Combating Different Risks with an Effective ERM Solution Part I

This is a two-part article that looks at the different risks faced by enterprises today and the need of effective solutions to mitigate these risks.

Globalization, technological advancements and outsourcing have benefitted enterprises in many ways. On one hand, they have been able to reduce the mounting costs by transferring the costly core business functions to low cost regions and on the other hand, they have been able to improve performance and operational efficiency by accessing the myriad of global talent available around the world. However, it has increased enterprise risks many folds. For instance, for enterprises outsourcing to low cost regions, there is a greater risk of counterfeits, gray market sales and lower than MAP sales.

Product Counterfeiting

The Federal Bureau of Investigation (FBI) has named product counterfeiting as the crime of the new decade in view of its considerable growth and sales. It is estimated that the annual counterfeit sales amount to a whopping $300-600 billion. Counterfeit products ranging from breakfast cereals to medicines have caused injuries and sometimes even death for some unsuspecting customers. From pharmaceutical, high tech to retail luxury goods companies, there is not a single industry that has not experienced the outcomes of counterfeiting.

According to the United Nations Office on Drugs and Crime (UNODC), drug counterfeiting is one of the most harmful forms of counterfeit goods with sales from Asia to South-East Asia and Africa alone amounting to some $1.6 billion per year. The reasons for this are the easy profits and relatively low risk of prosecution and penalties. Statistics show that the counterfeit drugs cause 100,000 deaths worldwide each year and provide approximately $75 billion in revenue, for illegal operators. Counterfeiting is a disease that easily corrodes the real brand’s image and reputation, derails global business, counterfeiting ensures loss of brand, revenues and jobs.

Gray Marketing

“When authentic branded products reach the consumer through marketing channels other than that of the authorized distributor” it is referred to as gray marketing. Though gray market products are authentic products unlike counterfeit goods, which are fakes, it can be as damaging and costly as counterfeits to the manufacturer. This is because the sales of these grey market products have a negative impact on customers who are expecting the original manufacturer’s warranty. Besides, the entire grey market sales process takes sales away from new products and affects distributor loyalty. This results in loss of revenue and legitimate channels as well.

In the second and concluding part of this article, we will look at some other enterprise risks and how to combat these risks with an effective Enterprise Risk Management (ERM) solution.

Brand Monitoring and Brand Management to protect Brand Reputation

Brand monitoring is the practice of “strategically and regularly investigating online resources in order to discover and when necessary react to references to your companies’ trademarks and potentially the trademarks of your competitors.” Brand monitoring is very important in today’s hypercompetitive business environment where fraudsters stop at nothing to make money. Hence, brand monitoring is the only effective means to protect one’s brand name from losing its credibility in the market.

The advent of the Internet has provided fraudsters with ample opportunities to involve in counterfeiting and other illegal and fraudulent activities. This puts brands at grave risk of losing its hard-earned reputation, image, and name. Counterfeiting and gray marketing actually wipes out marketing investments that runs into millions, erodes the brand and its reputation, and breaks customer trust.

According to leading research agency Gartner, "IT needs to really help marketing and communications, legal counsel, corporate risk management and the line of business, understand how to better monitor, manage, and measure online reputation and to immediate problems faster when they occur." Hence, today Enterprise Risk Management (ERM) solution providers have come up with effective brand monitoring solutions that help to identify counterfeit suspects and gray market violators quickly for effective enforcement actions. It searches the Internet 24/7 for violations, prioritizes and analyzes the violations and presents the details in an easy-to-use dashboard. The following are some of the benefits of deploying brand monitoring solutions.

• Automated monitoring of Internet activity through intelligent search agents
• Retrieval of information down to the product and individual listing level (based upon client specifications)
• Application of both technology-based and human analysis to insure data integrity
• Protection of revenue by identifying and shutting down sites selling gray market, pirated or counterfeited good
• Reduction of false warranty/guarantees and customer support claims
• Finds new targets and networks that sell counterfeits
• Locates large players

With e-commerce facilitating the growth of counterfeiting and gray markets, global brand reputation management has become even tougher for manufacturers. Maintaining a strong brand worldwide is the key to increasing and maintaining a strong customer base. Hence, enterprises need to deploy brand monitoring and brand management solutions to combat any kind of reputation erosion.

