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Design homeware & furniture MARKET RESEARCH Brand name vs design How susceptible are customers to illegal replicas?

MARKET RESEARCH Design homeware & furniture...The homeware and furniture market has seen steady growth over the past five years and is expected to continue for the foreseeable future

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Page 1: MARKET RESEARCH Design homeware & furniture...The homeware and furniture market has seen steady growth over the past five years and is expected to continue for the foreseeable future

Design homeware& furniture

MARKET RESEARCH

Brand name vs designHow susceptible are customers toillegal replicas?

Page 2: MARKET RESEARCH Design homeware & furniture...The homeware and furniture market has seen steady growth over the past five years and is expected to continue for the foreseeable future

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Key findings

USEAMAZON64% of design furniture and homeware customers use Amazon as a means of searching for products

FEEL BRAND OWNER IS RESPONSIBLE43% of consumers feel that the brand owner should be the one responsible for removing counterfeits

PREFER CHEAP REPLICASGiven the choice between a product from a well-known designer or a cheaper one with the same design on Amazon, 82% of consumers would opt to buy the Amazon product

USE IMAGESTO VALIDATE38% of consumers use product images as a means of evaluating a seller’s trustworthiness

MILLENNIALS BUY ONLINE75.4% of people aged between 25-34 years old buy design homeware or furniture products online

TRUST ONLINEMONITORING68.5% of consumers believe that online marketplace monitoring is an acceptable method of brand protection

BOUGHT FAKES31% of consumers have bought a replica or fake design product either knowingly or by error

CAN’T IDENTIFY FAKES54% of consumers do not feel confident they can identify non-genuine products online

43%82%64% 38%

75.4% 68.5%31% 54%

RED POINTS

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Introduction

The homeware and furniture market has seen steady growth over the past five years and is expected to continue for the foreseeable future. The global market is estimated to be worth more than $157 billion in 2017 ¹. The highest growth in the sector has come from China, where the market is now the largest in the world and worth $58 billion annually. The Chinese market is expected to continue to grow by 14% year on year ². This explosion in demand has been met by a host of new companies across the world offering innovative and creative designs.

This success has come with adverse side effects for design companies. Now more than ever, companies have their designs illegally copied or products counterfeited. The design process is expensive, requires time and highly skilled staff; for this reason, many individuals have found it far more profitable to merely copy the work of others. This issue is particularly problematic online, where customers have only reviews and images to judge a product or seller’s validity.

This study aims to explore consumer perceptions and attitudes towards design homeware products, specifically when shopping online. We aim to answer questions about their brand loyalty, awareness of replicas and counterfeit recognition. This study will give us some indication of how prominent the counterfeiting problem is and how likely people are to purchase a copied design.

SECTION 1. Purchasing LandscapeThis first section aims to establish the current shopping norms of our sample and their motivations for buying design furniture or homeware products. This information helps us paint a complete picture of the buyers’ motivations and the purchasing landscape.

SECTION 2. Behaviour and Decision MakingHere we set out to understand our sample’s ability to identify factors that would lead brand protection professionals to be suspicious of a listing. Also, we wish to create a better understanding of how customers select products and to what degree they are loyal to brands. These factors will have implications for their likelihood to purchase a fake or replica product.

SECTION 3. Consumers and counterfeitIn this part of the research, we aim to better understand how good our sample believe they are at spotting a counterfeit or replica product, both before and after being shown images of the real and fake products. Information on their reported ability to spot fake products will allow us to draw further conclusions about their level of awareness among other things. We also aim to find out to what extent our sample think counterfeiting is a problem.

SECTION 4. Reactions & Trusted SolutionsIn the final part of the study, we ask our sample about the repercussions of counterfeits for brands and the best solutions. This info will help businesses understand what countermeasures are valid and reassuring in the eyes of their customers as a means of brand protection.

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The survey was conducted using a market research company that was able to provide a timely and reliable sample. This ensured the anonymity of respondents while delivering sufficient reach. The survey was conducted online in October 2017.

Qualification.In order to participate in the research, potential respondents had to have answered yes to the following question.

Have you ever purchased a design furniture or homeware item?

Observations:• “Design furniture and Homeware” - refers to lighting products,

furniture or any household accessory that comes from a designer or high-end brand.

• These items are sometimes sold in larger stores (e.g. Macy’s) and are usually more expensive due to their unique design.

• Consider the following examples: Tom Dixon, Katrell or David Trubridge.

The question was coupled with a definition and examples. Since the survey was online, it is fair to assume that if the respondents did not know these brands, then they would have been able to search for them online.

