The Quantification of Consumer Attitudes and Behaviors Toward Counterfeiting Chris Stewart, Global Brand Manager The Gallup Organization WIPO/OECD Expert Meeting on Measurement and Statistical Issues Geneva, October 17 and 18, 2005 1 Copyright Standards This document contains proprietary research, copyrighted materials, and literary property of The Gallup Organization. It is for the guidance of your company only and is not to be copied, quoted, published, or divulged to others outside of your organization. Gallup, Q 12, The Gallup Path, The Gallup Poll, Business Impact Analysis, CE 11, SF 34, and SRI are trademarks of The Gallup Organization, Princeton, NJ. All other trademarks are the property of their respective owners. This document is of great value to both your organization and The Gallup Organization. Accordingly, international and domestic laws and penalties guaranteeing patent, copyright, trademark, and trade secret protection protect the ideas, concepts, and recommendations related within this document. changes may be made to this document without the express written permission of The Gallup Organization. 2
Reality Check: Why Measure? Without measurement the problem cannot be managed Baseline for tracking whether future efforts are impacting counterfeiting Lobbying for greater enforcement and laws; financial commitments from public and private sector Consumer and rights-holder education 3 Research Approaches QUALITATIVE n-measurable, feelings, views, attitudes, beliefs Small sample n-representative sample Unstructured questionnaire Exploratory QUANTITATIVE Large sample Representative sample Numerical data Structured questionnaire Ability to provide statistically accurate, quantifiable data 4
Mode of Interviewing t Recommended Postal Intercept Mystery Shopping Web-based IVR/In-bound Phone Recommended Outbound Phone (CATI, Pencil and Paper) Face-to Face (CAPI, Pencil and Paper) Web-based (only for certain populations and industry sectors. Ideally panel or prerecruit) 5 Art or Science? More science than art in the design, administration, and analysis of surveys Art plays a role in the way a question is designed 6
Methodological Standards Sample Design Time frame and sampling error n-response Error Contact versus completion rate Coverage Error Sample frame deficiencies Measurement Error Intersection of the questionnaire, interviewer, method of data collection 7 Sampling Methods Probability Sampling: Every respondent in the population has an equal chance of selection. Statistical inferences to the population can be made. Random Sampling Stratified Sampling Cluster Sampling n-probability Sampling: Depends in some part on the personal judgement or the researcher or interviewer. Any attempt to project data beyond the group interviewed is statistically invalid. Convenience Sampling Judgemental Sampling Quota Sampling 8
Current State of Attitudinal and Behavioral Surveys on Counterfeiting Wide range of surveys conducted by academia, government, and the private sector Attitudinal and behavioral data gathered Diverse geographical and industry focus Majority of research that has been conducted is interesting, but not projectable to larger populations of interest due to scientific shortcomings: Qualitative n-probability Method and Sampling Bias 9 Areas of Inquiry Attitudinal, Awareness Data Perception of Magnitude or Awareness Involved Parties Reasons for Counterfeiting Beneficiaries Deterrents Government and Business Support Stated Intent, Motivational, Behavioral Data Purchased (knowingly, not knowingly) Frequency Volume Value Factors for Purchase Future Intent Future Deterrents Purchase Channels + Demographics 10
Attitudinal and Awareness Data 11 Government Commitment to Find and Prosecute Counterfeiting (E.U.) How committed do you think the [:COUNTRY:] government is to find and prosecute counterfeiting? 5 (Very committed) 4 3 2 1 (t at all committed) Don't know (spontaneous) (spontaneous) Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 12
Government Commitment to Find and Prosecute Counterfeiting (Moscow) t Committed At All Very Committed 1 2 3 4 5 24% 11% 27% 16% 21% Q: How committed do you think the Moscow government is to find and prosecute counterfeiting? Sample Size: n=941 13 Video Games Perceptions (E.U.) Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Video games Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 14