International brand management solutions

Companies are struggling to answer the question of ‘how to protect their intellectual property in a rogue world—particularly when outsourcing to low cost regions?’ The New Momentum solution for brand management gives you the ability to:

• Find new targets and networks that sell counterfeits

• Locate large players

• Better model to find consistent trends

Get the New Momentum MAP Monitor solution which will help defend your brand from channel violations. It is a superior automated solution which will monitor online pricing and deliver prioritized, actionable data regarding violations to your Inbox.

Read More About: Anti-Counterfeiting

Anti-Counterfeiting Solutions To Combat Brand Dissolution

In the past fake branded products were sold at the back-street market stalls or by vendors carrying suitcases on the streets. Today this phenomena has become even more pervasive with the advent of internet technologies and eCommerce and are attracting purchasers from various sections. Thus, brand counterfeiting has been on the rise over the past few years and is considered as an acute concern across all industries. However, in case of consumer goods, electronic products, medical drugs and devices, automotive and the high-tech industry, brand counterfeiting is risky as it affects the consumer’s health and safety apart from the company’s profits and brand equity.

Brand counterfeiting has been gaining prominence globally with third party traders and counterfeiters making use of sophisticated methods online to trick consumers by selling fake and duplicate goods. According to the International Chamber of Commerce and World Customs Organization, the overall value of counterfeit goods was estimated to be $1 trillion globally in the year 2010. With online trading and eCommerce flourishing it is only expected to rise if adequate measures are not implemented.

At times it becomes very difficult for legitimate manufacturers to combat brand counterfeiting considering the techniques that counterfeiters use. Therefore, it is essential for manufacturing to invest in anti-counterfeiting and online brand protection solutions. This will protect them from revenue loss, increased liability risks and brand erosion. Keeping this in mind, eminent service providers specializing in online brand protection solutions have introduced efficient brand anti-counterfeiting solutions to put an end to brand counterfeiting.

Features of Brand Anti-Counterfeiting Solutions

Brand anti-counterfeiting solution concentrates on resolving issues related to product counterfeiting with its innovative search method to manage activities for any number of goods globally. The search engine tracks details on product pricing, product quantities and the discount percentages that are being offered by the counterfeiters. The end users can view all this information through a user-configurable chart on their dashboards. Moreover, the solution provides a company risk index that prioritizes the suspects as per their risk quotient and displays them on the dashboard.  The visibility and analysis you get from anti counterfeit solution enables a proactive response to online anti fraud detection.

Advanced brand anti-counterfeiting solutions also provide a comprehensive end-to-end brand management protection solution that comprises of investigation and innovative enforcement services that can efficiently curb down the operations of brand violators without investing in expensive and time consuming trials.

Read More About: gray market

Importance of Curtailing Gray Market Sales

Gray market goods have a substantial impact on brand equity. The influence of marketing communications initiatives on brand equity has been gaining significant attention of late. This is due to the changing international accounting standards associated with the reporting of the financial value of tangible assets which in turn is a result of increased focus on the impact of marketing communication on brand performance. The marketing activities by gray marketers are beyond the control of authorized distributors and might not project situations consistent with those planned by the manufacturer or the authorized distribution network. Hence, it is essential to estimate the impact of gray marketing on the brand equity.

Gray markets have been a major concern for the retailers and manufacturers since the mid 1980’s. The international gray market size is somewhere estimated between from $US7 billion to $US10 billion.

Gray Market and Counterfeiting

Gray Marketing is not same as counterfeiting. According to Duhan and Sheffet, the term “gray” suggests an “almost black market”. Gray market activities involve selling the trademarked goods and products through distribution channels that are unauthorized by the trademark holders. When gray market activities take place across international borders then the term “parallel importing” is used. Gray markets results in loss of brand reputation as well as loss of revenue.

In order to combat the dangers of gray market activities companies specializing in enterprise risk management have come up with brand protection solution, in the form of a SaaS based software that can halt gray market sales. The software effectively monitors open markets on an end-to-end basis for buy/sell listings of products and part numbers with the help of advanced search agents. These search agents also trace detailed market information from a wide range of market types that includes:

• Franchise and large distribution websites
• Independent and gray market websites
• Email-based forums that aggregate buy/sell listings
• Trade boards
• Auction sites
• Chat
• B2C sites
• Blogs
• B2B sites
  

Contrary to the generic brand protection solutions this Saas based software delivers data directly from a website to the end user in a complete, multi-dimensional market intelligence format. Referring to this format the users can have customized dashboards, custom report views and create user formatted export files. All vital information is accessible and can be used within a perceptive interface. This assists investigators to develop and manage case histories, evaluate evidence and understand the link between partners, suspect companies and other related contacts

Read More About: brand management