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Method & Sample

SURVEY SIZE 200 PEOPLE

LANGUAGEENGLISH

AGE RANGE18-40 YEARS OLD

GENDERMALE AND FEMALE

PARENTAL STATUSANY

COUNTRY U.S.A.

18+

Design Homeware & Furniture

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Sample Profile.The demographics of our sample are as follows:

Gender

Females

Males

Age Range

13-17

18-24

25-34

35-44

45-54

55-64

65+

Education

No college

Some college

2yr degree

4yr degree

Grad school degree

Professional degree

Household Income (yearly)

$0 - $25,000

$25,000 - $50,000

$50,000 - $75,000

$75,000 - $100,000

$100,000 - $200,000

$200,000 - $500,000

>$500,000

%

64.5

35.5

Resp.

129

71

%

0.0

6.5

28.5

21.0

21.5

12.0

10.5

Resp.

0

13

57

42

43

24

21

11.5

28.5

8.0

33.0

13.5

5.5

23

57

16

66

27

11

16.0

25.0

25.0

15.0

18.5

0.5

0.0

32

50

50

30

37

1

0

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Method & Sample

Design Homeware & Furniture

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Purchasinglandscape

SECTION 1.

This section aims to establish some basic principles about the motivations and purchasing habits of the sample. Also, we will explain where people purchase design homeware products, what values they look for in these products, and how they search for these items online.

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Question 1 Important factorsWhat are the important factors you look for in a design homeware product?

This question deliberately avoids price incentives, as we wish to establish what factors other than price are key motivators. This question shows that customers of design products favour durability, build quality and originality of design over other factors. Although still an important factor, only half of the sample looked for a good brand reputation. This initially indicates that design and perceived build quality are more important than the brand name of a product. Other important factors that was suggested via the “other” option were, as expected, the cost of the product and if it matched the style of the customer.

Design Homeware & Furniture

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Question 2 Where do customers shop?Where do you usually buy design homeware products?

The two most common forms purchasing design products were in-store purchases and online. This provides us with some idea of the purchasing landscape. Stores tend to have secure supply chains; however, online purchases, depending on the vendor, can be much riskier. The group most likely to buy online was people aged between 25-34; of the members of this age group 75.4% bought online, compared to only 41% of 45-54 year-olds. However, online purchases were popular across all demographics.

Design Homeware & Furniture

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Question 3 Online search methodsIf you shop for design homeware products online, how do you normally find them?

These results establish the search methods of our sample and show the use of both safe and riskier methods of finding products. Search engine results have the potential to show replica or counterfeit items due to SEO manipulation, especially if a customer uses a keyword such as “discount” or “cheap” ³. Amazon, while much safer than Alibaba, does contain some replica and counterfeit products that make it through the site’s screening process ⁴. Amazon seems to be favoured by younger buyers; 75% of 25-35 year-olds selected this but only 51% of 45-54 year-olds selected Amazon as a search method.

Design Homeware & Furniture

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Behaviour and Decision Making

SECTION 2.

This section aims to better understand how customers react to certain purchasing situations and how they evaluate listings. This information will allow us to have a clearer idea of what factors influence our sample’s decision to purchase, their level of brand sensitivity and how receptive they are to factors that many might consider indicative of a non-genuine product.

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Question 4 Brand benefits vs costPlease read the following scenario and give the answer that best describes your probable reaction: “You find a designer lamp you like from a well-known brand. Later, you see another lamp online that appears to be identical in design, but it is being sold on Amazon by a company/designer that you have never heard of before. The lamp on Amazon is 50% of the price of the well-known brand.”

The conditions in which our sample chose the cheaper product are the same conditions in which an illegal replica might be sold.

This question gives us an insight into the motivations of customers and their level of price sensitivity vs brand sensitivity. These results suggest that customers are more interested in the design and price of a product appose to the benefits a reputable brand brings. Also, there is very little difference in responses when they are segmented by income; 78% of respondents with incomes between $100-200k still selected answer A2, compared to 68% of respondents $0-25k. Meaning wealthier respondents still favoured the Amazon product.

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Question 5 Why pick the brand?Why would you purchase the lamp from the well-known brand?

From those that did select the branded option, we are able to see that quality and added value are the main motivators. One ‘other’ response showed a high level of awarenss.

RESPONDENT 105322594“Sometimes lesser known companies seed reviews and give products away for free to get positive reviews. This makes me mistrust Amazon reviews and products that are so low in price as

to question the quality”

This individual showed scepticism about reviews and questions the quality of a cheaper product. This opinion would be shared by brand protection specialist, but is not representative of our sample.

Design Homeware & Furniture

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Our sample favours product reviews over other forms of evaluation. However, researching the sellers is also a popular method.

