Global Marketing Strategy Report: Grey Market Analysis and Solutions

This report provides a comprehensive analysis of global marketing strategies, with a specific focus on the challenges and implications of grey markets. It begins with an overview of grey markets, defining their characteristics and significance in international trade. The main body critically assesses the causes and effects of grey market activities, examining how they impact brand owners, market structures, and consumer behavior. The report then evaluates various strategies to reduce or eliminate the likelihood of grey markets emerging, including pricing policies, distribution channel management, and brand protection measures. The analysis covers the legal aspects of grey markets, their impact on brand reputation, and strategies to maintain market control. The report concludes with a summary of key findings and recommendations for businesses operating in global markets, highlighting the importance of proactive strategies to mitigate the risks associated with parallel imports and maintain brand integrity.

GLOBAL MARKETING STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
Overview................................................................................................................................2
Evaluate the cause and implications of grey market for brand owners..................................4
Ways to reduce or eliminate likelihood of grey markets emerging........................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Global marketing strategy is the framework for the companies to adjust in accordance to
the pricing strategies, market maturity and differing levels of competition. There is a need to
understand that grey markets are significant in selling of goods via a distribution channel under a
flexible framework, however such goods are never intended for sales by the original
manufacturer. Grey market is also known as grey market which involves the trade of legal goods
through unauthorized, unofficial, and unintended channels of distribution (Roy, Abhijit. "Grey
Market.”, 2009). This assignment is based on critical assessment of the grey markets in terms of
causes and effects. Along with this, the emergence of grey markets in the international market is
also going to be evaluated to reduce its impact on the whole.
MAIN BODY
Overview
Grey market can be defined as a commodity trade that is done through distribution
channels that are completely legal but unintended by the trade mark proprietor or by the original
manufacturer. Grey market good or products or goods are mostly sold by an authorized agent or
manufacturer outside the agreement terms. Grey markets are completely legal unlike black
market. Most of the products sold in Grey market causes changes in the market structure. These
causes and implications of Grey market completely differ from each other and are based on the
extent to which retailers of Grey market has access to product consumers. This disturbs the brand
owners strategies and market (Zeriti and et.al., 2014). So, Grey market retailers try to keep their
prices as low as possible so as a result they do not advertise their products on same scale as the
original brand owners.
Due to prevalence of grey markets, The parallel importation has become significant
phenomenon for challenging the companies. It is required for managing the grey market that has
already important but difficult problem for the organization in terms of decision making (Griffith
and Zhao, 2015). Many multinational companies are argued that the presence of grey market that
hurt the entire profits. For Example- In 2001, HP, Apple and other IT firms set up their own anti
Gray alliance which against towards the grey markets. In this way, they also take the serious
action towards the grey market that affect the business operations and function. However, it
directly impacts on the company’s profits (Bronzi and Rosenthal, 2014). It also depends on the
reseller inventory that can holding the costs.
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On the other hand, The Grey market is beneficial to manufacture under the conditions
such as follows the parallel imports related as low quantity substitute. The authorised item can be
used as a price discrimination that help for enhancing the manufactures profit rate (Ban,
Seabrooke and Freitas, 2016). According to driver of grey market, price differentiate may be
caused by the comparison in the demand of markets. Brand owners mainly used the
segmentation strategy across the world which is the most common factor in terms of grey
markets.
In today's competitive markets, the manufactures increasingly rely on their authorised
distributors to perform different operations for added more values. In this way, it will improve
the service and quality. Sometimes, the grey market occurs when it helps for branded good
which are sold through the unauthorised marketing channel (Roy, Abhijit. "Grey Market." 2009).
It is required for controlling the grey market through the demands. In multinational companies,
managers of international brand must require to influence of reaction on the grey market. The
grey market is negatively affects the consumer brand trust which negatively influences the brand
loyalty.
Globalization may increase the size of organization concentration, also give the more
advantages of firms at the expenses of other ones. It is the most important part of global business
to access the large market which allows the business of benefits from economies. It also allocates
the production in the different areas and locations. In this way, it has been increased the
productivity and profitability in marketplace (Beck, Chapman and Palmatier, 2015). While good
for the clients, the transition always painful for small level organization and their staff members.
Moreover, in long term production, it is greater the company concentration that may harm the
growth and development. it also decreases the incentives for investing money due to the lack of
competition in marketplace.
Cultural globalization always causes the reinforcement of various type of domestic
regional characteristics and it can produce the process against itself. It also removing the proper
identification and barrier of knowledge that has created the foundations of ethics, national
identity as well as domestic (Jia and et.al., 2014).
