Brand protection strategies: Defending against grey market
BRAND PROTECTION STRATEGIES:
Defending Against Gray Market Diversion
EXECUTIVE WHITE PAPER
Solutions for Business
Consulting. Technology. Results.
Executive Summary
In this rapidly changing global economy, gray market diversion has become an ever increasing issue facing many brand owners today. Unlike black market activity—where counterfeit, refurbished, or stolen goods are resold as genuine brand products—gray market activity involves the unauthorized movement of commerce through various geographies by rogue distributors and trusted channel partners alike.
It has been estimated that as much as $63 billion per year in revenue is lost to gray market diversion in the U.S.1 Within the
IT industry alone, nearly $5 billion in profits is lost to gray market activity each year. 2 The problem is more prevalent in other countries, potentially costing hundreds of billions of dollars per year in lost revenue to thousands of companies worldwide.
Considering that manufacturers could be losing 4.5% of sales or more to gray marketers, it is no wonder that companies are now taking a hard look at their Brand Protection Strategies to combat this ever increasing problem.
Gray Market
Brand Impact
More commonly known as “product diversion” or “parallel importing,” gray market activity can be considered a fraudulent means of inflating profits for participating distributors, while reducing brand owner revenue. Gray marketers capitalize on surplus inventory, lower manufacturing costs, fluctuating distribution costs, economic conditions, and currency exchange rates, by exporting goods without the permission of brand owners.
Gray market product diversion is caused by geographic price disparities within various channel partners, from internal or external distributors, brokers, and resellers.
As economic conditions change in various regions of the world on a daily basis, the currency exchange rates are affected. These global factors can be compounded
Defending Against Gray Market Diversion
EXECUTIVE WHITE PAPER
Solutions for Business
Consulting. Technology. Results.
Executive Summary
In this rapidly changing global economy, gray market diversion has become an ever increasing issue facing many brand owners today. Unlike black market activity—where counterfeit, refurbished, or stolen goods are resold as genuine brand products—gray market activity involves the unauthorized movement of commerce through various geographies by rogue distributors and trusted channel partners alike.
It has been estimated that as much as $63 billion per year in revenue is lost to gray market diversion in the U.S.1 Within the
IT industry alone, nearly $5 billion in profits is lost to gray market activity each year. 2 The problem is more prevalent in other countries, potentially costing hundreds of billions of dollars per year in lost revenue to thousands of companies worldwide.
Considering that manufacturers could be losing 4.5% of sales or more to gray marketers, it is no wonder that companies are now taking a hard look at their Brand Protection Strategies to combat this ever increasing problem.
Gray Market
Brand Impact
More commonly known as “product diversion” or “parallel importing,” gray market activity can be considered a fraudulent means of inflating profits for participating distributors, while reducing brand owner revenue. Gray marketers capitalize on surplus inventory, lower manufacturing costs, fluctuating distribution costs, economic conditions, and currency exchange rates, by exporting goods without the permission of brand owners.
Gray market product diversion is caused by geographic price disparities within various channel partners, from internal or external distributors, brokers, and resellers.
As economic conditions change in various regions of the world on a daily basis, the currency exchange rates are affected. These global factors can be compounded