Although researching a seller is a good way of evaluating a product, reviews are not always reliable.Reviews can be manipulated through fake reviews or review networks, which are permitted by Amazon⁵. The third most popular answer was the use of images, and we know that counterfeiters regularly use high-quality images or images of the genuine product.

Question 6 How to tell if a seller is trustworthy?When purchasing a design homeware item from a seller on an ecommerce website, how do you evaluate their trustworthiness?

Design Homeware & Furniture

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While the previous question established that the majority of our sample use reviews to evaluate the trustworthiness of a seller, question 7 looks to better understand just how influential reviews are in the purchasing decision. 88.5% of respondents stated that reviews influenced their decision making process, of which approximately one third base their purchase decision on review. This is concerning as the issue of non-genuine reviews is only growing; reports have indicated that the number of suspicious reviews have increased dramatically in 2017 ⁵.

Question 7 How important are product reviews?How influential are product reviews when you are considering purchasing a design homeware product?

Design Homeware & Furniture

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This result is interesting as we know that counterfeits and replicas tend to be manufactured in low-cost production countries like China⁶. It’s not to say that many official products are not also produced there, however, if a product is being sent from a country other than that of the designer’s stated production location, this should serve as a warning that the seller might not be providing a genuine item. Therefore, the 26% of respondents who showed no level of concern would be particularly at risk of purchasing a replica or counterfeit product.

Question 8 Sending locationWould you be concerned if a product was sent from somewhere other than the brand’s stated production location? (e.g. from China)

Design Homeware & Furniture

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Consumers and Counterfeits

SECTION 3.

This part of the survey looks to understand consumers’ perceived ability to spot a non-genuine product. We will see how this ability changes after being shown examples of both real and fake listings side by side. Also, this section will establish what level of contact consumers have had with counter-feit or replica items and if they are concerned about the issue.

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The results for this question show that the majority of consumers feel confident in their ability to spot a fake product online, as 43.5% of respondents selected a “confident” response, compared to only 34% who selected a non-confident response.

Question 9 Ability to identify a fakeHow confident do you feel about your ability to identify a replica or counterfeit design product online?

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“These are real images that are being used to sell both real and unauthorised versions of design items. Please view these images and consider which ones are genuine products.”

NOTE: All the images featured on large ecommerce sites. The non-genuine product listings were described using the real brand name, had positive reviews, were sent form China and were listed at a significantly lower price than the genuine product.

Product Images Reality of replicasThe participants were then shown a series of images with accompanying text:

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This question shows interesting results when compared to results of question 9. Non-confident options now account for 54% of the sample compared to 34% in question 9. This shift in opinion shows that our sample were unaware of how similar counterfeit and genuine products appear online. This information would suggest that a large section of design furniture and homeware customers have a false confidence when shopping online. It would reasonable to suggest that many of these customers may have already purchased a counterfeit item and be unaware.

Question 10 Ability to identify a fake (revised)Considering these images, now how do you feel about your ability to identify a replica/counterfeit design item online?

Design Homeware & Furniture

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The majority (73%) of customers are concerned about the issue of counterfeiting to some degree.

However, the results of this question slightly jar with the results of Q4. In Q4 most respondents said they would buy a cheaper product if it looked identical to a branded one; which could imply it was a replica. This suggests either our sample are self-censoring their response in Q11 or that in Q4 they were unaware these selling conditions are indicative of an illegal replica.

Question 11 Level of concernHow concerned are you about the problem of replicas and counterfeits of original designs in the marketplace?

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Although most of our respondents have has no contact with fakes, 10% have knowingly purchased a fake item. From this, there was an even-spread throughout the income groups; 12.5% of people on $0 - $25k p.a. knowingly bought a fake, but so did 13% of people on $100k - $200k p.a. This would indicate that income is not the most important factor in this decision but would suggest there is a segment of the customer base that is not brand loyal and is motivated by price incentives.Furthermore, 21% have bought a non-genuine item in error. This isn’t suprising, given that we already established that many consumers lack the ability to identify non-genuine items.lack the ability to identify non-genuine items.

Question 12 Contact with counterfeitsWhat contact have you had with counterfeit or replica design items?

Design Homeware & Furniture

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Reactions & Trusted Solutions

SECTION 4.

The questions in this final section aim to discover how customers react to the presence of counterfeits and how this affects their behaviour towards brands. Also, we will ask customers who they believe should monitor and remove counterfeits and what steps are prudent in order to mitigate the problem.

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Only 11% of respondents stated that the presence of fakes would not affect their buying behaviour in any way.

Although the majority stated they would simply be more cautious, 29.5% selected options where they would no longer buy this brand. This has huge significance for brands as this suggests that counterfeits will not only negatively affect your sales but potentially increase those of your competitors.

