perceive brand imitation as being less ethical than those employed in other occupations. It is possible that housewives are more aware of the existence of brand imitation and therefore see it as a greater problem when shopping. It was also found that those with incomes under $30,000 perceived brand imitation as more unethical than those with incomes over $50,000. Consumers with tighter budgets may be more critical of what they feel are attempts to deceive them when they are shopping. Another possibility is that consumers with higher incomes may be loyal to nationally advertised brands and do not even consider store brands when shopping. As a result, they might feel the issue has little relevance for them personally and therefore are less critical. Another possibility is that consumers with lower incomes may be more brand loyal and rely more on national brands for choice. As a result, this segment does not want to see interference with their decision-making. Significant differences between genders were found for both studies. In both cases, females tended to be more critical of brand imitation than did males. Perhaps females are more aware of the issue than are males, and thus more critical. Other studies using either student or more general samples have shown females to be more concerned about ethical issues and more likely than males to see ethical problems in a given situation (Beltramini, Peterson and Kozmetsky, 1984; Chonko and Hunt, 1985; Fritzche, 1988; Jones and Gautschi, 1988). This study's findings are therefore consistent with previous research. Implications

It is possible that underlying factors may have contributed to the results (Vitell and Muncy, 1992). If consumers feel that the buyer is at fault for purchasing an imitator brand when intending to purchase the original brand (i.e., caveat emptor), they would likely see imitation strategies as being less unethical than those who feel the seller is at fault. Consumers who have a negative attitude towards business or those who perceive the practice of brand imitation as illegal may see this strategy as being more unethical. The size of the imitator firm may have some effect on consumers' judgments of their actions. Consumers seem to have more sympathy for small businesses than for large corporations that imitate other brands. One issue that should be considered is whether imitator products serve a role in the marketplace. As mentioned earlier, similar packaging may simplify the buying process for consumers. Imitator products that are cheaper than the imitated brands may be perceived as being a better value for the money by some consumers. Consumers who feel this way are likely to perceive the practice of imitation as ethical. APPENDIX REIDENBACH AND ROBIN'S MULTIDIMENSIONAL ETHICS SCALE Limitations There are two limitations in this research that should be considered. First, the respondents were not able to try the products while they were being questioned, only visually inspect them. As a result, their judgments were necessarily based on past experience and/or the appearance of the packaging. This differs from a real purchase experience where consumers actually use the products and may base their judgments on the comparative quality of the products. Second, opinions regarding ethical judgments may change over time (Bone and Corey, 1992). For example, during recessionary times consumers may be so concerned with saving money that they may compromise their ethical beliefs. Suggestions for Future Research Future research on the topic of brand imitation should continue to examine a wide range of products. As Wells (1986) points out, "it is as important to sample products as it is to sample people" (p. 11). In terms of ethical judgments, research should continue exploring consumers' perceptions and opinions on brand imitation strategies since it is possible that consumers' ethical beliefs are not compatible with their actions. Explanatory variables should be examined in order to determine what influences consumers to make the judgments that they do. REFERENCES Beltramini, R.F., Peterson, R.A. and Kozmetsky, G., (1984), "Concerns of College Students Regarding Business Ethics," Journal of Business Ethics, Vol. 3, 1984, pp.195-200. Bone, P.F. and Corey, R.J. (1992), "Ethical Dilemmas in Packaging: Beliefs of Packaging Professionals", Journal of Macromarketing, Vol. 12, Spring, pp. 45-54. Carratu, V. (1987), "Commercial Counterfeiting", in Branding: A Key Marketing Tool, John M. Murphy, ed. London: Macmillan Press, pp. 59-72. Chonko, L.B. and Hunt, S.D. (1985), "Ethics and Marketing Management: An Empirical Examination," Journal of Business Research, Vol. 13, pp.339-359. Chonko, L.B. and Hunt, S.D., "Ethics and Marketing Management: An Empirical Examination", Journal of Business Research, Vol. 13, 1985, pp. 339-359. Dornoff, R.J. and Tankersley, C.B., "Perceptual Differences in Market Transactions: A Source of Consumer Frustration", Journal of Consumer Affairs, Vol. 9, Summer, 1975, pp. 97-103. Fenby, J., Piracy and the Public, London: Frederick Muller Ltd., 1983.

Fritzsche, D.J. (1988), "An Examination of Marketing Ethics: Role of the Decision Maker, Consequences of the Decision, Management Position, and Sex of the Respondent," Journal of Macromarketing, Vol. 10, Fall, pp.29-39. Jones, T.M. and Gautschi, F.H. (1988), "Will the Ethics of Business Change? A Survey of Future Executives," Journal of Business Ethics, Vol. 7, pp.231-248. Murphy, P.E. and Laczniak, G.R., "Marketing Ethics: A Review with Implications", Review of Marketing 1981, Ben M. Enis and Kenneth J. Roering, eds. Chicago, IL: American Marketing Association, 1981, pp. 251-266. Reidenbach, R. Eric and Donald P. Robin (1988), "Some Initial Steps Toward Improving the Measurement of Ethical Evaluations of Marketing Activities," Journal of Business Ethics, Vol. 7, pp.871-879. Reidenbach, R.E. and Robin, D.P. (1990), "Toward the Development of a Multidimensional Scale for Improving Evaluations of Business Ethics", Journal of Business Ethics, Vol. 9, August, pp. 639-653. Reidenbach, R. Eric, Donald P. Robin and Lynden Dawson (1991), "An Application and Extension of a Multidimensional Ethics Scale to Selected Marketing Practices and Marketing Groups," Journal of the Academy of Marketing Science, Vol. 19, Spring, pp. 83-92. Statistics Canada, Canada 1986: Profiles, Vancouver Part 1 and Part 2, Ottawa: Supply and Services Canada, 1988. Vitell, S.J. and Muncy, J. (1992), "Consumer Ethics: An Empirical Investigation of Factors Influencing Ethical Judgments of the Final Consumer," Journal of Business Ethics, Vol. 11, pp.585-597. Vitell, S.J. and Muncy, J. (1992), "Consumer Ethics: An Empirical Investigation of Factors Influencing Ethical Judgments of the Final Consumer", Journal of Business Ethics, Vol. 11, 1992, pp. 585-597. Ward, J., Loken, B., Ross, I., and Hasapopoulos, T. (1986), "The Influence of Physical Similarity on Generalization of Affect and Attribute Perceptions From National Brands to Private Label Brands", in AMA Educators' Proceedings, Vol. 52, Terence A. Shimp et al., eds. Chicago, IL: American Marketing Association, pp. 51-56. Wells, W.D., "Three Useful Ideas", in Advances in Consumer Research, R.J. Lutz, ed. Provo, UT: Association for Consumer Research, 1986, pp. 9-11.