Reasons For Piracy And Counterfeiting (U.S.) t a Reason at all for Piracy/Counterfeiting Definitely is a Reason for Piracy/Counterfeiting 1 2 3 4 5 Easy Profit for Counterfeiters 27.35 2.8 8.7 15.85 45.3 Easy to Produce Fake Products 25.31 6.78 14.33 19 34.58 High Prices of Genuine Goods/Products 24.82 7.34 19.05 18.66 30.13 Little or Risk for Producers and Sellers at Counterfeits 26.37 8.08 19.15 19.7 26.69 Weak Penalties Exist for Counterfeiting and Piracy 27.22 9.28 22.27 16.76 24.47 Sellers and Retailers Don t Pay Tax on Counterfeiter 34.98 9.88 21.43 11.08 22.63 Lack of Law Enforcement Mechanisms 28.83 9.69 21.48 19.06 20.94 Weak Laws Existing Against Counterfeiting and Piracy 29.37 11.17 23.36 16.39 20.59 Low Household Incomes 29.84 12.11 22.5 15 20.55 The Government Doesn t Care about Counterfeiting 41.76 17.73 21.07 8.71 10.73 Corruption at Law Enforcement Officials 45.59 17.33 20.92 6.09 10.07 Absence or Shortage of Genuine Products 53.79 18.45 15.01 5.94 6.8 Q: To what extent do you believe the following are reasons for piracy and counterfeiting? Using a scale of one-to-five, where 5 means you think it definitely is a reason for piracy and counterfeiting and 1 means it is not a reason at all for piracy and counterfeiting, how would you rate the following as reasons for piracy and counterfeiting? Sample Size: n=1,304 15 Groups Or Organizations Benefiting From Piracy Or Counterfeiting (Open-Ended) (U.S.) Those Who Make/Create Products Sellers/Those That Distribute Products 29.7% 28.0% 18.9% Those Who Buy/Purchase The Products 17.9% Organized Crime 10.2% Criminals/Crooks 7.7% ne/ One 7.1% Importers/Exporters 5.7% Younger Kids/College Kids 4.1% Terrorist Organizations 3.1% Other 2.7% Poor Low Income People 2.5% Private Citizens 1.7% Government Officials 1.2% Music Industry 1.1% People With Morals 1.0% 0% 10% 20% 30% 40% Q: Which groups or organizations do you believe benefit from piracy or counterfeiting? Sample Size: n=1,304 16
Groups Involved In Producing Or Distributing Imitation Or Counterfeit Products (Aided) (U.S.) 100% 80% 84.1% 83.4% 72.4% 60% 48.0% 40% 20% 19.5% 0% Importers Organized Crime Exporters Terrorist Government Organizations Officials Q: In your opinion, which of the following groups are involved with producing or distributing imitation or counterfeited products? Sample Size: n=1,304 17 Stated Intent, Motivational, Behavioral Data 18
Purchased, Copied, Or Downloaded Any Imitation Or Counterfeit Product In The Past Year (U.S.) Purchased* Brand Name Fashion Clothing 3.3% Brand Name Watches 1.2% Music CDs or Audiocassettes 5.1% Movies (VHS, VCDs, DVDs) 3.3% Computer Operating Systems (Windows, Mac) Computer Application Software (Word, Excel, Etc.) Video Games 1.4% 2.0% 2.2% 13% 87% Pharmaceuticals or Medicines 3.2% Alcoholic Beverages 0.9% Tobacco 0.9% Tools or Auto Parts 1.6% Jewelry 1.8% Q: Have you personally purchased, copied, or downloaded any imitation or counterfeit products in the past year in any of the following categories? Sample Size: n=1,304 *Half of those who purchased goods bought in more than one category 19 Aware Product Was Imitation Or Counterfeit (Aware In At Least One Category) (U.S.) Aware* Brand Name Fashion Clothing 50.8% Brand Name Watches 39.2% Music CDs or Audiocassettes 51.1% Movies (VHS, VCDs, DVDs) 45.1% Computer Operating Systems (Windows, Mac) Computer Application Software (Word, Excel, Etc.) Video Games 58.9% 49.4% 38.4% Aware 52.6% t Aware 47.4% Pharmaceuticals or Medicines 46.8% Alcoholic Beverages 28.5% Tobacco 61.6% Tools or Auto Parts 39.5% Jewelry 53.4% Q: Prior to purchasing, were you aware it was an imitation or counterfeit product? Sample Size: n=170 *Caution: Small Sample Size 20
Purchase Factors (U.S.) 100% 80% 77.65% 72.94% 67.65% % * 60% 40% 27.06% 20% 9.41% 0% Easily Available Buy Same Quality At Better Price Genuine Product Price Too High Buy Earlier Than Licensed Product Appeared Others Q: Which of the following were factors in your purchase of an imitation or counterfeit product? Sample Size: n=170 *Caution: Small Sample Size 21 Purchase Deterrents (U.S.) (Asked Among Those Who Had Purchased Counterfeit Goods) Would t Have Purchased Would Have Purchased Sponsoring A Terrorist Organization 97.3 2.7 Funding A Terrorist Act 96.0 4.0 Funding Organized Crime 95.8 4.2 Using Earnings To Bribe Government Officials 91.3 8.7 Damaging Creator Or Owner Of Brand 78.4 21.6 t Paying Sales Tax 66.6 33.4 Q: Would you have purchased the imitation you previously mentioned you bought if you knew the seller was ( )? Sample Size: n=170 *Caution: Small Sample Size 22
