hr: Money

Companies that are concerned about their brand image face a new problem with the advent of the Internet. That problem, is the grey market. The Grey Market consists of unauthrorized dealers of a company’s product, that get their hands on it by several means, including buying directly from the wholesalers.

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The problem is, that these dealers are able to sell goods much more cheaply than either the manufacturer, or the authorized dealers can sell, simply because they do not have to offer a warranty, or any other customer service. It’s just buy and forget.

When something goes wrong with the product, and the unauthorized dealer can’t come up with the service, customers naturally blame the product itself, jeapordizing it’s brand image.

And the problems don’t stop there. Genuine authorized dealers are losing a huge share of their market to these grey dealers. John Ferreira at Archstone Consulting says “Between the manufacturer and the end customer, there are huge networks of intermediate distributors. It’s easy for products to trickle outward.”

This has been exacerbated by the advent of the Internet, where any unauthorized dealer is now able to sell to the whole world at prices that are between 30-40% less than the real price.

It therefore becomes important for a company to know where it’s goods are going. To help with this, there are softwares available like Net Enforcers and Cyveillance, that track where in the Internet your products are appearing.

But some vendors are using their own images, and by means of other techniques, they are finding ways to circumvent and make it difficult for themselves to be found.

“When a manufacturer’s goods sell for cheaper prices or through disreputable channels,” says Ferreira, “the company will eventually have to bring its prices down, or suffer lost revenues.”