There is often a huge price difference between goods that follow the right distribution channels and gray market goods. This if obviously to the disadvantage of the rightful manufacturer who is reduced to just watching as their brand makes money for someone else. Some related problems that such manufacturers will encounter are lack of support from certified resellers, degradation of pricing strategies previously used and difficulty maintaining a positive image. Only by a manufacturer understanding the causes for gray market sales of their products can they device strategies to combat this trouble. Use these strategies to fight for a profitable performance of your brand anywhere it is sold.
- All territories should have a single transfer price
This approach may mean that you will lose out of the possibility of earning more for your brand in some territories but it pays off in the long haul. The idea behind having a single price across all territories where your product is sold is so that gray market sellers have no motivation for price arbitration. At the same time, it is important to maintain a uniform worldwide price-setting policy that will discourage gray market sellers from infiltrating the distribution channel. Visit www.wisermarket.com for proactive online brand protection services.
- Exercise active control over the retail price
Once you have harmonized the price with which distributors get your products, it is now time to set the end-user price. This is possible however if you draft an agreement with authorized distributors where the power to set the minimum and maximum price of products rests with the manufacturer. A policy that addresses end-user price control leads to higher brand loyalty since there will be no incidents of “cheap” alternatives that can easily be flagged as counterfeits.
- Consider different packaging styles for different territories
When you package the same product in different packaging for all the different regions you have gained markets, it becomes hard for gray market sales to thrive because consumers will consider the product foreign and possibly counterfeit. Make sure that what is presented for sale in a certain region is what appears in form, color and style in the local advertising and marketing channels.
- Consider different serial numbers for different territories
Products such as electronics require some level of support during and after sale. To reduce or totally root out gray market sales, why not advice regional support stations to only accept and service products that bear the serial number designated for that region. This can be facilitated through having a digital serial number verification system
The above efforts discourage gray market sales but they might not completely keep off the daring lot.