You have a right to protect your brand from harm, and your customers have a right to be protected from negative experiences themselves. This means staying on top of the threat posed by gray markets and doing your bit to stop unscrupulous traders from profiting off your hard work.
What exactly is a gray market, or a grey market for those outside the US? A gray market is an unofficial channel for importing, dealing, and selling goods. It is different from the better known "black market" in that it is not inherently illegal, although it is certainly frowned upon by most legitimate manufacturers, product dealers, and authorities — not to mention customers themselves.
The goods sold on gray markets are not counterfeited or produced fraudulently. Instead, they are genuine goods that have been manufactured by licensed facilities, according to manufacturer specifications. In most cases, they are not stolen or acquired by deception — this would make them illegally sourced products, disqualifying them from gray market status. However, they are sold and marketed by unlicensed dealers and distributors without the consent of the entity that owns the product's intellectual property.
You plan to release your products at a certain time, and in a certain way, for a reason. For starters, they have to undergo the proper levels of testing and development before they can be safely launched into the market. This testing can take quite some time to complete but needs to be carried out in full before quality can be guaranteed.
If products are being leaked from this system of testing and monitoring, there are two potential risks that come into play. Firstly, these products may not yet have undergone all the necessary testing and analysis and may be released to customers without the proper checks and certification.
Secondly, the products may have been leaked from the manufacturing process even earlier in the chain — before testing has even begun and before the crucial final stages of manufacture have been completed. This leaves customers with a product that lacks the intended functionality.
This is seriously bad news for your brand. These unauthorized products still bear your trademarks and represent your company. Their presence in the market significantly reduces the perception of your business in the public eye.
You have a new product, and you are excited to release it into the market. You spend money on creating promotional materials and drumming up interest in this revolutionary item, and you tease its launch ahead of time to pique customer curiosity.
What happens to all of this hard-earned publicity and interest if the products are leaked to the market ahead of time? Well, they certainly lose their impact. Customers have access to products before your intended launch date, and the carefully curated promotional campaign comes to nothing.
This kind of anti-climax is not only a waste of money. It also has major repercussions for your brand. It leaves you with the appearance of a company that is not in control of its own brand activities, and this can be a major detriment moving forward.
If one of your products is released on the gray market and is not properly tested and assessed before release, the public is put at risk. This is of course no fault of your own — but from the customer's perspective, it is your brand that is legally culpable.
You may find yourself having to prove that the product was released via an unauthorized channel. This can be a lengthy, difficult, and expensive process and is certainly not a situation you want to be faced with. While you should be able to prove your innocence eventually, the legal proceeding can still cause irreparable reputational damage.
Gray market channels tend to be unscrupulous and underhand. Any deals you have with distributors will be negated by gray market sales, and you may find that you miss out on crucial sources of revenue as a result of gray market trading.
This is before revenue reduction from other sources, such as reduced reputation, are factored in. In short, unauthorized vending on the gray market directly hinders your business's ability to make money.
Digital platforms like engage™ do provide brands with a level of protection against gray marketers. Let's take a look at how you can make sure your products, brands, and customers stay protected.
We've talked at length in previous articles about the power that a platform like engage™ has when it comes to fighting counterfeiters and fraudsters. Businesses simply need to register their products on the platform, and this registration data is made available to any potential customers with the app. But, as these products are still legitimate versions in most cases, and are manufactured through proper channels, how does engage™ make a difference here?
Well, first and foremost, not all gray market items are manufactured through the proper channels — or at least have not yet completed the full testing phase. By registering products on the platform only when they leave your facility ready for launch, you can still make sure that customers are connecting only with officially released items.
Secondly, you can make other information available via the platform also. For example, you can educate customers on the different product hallmarks and features that should be evident on the completed item, providing further details on how they can reach out to your team with any concerns.
Thirdly, you can edit the information you release as and when required. For example, if you hear of a new batch of products that have been released via an unauthorized channel, you will be able to make this known to the general public quickly and easily. If you are able to gather more information regarding serial numbers or other identifying features, you can publicize this across the app too.
In order for an initiative like this to be successful, you need to get the word out there that this is what you are planning to do. Let your customers know that they can protect themselves from fraudulent or gray market items via the app, and show them how they can download this.
Increasing numbers of people now have access to powerful smartphone devices, putting the power back in their hands — literally.
As well as being a channel for registering products, the engage™ platform is also great for gathering data regarding the customer experience. For example, you will be able to gauge public perception and satisfaction regarding your brand based upon quantitive and qualitative data gathered by the app.
A downturn in public perception could be down to many different factors. However, it could be an indicator that gray market distribution is taking place.
If you do find yourself having to prove that you took all the required responsible steps in protecting the consumer from substandard products, the engage™ platform can help you achieve this.
Registering your products via the platform will provide an indisputable record that you took all reasonable actions in making sure that your products are up to code and are suitable for public release.