Limitations of a Survey Based Approach Snapshot of Time and Seasonality Factors Even with a Scientific Design and Administration Biases can Remain Cost Length of Instrument (Respondent fatigue after 15 to 18 minutes begins to degrade data) Analytic Bias (Cross-Country Comparison) Difficult to Capture Data from Some Service or Industrial Sectors Measurement Gap on Purchase Data for Those Unaware of Counterfeit Purchase 23 Improvement of Quality and Information Standardized Metrics and Industry Classes with a Focus on Actionability Probability Designs so that Data can be Extrapolated Frequency, Volume, and Value Data Gathering A View Toward both Attitudinal and Behavioral data Factoring for Substitutability in any Extrapolations The China Problem Longitudinal Effort Determination of Age Standards 24
The Substitutability Dilemma t all categories of counterfeit goods and services are perfect substitutions for legitimate offerings. One potential solution is the use of Preference Structure Modeling techniques. Conjoint Customers and potential customers evaluate a series of hypothetical and real products as defined by their features. Discrete Choice Consumers are asked to view a series of competing products and select at least one. By conducting industry level analysis and a short assessment of actual past behaviour, a factor can be derived that would indicate the ratio of substitutability for product categories. This weight could then be applied to behavioral volume and value data to derive a cost and severity estimate. 25 Extra Slides 26
Methodology 1,304 completed interviews among U.S. adults 18 years of age or older Computer assisted telephone interviewing Interviewing conducted January 10-January 20, 2005 Based on a sample size of 1,304, the margin of error at a 95% confidence level is +/- 2.7%. 27 Counterfeiting And Piracy Laws 100% 80% 72.0% 60% 40% 20% 0% 57.7% Should Be Stricter 32.7% 22.8% 7.7% 3.3% 1.9% 1.9% Left As They Are Less Strict t Purchased Purchased Q: Do you believe counterfeiting and piracy laws should be stricter, left as they are, or made less strict? Sample Size: n=1,304 28
Familiar With The Term Intellectual Property Rights 39.4% 60.3% Q: Are you familiar with the term Intellectual Property Rights? Sample Size: n=1,304 29 Counterfeiting in Europe Perceptions on Counterfeiting 2005 30
Methodology Random digit dial telephone methodology Interviewing conducted May August 2005 Average sample size is 2,000; sample size 800 For results based on a sample size of 2,000, one can say with 95% confidence that the margin of sampling error is +/-2.2 percentage points; for a sample size of 800 the margin of error is +/-3.5 percentage points. All questions were not asked in every country 31 Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Branded Fashion Clothing Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 32
Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Branded Watches Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 33 Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Music CDs/Audio Cassettes Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 34
Do you think that imitations for the following goods are widely available in [:COUNTRY:]? VHS/VCD/DVDs Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 35 Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Computer Operating Systems (Windows, Mac) Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 36
Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Computer Application Software (Word, Excel, Adobe, etc.) Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 37 Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Pharmaceuticals and Medicine Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 38
Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Alcoholic Beverages Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 39 Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Tobacco Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 40
Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Tools, Auto Parts Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 41 Do you think that imitations for the following goods are widely available in [:COUNTRY:]? Jewelry Does t Apply Sample sizes: (2,004), (2,014), (2,011), (2,001), (2,016), (2,025), (2,020), (2,003), (2,023), (800), (2,010), (2,011), Spain (2,037), and (2,012) 42
Methodology 1,008 completed interviews with Moscow residents 18 years of age and older Interviewing conducted via Computer Assisted Telephone Margin of error based on 1,008 interviews is +/-3% Interviewing conducted during February 2005 43 Groups Involved with Producing or Distributing Counterfeit Products (Moscow Residents) 100% 88.2% 88.5% 80% 76.1% 60% 55.4% 40% 20% 0% Corrupt Government Officials Organized Crime Importers & Exporters Terrorist Organizations Q: Are the following groups involved with producing or distributing counterfeited products? Sample Size: n=1,008 44