Marketing Clive Simpkins
THE “grey” market has always posed a problem for marketers of Fast Moving Consumer Goods (FMCG) brands in South Africa, with notable wars between the likes of Panasonic and the sassy Western Bazaars with their “Hong Kong prices”. The impression has been created that the big guys simply want to milk every cent of profit from the consumer but the reality is often something different.
It takes many years to build brands. The brand value of a name like McDonalds, Coca Cola or Sony is immense. The promotional and marketing build is vast and relentless, emblazoning those brands in the psyche, awareness and preferences of consumers.
Enter then the grey marketeers, claiming to be consumer champions and the David against the Goliath of monopolistic and extortionist business practice. The reality, of course, is that they are more often usurpers and pretenders than defenders. They cheerfully piggy-back on the goodwill and the powerful franchise of the brand name they offer to undercut but usually without the backup or guarantee benefits offered by the legit dealers.
Way before cellular I made the mistake of buying a cordless phone from a grey dealer. It’s not exactly like they have a sign up reading, “These are grey market goods.” You need to ask. When I did, the retailer was seemingly offended and claimed I’d have absolutely no advantage by paying a higher price to the regular importer. Suffice it to say that when the phone did die, it required burial. The regular importer emphatically, and I believe justifiably, refused to repair it. The grey man claimed he would have repaired it but the regular guys were “holding on to the microchips”, jealously preventing him from doing so.
The danger of dealing grey — inadvertently or otherwise — is couched in the good boere adage, “goedkoop is duurkoop” (bargains are expensive).
The marketer who’s spent time building the brand and developing the market will often go the added mile — even to his or her financial detriment — to ensure a happy customer.
A classic case is the recent threatened failure of the air conditioning compressor in my Mazda MX6 sports car. The aircon is covered by a separate (one-year-only) guarantee for some odd reason, but the point is this: Samcor were prepared to replace the aircon at no charge because the Mazda guarantee is for three years and they agreed the 14- month lifespan of this particular aircon was aberrant and unacceptable. They are to be congratulated on a thoroughly marketing-orientated response, one which has cost them R7 500 but won a satisfied customer.
With opening and emerging markets there is certain to be a burgeoning of grey market and pirate operators with sometimes life-threatening implications, as in safety components of goods or pharmaceuticals.
Free market euphoria must be balanced with the caution of caveat emptor — or let the buyer beware.