Protecting Your Enterprise from Gray Market Infiltrators
Protecting Your Enterprise from Gray Market InfiltratorsThe technologically changing global economy demands constant vigilance to battle brand piracy,counterfeits and gray market infiltration. Gray market products can be as damaging and costly ascounterfeits to a manufacturer and as an ever-increasing issue facing many brand owners today, theycontribute to significant losses. The gray market activity involves the unauthorized movement ofgoods via different geographies by unscrupulous distributors and trusted channel partners alike.Gray market, also known as product diversion or parallel importing, is a fraudulent activity thatdeflates profit of participating distributors, while reducing the revenue of the brand owner.Beware of the gray market Impact on your brandWhile the gray market activity spoils business relationships between manufacturers and theirchannel partners, eventually authorized distributors may reduce their business with certainmanufacturers. There can also be a considerable erosion of your brand. Gray market importedproducts may not have the necessary functionality, accessories, and features apart from support. Thiscan lead to customer dissatisfaction towards a brand; create brand equity issues, quality, packaging,instruction manual, price, and safety concerns.Taking control with the right solutionGray Market products create disruptions with the “good” distributors in your channel—the ones whoare keeping their agreements. Unfortunately, these good partners lose sales to the gray market. Ifthey believe that there is unfair competition from a growing gray market, they’ll drop you as asupplier. Manufacturers and luxury brand owners want to control the chain of distribution to assurethat a gray market product is not inadvertently or intentionally mixed in with its genuine product.
Needless to say, most brand owners also have contractual obligations with their distributors, whowould clearly not be happy to see products sold at a lower price in their markets.To tackle the problem of gray market, both strategic and tactical remedies need to be a part of thesolution. Enterprises need an effective enterprise risk management solution that can help track thedistributors who are responsible for unloading these products in the gray market and take necessaryaction against them. As the entire gray market sales process takes sales away from new products andaffects the distributor loyalty, look for an advanced SaaS-based software that has a propriety searchcapability and can find where and at what price your products are being sold globally. With this kindof data in real-time your business can be well prepared to take appropriate action against theviolators.Read More About: brand management, Anti-Fraud, Anti-Counterfeiting