Globalization has created the market culture when human can easily identify the
differences and diversities which exists between peoples. It also recognises the different cultures
and interests of nations, creates the competition among the people but the lack of communication
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technology will increase the impressionability and deletion of geographical. In many cases, it
combined with the tradition so there are chances of issues and dependences between citizens.
Evaluate the cause and implications of grey market for brand owners
The Grey market is selling and importing the goods by dealers that are not authorised
according to manufacture. However, the selling activity is not illegal but still unofficial. The
Grey market refers to the flow of good and services through distribution the channels other than
those who are authorized and intended by the producer or manufacturer (Gillespie and Riddle,
2015). Unlike those on the black market, where grey market commodities are not illegal but
many brands are sold the good outside of the normal distribution channels by companies. In this
way, it may causes have no good relationship with the producers. It is frequently occurring when
the cost of product is significantly higher in one nation to another. There are some causes of grey
market and how they can affect the global marketplace.
Many entrepreneurs can buy the product at cheap prices and often at the retail. Wholesale
price is comparatively less than the original price of goods. For importing the good which is
legally to the target market (Bình, 2018). In this way, manufacture distribute their product to
distributor in large amount so that they will increase the sales and profitability in marketplaces.
On the other hand, companies set the prices on the basis of profit calculations when goods are
sold at low price that affected on the profitability of organization.
Some manufacture blocks a few distributors from selling the products, however the
distributor want to sell the item of manufacture but they buy the product through grey market.
On the other hand, it is difficult for distributor to differentiate between new product and used
ones. Trusting the grey market might not be easy to identify the proper goods and services
(Samaha Beck and Palmatier, 2014).
For Example- The problem and issue seems to be generated in New york, California. The
dental shopper is supply the different type of products such 3M/ESPE, Dentsply etc. There are
trends in the global market so that many industries are deals with the dealers and now getting the
space at the big trade shows (Bahadir, Bharadwaj and Srivastava, 2015). In this way, it is
displaying the grey market goods and thumbing their noses at manufactures, they are enticing
dental community with deals with the low prices products and also they want to cut the expenses
in global marketplace (Brand, Cluzel and Anable, 2017). Sometimes, the grey marketer does not
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consider the durability, quantity and quality of product which further increase to dissatisfaction
of items Thus, it will create a bad impression towards the consumers.
Manufacture offers the different cost for same products in other countries. This type of
strategy to increase the profits rate on the basis of demand of particular country. The grey
marketers always aware of same items and purchased the food from the country. Market dealer
sell the genuine product at higher price where grey marketer sells the same type of product at
lower price (Cavusgil and Knight, 2015). This will create more difference for one signal item's
development through same manufacture. On the other hands, it effects on the parallel marketing
whereas many consumers are confused that what products are the best. In this way, Brand
owners suffer a huge loss due to parallel marketing and also reduce the reputation and brand
image in the international marketplace.
Inequality in the income of variety of people in other countries. In this way, the level of
income and consumption leads to demand conditions, situation for items. This can cause the
level of quality, price and brand value. It effects to create many hurdles in the development of
companies. They also reduced their new product development capabilities and abilities.
A grey market must create the consumer dissatisfaction while it seems to be right attitude
towards the client or buyer in the goods of grey market. There are many manufacturers faced
problems to find out the better products in their doorstep. For example- IBM personal computers
which typically operates the global world but they don’t provide so much warranty on the
services. In this way, the customer response towards the owner of grey market, unwillingly it’s
hard to earn more money. They also decided to direct communicate with the services shops
those perform out of warranty. This type of posture will increase the sales of grey market by
decreasing the risk for end users.
Ways to reduce or eliminate likelihood of grey markets emerging
International marketer is feeling threatened because of the emergence of Grey market as
it affects them in many ways. It is important to reduce the likelihood of grey market emerging as
it is affecting the marketing and image of brand owners as it an unauthorized sales challenge for
product. For example, sometime Gray market sellers even sell not for sale products to customers
which affect the image and reputation of brands (WirtzTuzovic and Kuppelwieser, 2014). This is
affecting the privacy of companies as well because these products are leaked into marketplace
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and as a result manufacturers do not receive complete potential revenue which they deserve. This
break in privacy also breaks the market share of companies. This form of piracy and theft of
products not only affects the brand but it also affects the manufacturers, partners and all the other
persons in the supply chain due to continuous stolen shipment, illegal supply of products etc.
Due to this sometime defected or low quality products are also released into market that work as
a hindrance for the companies and affect their reputation (Singh and Pandey, 2017). Overall it
affects the total profitability of the company, reputation of the company, customers doubt the
guarantee and warranty of the products as well as doubt the original price of the product.
