Solving the Grey Market: The Antidote to Consumer Engagement & Brand Prosperity Issues
I read an article two days ago where the author was advocating for "firing customers." He continued to suggest taking the time and resources needed to manage those fired customers and investing in the customers who make up the majority of the business. I suppose this is okay for some companies, who sell commodities, but if a company sells premium products, and their brand is built on a premium consumer view, I hate this idea.
While I understand the author's perspective on focusing resources on the majority of customers who drive the business, I believe that has the potential to alienate channels where valuable consumers interact with products and potentially create the demand in the higher volume channels. Exiting and/or ignoring some of these outlets due to size creates the potential for long term market share loss and a need to redefine how to connect with early adopters. Constant review of a brands distribution strategy is appropriate and necessary now more than ever. Retailers must evolve with the changes and maximize consumer engagement to remain relevant, and brands need to adapt and find new ways to thrive. Working together to identify common goals for product fitting into these strategies is key. It's not just about firing customers, but rather about assisting them in adjusting to the evolving landscape.
In today's dynamic business environment, where e-commerce and globalization have opened up new opportunities, brands face challenges from various sources. The largest challenge that we talk about at Counter Diversion is the rise of the grey market. Grey Market issues include harming a brand's reputation, eroding customer trust, and ultimately impact profitability. Addressing this issue at the supply source to grey market sellers unlocks the ability for brands to execute all strategies more effectively.
To maximize consumer engagement, brands need to work closely with their wholesale partners. Instead of firing customers, it is crucial for brands to assist their wholesale partners by battling the grey market and driving profitability and brand heat that the retailers can trust and build into their long term plans. By doing so, brands can create and maintain a more consistent and profitable distribution model, and ensure that their premium products are sold through authorized and reputable outlets, consistently reaching their targeted consumer.
Here are a few reasons why brands should prioritize supporting their wholesale partners in the fight against the grey market:
Protecting brand reputation: Premium brands rely on their reputation for exclusivity, quality, and authenticity. The grey market undermines this reputation by flooding the market with unauthorized products, often of lower quality. By assisting wholesale partners in combatting the grey market, brands can protect their image and maintain the trust and loyalty of their customers.
Ensuring consistent customer experience: Premium brands often provide a unique customer experience, which includes personalized service, knowledgeable staff, and a carefully curated environment. When products end up in the grey market, this experience is compromised, as customers may receive subpar service and encounter counterfeit or defective items. By supporting wholesale partners, brands can ensure that customers receive the intended premium experience.
Strengthening relationships with wholesale partners: Wholesale partners play a crucial role in a brand's distribution network. They invest in marketing, sales, and customer support to promote and sell the brand's products. By assisting wholesale partners in the battle against the grey market, brands demonstrate their commitment to the partnership, fostering stronger relationships and mutual trust.
Driving profitability: The grey market often sells products at lower prices, undercutting the authorized distribution channels. This can result in lost sales and reduced profitability for both the brand and its wholesale partners. By actively fighting against the grey market, brands can help maintain higher price points, protect margins, and ensure sustainable profitability for themselves and their partners.
Rather than resorting to the drastic measure of firing customers, brands selling premium products should focus on assisting their wholesale partners in battling the grey market. By doing so, they can protect their brand's reputation, ensure a consistent customer experience, strengthen relationships with wholesale partners, and ultimately drive profitability. Adapting to changing marketplace conditions is essential, and collaborating with partners is a far more constructive approach than severing ties with customers. Together, brands and wholesale partners can navigate the challenges posed by the grey market and thrive in a dynamic business environment.
Counter Diversion is a boutique SaaS company - we don't have marketing and we don't use high-pressure sales tactics. Our goal is to have solid, honest conversations about the issues at hand and then either recommend our service or another one that is a better fit for your needs. If you'd like to engage in that type of discussion, please schedule a free consultation.