【成果速递】Gray marketing phenomena in global supply chains

Transportation Research Part E

Published: 14 May 2024

1．Lei Xu

Economics and Management College, Civil Aviation University of China, Tianjin 300300, PR China.

2. Tsan-Ming Choi

Centre for Supply Chain Research, University of Liverpool Management School, Chatham Building, Liverpool L69 7ZH, United Kingdom

3.Xiaoran Shi

School of Management, Tianjin University of Technology, Tianjin 300384, PR China

4.Chi Zhou

School of Management, Tianjin University of Technology, Tianjin 300384, PR China

灰色市场是当今全球供应链管理中的一个重要问题。本文分析了在位授权零售商如何利用定价策略阻止未授权销售商进入并建立灰色市场。考虑了在位授权零售商可选择的三种定价策略，即：短视定价、主动定价和被动定价。高端市场的授权零售商面临着更高的消费意愿(WTP)。本文通过建立一个简洁的分析框架来探究未授权销售商在三种定价策略下建立灰色市场的进入条件，以进入条件明确细分高端市场。本研究从理论上揭示了未授权销售商的购买成本和消费者对授权产品和未经授权产品的WTP差异程度将决定阻止或允许灰色市场入侵是最优的。当消费者在高端市场的WTP较高，并且在位授权零售商的采购成本较高时，未授权销售商更有可能进入高端市场。虽然被动定价策略是最灵活的定价策略，但采用相对灵活的定价策略并不能完全阻止未授权销售商的入侵。对于在位授权零售商来说，采用短视定价策略来忽视未授权销售商入侵的威胁是最优选择，其次是采取主动定价策略和被动定价策略。此外，研究结果强调，选择采用更灵活的定价策略来阻止未授权销售商的入侵，可能会导致“赢家诅咒”，而不是“赢家通吃”的结果。此外，允许未授权销售商入侵供应链绝不是一个“双赢”的游戏。

Grey market, which involves business activities such as parallel imports and cross-border e-commerce, create challenges for businesses. In recent years, a remarkable gray marketing phenomenon called cross-border e-commerce has emerged, where the dealers sell the unauthorized products through oversea indirect purchasing from the oversea distributors authorized by the brand merchants. While grey marketing can enhance competition and benefit consumers, it can also result in significant losses for brand owners. Brands usually tolerate the existence of grey markets, relying on the perceived quality and consumer loyalty. we address how incumbent authorized firms adopt different pricing strategies to cope with the gray market and, fundamentally, whether incumbent authorized firms should deter or allow the gray market. This study explores three main questions: 1. What limits gray marketer entry into high-end markets? 2. How does the gray market impact authorized retailers' prices, market share, and profits? 3. What pricing strategies should retailers adopt?

To address the above questions, this study builds a Stackelberg gaming model in which two retailers are authorized to sell the same product in two separate markets, and the retailer in the low-priced market is tempted to enter and sell products in the high-priced market without authorization. In this setting, this study investigates how the incumbent retailer utilizes different pricing strategies to tolerate or deter gray marketing both proactively and reactively. Based on the optimal pricing decisions, we characterize gray market entry conditions.

Furthermore, based on the entry conditions under the three pricing strategies, this study provides a framework to explicitly segment the highend market and identify the deterrence outcomes of each pricing strategy in each segmented market. This study thus provides theoretical guidance to incumbent retailers in selecting the optimal pricing strategy.

The model offers key insights into gray market entry and can be applied to broader channel entry scenarios. This study uniquely characterizes pricing strategies based on incumbent retailers' attitudes toward the gray market—whether to tolerate or deter it—and examine how these strategies influence gray market entry.

This study analyzes the entrant retailer's pricing behavior, noting that their selling price initially rises and then falls as consumer willingness to pay differentiates. This pattern reflects first-mover and incumbent advantages under various pricing strategies. Additionally, this study provides a framework to segment the high-end market based on entry conditions for three pricing strategies, identifying the deterrent effects of each.

Interestingly, a more flexible pricing strategy does not always prevent gray market entry and can lead to a "winner's curse" rather than a "winner-take-all" scenario. In some cases, completely deterring gray market entry may not be more beneficial for incumbents than allowing it through a less flexible strategy. Gray markets, including parallel imports and cross-border e-commerce, pose significant challenges for businesses.

Gray marketing is an increasingly critical channel management issue for authorized firms and brands. In such a context, a key issue is whether to deter unauthorized gray market entry, and if so, which pricing strategy should be adopted to deter such entry in different market segments. This study explores this topic by building a Stackelberg model in which the incumbent retailer in the high-end market acts as the leader and the retailer in the low-end market enters the high-end market as a follower to sell products without authorization. The incumbent retailer can choose three pricing strategies, myopic, proactive, or reactive, to prevent unauthorized entry. On this basis, this study first investigates the entry conditions for the entrant retailer to start a gray market under the three pricing strategies.  Then provides a succinct analytical framework to segment the high-end market explicitly in terms of entry conditions under these three pricing strategies and identify their deterring outcomes in each segmented market. Furthermore, this study examines the impact of the unauthorized entry of the gray market on the prices, demands, and profits of the incumbent retailer in the high-end market and of the entrant retailer in the gray market.

 https://doi.org/10.1016/j.tre.2024.103541