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.

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