Brand Protection Challenges
Are discounts on the gray market negatively impacting my
legitimate sales channel?
Do offers on the gray market point to obviously counterfeit
or re-marked products?
The scary truth is that the answer to both of these questions is probably "yes".
In fact, from the moment you place an order for components to the time your products leave your distribution facility, there are significant risks that pose even more significant threats to your overall brand equity and integrity.
Can I “see” matching requests that encourage OEM shortages and possibly encourage re-marking, repackaging, or flat out counterfeiting to meet demand.”
Even if it is a legitimate product, doesn’t “leakage” of over-discounted or excess product on the market result in lower than desired prices?
There are four main challenges to finding counterfeiters and those involved in
gray market activity, and getting them to cease operations:
- Top management does not understand the bottom line cost of this activity
- Manufacturers don’t know how to get find the counterfeits (Often they find out about a counterfeit part when, because of poor quality, it comes in for warranty repair.)
- Once they find the counterfeits, many companies either lack the resources or don’t know how to go about enforcement and getting the counterfeiters to cease operations
- Ongoing monitoring of distribution streams is difficult and resource consuming
According a KPMG white paper on “Managing the Risks of Counterfeiting in the Information Technology Industry, “Counterfeiting is among the most challenging issues facing the information technology (IT) industry today. Illegal replicas of brand-name high tech products are flooding the marketplace, cutting into legitimate companies’ revenue and reducing their ability to invest in research and development (R&D). Proliferation of technology used to make computers, servers, and a host of high tech products—as well as a lack of regulatory enforcement in developing nations—is accelerating counterfeiting. It is now estimated that as much as 10 percent of all high tech products sold globally are counterfeit.
Despite IT products’ sophisticated design and complex manufacturing, counterfeiting is a growing problem. As many as one in ten IT products sold may actually be counterfeit, according to interviews conducted with electronics industry executives.
In some specific product cases the percentage of counterfeits may, in fact,
be even higher (e.g., network interface cards). Conservatively estimated, this
equates to about US$100 billion of global IT industry revenue that is lost to counterfeiters
annually. Indeed, according to estimates by the International Chamber
of Commerce, all counterfeit goods accounted for 6 percent of world trade in
2003, valued at a whopping US$456 billion.
Here’s what KPMG says about mitigating counterfeits:
“One of the ways to mitigate counterfeiting and sales through unauthorized channels: Ongoing monitoring of distribution streams including distributors, authorized resellers, contract manufacturers and independent distributors.”
Here’s the biggest challenge with this ongoing monitoring:
Most companies who have attempted this kind of monitoring are doing it through search engines such as Google and coming up with volumes of information, some valid, some not so valid and duplications. This is a very time and resource consuming process that is difficult to verify.
New Momentum’s Brand Protection gives you visibility into the worldwide market, provides real-time information formatted in a way that’s easy to use.