Likelihood of emergence of Grey market can be reduced or eliminated by following steps such
as:
Organizations should set a single cost policy for their products. This will help the companies to
reduce the illegal selling of their products at lower price. Single cost policy will work as a
hindrance for Grey market sellers as they will not be able to sell those products at lower prices
set by the companies (Musso and et.al., 2014).
 Companies should also update their privacy policy so that details regarding selling,
distribution and launching of the product remains hidden and theft of branded products
can be reduced as all the information regarding the same will remain private.
 Companies should focus on increasing their distribution channel so that they can avoid
grey market. As of the main reason for breech in privacy and theft of products is small
distribution channel which gives them a chance of stealing original company’s products.
 Organizations should also focus on improving their terms and conditions in a stricter way
for distributors so that they do not get a chance of selling companies products illegally to
grey market sellers (Simba, Smith and Dube, 2018).
 They should also focus on improving their pricing and costing strategies like they should
try to reduce their cost of manufacturing products so that they can reduce or stabilize
their product cost which will further help them to reduce their selling cost as compared to
their competitor’s product cost. This will also help the companies to reduce the chances
of grey market sellers to sell companies products at lower price.
 Organizations should also try to focus on controlling their product supply in international
market by the distributors and company. So, they can control the theft of their products
and reduce selling of their products in grey market (Pham and Gammoh, 2015).
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 Realistic goals should be set for the companies’ employees especially for the sales team
so that they do not force themselves to sell companies products in grey market.
 International marketers should also update their manufacturing and selling strategies in
such a way that their products are offered to the customers at best price and grey
marketers do not set any chance of getting profit by selling their products.
Grey market is not only a threat for international marketers for theft of their product as today
online Grey marketing is also increasing rapidly. With the help of unauthorized channels many
luxurious products are sold through online Grey market as those products are available and are
sold at lower prices (Lobstein and et.al., 2017). This also work as a hindrance for companies as
suffer loss due to this unauthorized selling of their products. This can be controlled by following
ways such as:
 Companies should renew their online selling policies and should also update their terms
and conditions with all the e-commerce websites, this will work as a hindrance for all the
unauthorized channels for unauthorized selling of all the branded products (Katsikeas and
et.al., 2016).
 Organizations should also improve their monitor of online selling of their products so that
they can track flow and selling of all the products sold on Internet. This will help the
companies to track all the unauthorized channels selling their products (John and Lawton,
2018).
 Government should also update their selling and trading policies so that this unauthorized
grey market emerging can be reduced.
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CONCLUSION
It has been summarised that any marketing strategy of company assist in laying the
foundation of competition, markets and affordability is important tool to flourish in the
international trading. Moreover, the grey markets have affected the global marketing in adverse
manner and thus needed to be regulated to maintain the balance of trade. It has also shed light on
the international marketer perspectives in mitigating the implications of the grey markets which
is devaluing the brand and the products. Thus, strategic planning must be laid to overcome the
causes of these markets to sustain the global competitive marketplaces.
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REFERENCES
Books and Journals
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global markets: Examining the contingent role of country-market characteristics. Journal
of International Business Studies. 46(5). pp.596-619.
Ban, C., Seabrooke, L. and Freitas, S., 2016. Grey matter in shadow banking: international
organizations and expert strategies in global financial governance. Review of
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loyalty program effectiveness in global markets. Journal of International Marketing.
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Networking–The Case of Vietnam." Asian Journal of Business and Accounting 11. no.
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Jia, F. and et.al., 2014. Global purchasing strategy and International Purchasing Offices:
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pp.284-298.
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John, A. and Lawton, T.C., 2018. International political risk management: Perspectives,
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Musso, F. and Francioni, B., 2014. International strategy for SMEs: Criteria for foreign markets
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Pham, P.H. and Gammoh, B.S., 2015. Characteristics of social-media marketing strategy and
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Samaha, S.A., Beck, J.T. and Palmatier, R.W., 2014. The role of culture in international
relationship marketing. Journal of Marketing. 78(5). pp.78-98.
Simba, A., Smith, D.J. and Dube, T., 2018. Competing with the grey market: Puzey and Payne
in Zimbabwe. The CASE Journal. 14(2). pp.145-163.
Singh, G. and Pandey, N., 2017. Determinants of celebrity-owned brands leveraging price
premium. Journal of Fashion Marketing and Management: An International
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Online:
Roy, Abhijit. "Grey Market." 2009. [online] Available
through:<https://nelson.northampton.ac.uk/primo-explore/fulldisplay?
docid=TN_gvrl_refCX3201500467&context=PC&vid=44NORTH_V1&lang=en_US&adaptor=
primo_central_multiple_fe&tab=default_tab&query=any,contains,grey
%20market&sortby=rank>
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