Question 13 Effect on behaviourIf you knew there were replicas/counterfeits of a brand, would this affect your buying behaviour towards this brand?

Design Homeware & Furniture

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This question provides us with some insights into who should take action against counterfeits in the eyes of the consumer. This is important as this is ultimately who consumers will blame for the issue. The overwhelming majority believe that the responsibility lies with the marketplace, this has implications for Amazon and other ecommerce platforms as they ultimately rely on customer confidence.

Additionally, 43% believed that the brand owner should be responsible for policing their listings. Again, this is important as if brands do not meet these expectations they may be viewed as negligent by consumers.

Question 14 Who is responsible?In your opinion, whose responsibility is it to remove replicas or counterfeit products from online ecommerce platforms?

Design Homeware & Furniture

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Similar to the previous question, this intends to better understand the expectations of consumers, but in this case what measures they view as effective. The most popular answer was ‘online marketplace-monitoring technology’, shortly followed by authenticity marks. All of the options were selected by 50% of respondents, implying that customers expect a range of tactics to be employed. This result sends a clear message to brands that customers expect there to be multiple anti-counterfeit measures in place to protect them.

Question 15 What are effective countermeasures?In your opinion, which of the following are effective methods of protecting customers from replicas and counterfeits?

Design Homeware & Furniture

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Discussion

Most consumers are not good at recognising counterfeits/replicas

When customers were initially asked to judge their ability to identify a fake online, more people stated they were confident in their ability than not. In fact, only 34% of respondents stated they were not confident. However, after seeing images of both replicas and genuine listings, over 54% of respondents stated they were no longer confident in spotting fakes.

This data indicates that a significant amount of consumers believed that replicas would be easier to identify than they are in reality, and as a result downgraded their confidence level. This information, combined with the fact we know that many consumers do not recognise potential replica/counterfeit warning signs, means it would be safe to suggest that there are a significant number of consumers who have purchased replicas or even counterfeits but are simply unaware of this.

.

Affected brands pay the price

The presence of replicas damages brands in multiple ways. Although 10% of our sample had bought a replica knowingly, a further 21% had bought a replica or counterfeit in error. This is unsurprising as we have already established the overconfidence and lack of awareness consumers have when it comes to identifying non-genuine items online.

Our survey proved that if customers become aware of replicas or counterfeits of a design furniture or homeware brand, then it would cause a behavioural change in 89% of our respondents. Even more concerning, 30% of customers would stop buying the affected brand. This reason behind this becomes clearer in the next question where we learn that 40% of respondents believe it is the brand’s responsibility to remove replicas and counterfeits from online. This could suggest that consumers blame brands for counterfeits.

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Conclusion

The buying habits of many customers of design furniture and homeware leave them open to exploitation by counterfeits. This, combined with a lack of awareness of warning signs, means that it is almost certain that some customers are fooled into buying illegal replicas.

Brands ultimately pay the price, both from lost sales and hurt reputation. To add insult to injury, many customers feel it is the brand’s responsibility to control counterfeits.

Overall, it would appear that a significant cross-section of the design furniture and homeware market is likely to buy replicas as they are incentivized by price and design, not brand loyalty. It would seem prudent that brands engage in preventative measures and perhaps, more importantly, publicise this to their consumers as consumers believe some measures are more effective than others.

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¹ “Furniture &; Homeware - Worldwide | Statista Market Forecast.” Statista, www.statista.com/outlook/255/100/furniture-homeware/worldwide.

² “Furniture &; Homeware - China | Statista Market Forecast.” Statista, www.statista.com/outlook/255/117/furniture-homeware/china.

³ Woollacott, Emma. “Amazon’s Fake Review Problem Is Now Worse Than Ever, Study Suggests.” Forbes, Forbes Magazine, 13 Sept. 2017, www.forbes.com/sites/emmawoollacott/2017/09/09/exclusive-amazons-fake-review-problem-is-now-worse-than-ever/#6e16759e7c0f.

⁴ Shepard, Wade. “How Chinese Counterfeiters Continue Beating Amazon.” Forbes, Forbes Magazine, 14 Feb. 2017, www.forbes.com/sites/wadeshepard/2017/01/12/why-amazon-is-losing-its-battle-against-chinese-counterfeiters/#75961c34585c.

⁵ Bryer, Lanning G., et al. Intellectual Property Strategies for the 21st Century Corporation: a Shift in Strategic and Financial Management. Wiley, 2011.

⁶ Global Trade in Fake Goods Worth Nearly Half a Trillion Dollars a Year - OECD &; EUIPO.” www.oecd.org/industry/global-trade-in-fake-goods-worth-nearly-half-a-trillion-dollars-a-year.htm.

Works Cited

Design Homeware & Furniture