How to Address the Gray Market Threat Using Price Coordination

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Gray market goods are brand name products sold through unauthorized channels. Gray markets have recently become more threatening to multinational companies as a result of the increasing number of global products available and easily accessible price information about them. The authors present a framework to select the right approach to the gray market threat by coordinating price-setting decisions based on the subsidiary's local resources and the complexity of the product's market. Through examples from their sample of companies that have dealt with gray markets, they show how price coordination methods have been implemented.  

Gert Assmus is professor of business administration, The Amos Tuck School, Dartmouth College. Carsten Wiese is market research manager, Hoechst AG, Germany.

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