بازاریابی گری به عنوان یک استراتژی جایگزین نفوذ در بازار برای کارآفرینان: مدل مفهومی و شواهد موردی

Gray marketing is said to occur when authentic branded products reach the consumer through marketing channels other than that of the authorized distributor (Weigand 1991). Free-riding was first offered by Tan et al. 1995 and Tan et al. 1997 as an alternative explanation for the occurrence of gray marketing. We extend the authors' work to show that free-riding can be an alternative strategy to niching for entrepreneurs contemplating entry into established markets. Almost exclusively, the existing literature on gray marketing treats the phenomenon as a pricing problem and fails to recognize it as a market entry opportunity for start-up entrepreneurs. The gray marketing strategy is appropriate for start-up entrepreneurs in view of their resource limitations and the risk of being a first-mover in market development. We show in this paper that an entrepreneur can successfully penetrate an established market by following a gray marketing strategy. This is because it can be optimal for the incumbent supplier to accommodate the entrepreneur/gray marketer even if the former could force the latter out of the market through aggressive counter actions. We developed a conceptual model using game theoretic concepts to aid entrepreneurs in understanding the strategic interactions amongst parties involved in gray marketing and to identify the conditions under which entrepreneurs can successfully penetrate a market via gray marketing. The deductive or game theoretic approach, we feel, is most appropriate because gray marketing involves multiple-party interactions and conflicts of interests. As Moorthy (1985) showed, the game theoretic methodology is most suited to analyzing the behavior of market participants in such a situation. This paper identifies the conditions under which gray marketing would be profitable and sustainable for entrepreneurs. First, by targeting markets that are already well established by the larger firms, the entrepreneurs' risk of failure due to demand uncertainty is reduced. In addition, they need not incur substantial costs for market developmental efforts. Furthermore, the free-riding strategy provides entrepreneurs with the opportunity to enter profitable markets that are currently supplied by larger firms, instead of being restricted to markets ignored or disdained by the latter. Second, entrepreneurs are able to benefit from the second-mover advantages in following the free-riding strategy. As late entrants into the market, entrepreneurs could learn from the experiences of the larger firms and avoid costly mistakes. By imitating the product strategy of the larger firm, entrepreneurs could also achieve cost savings in R&D and product development costs. All these effectively reduce the entrepreneur's cost of entry into the market. Hence, even with limited resource at their disposal, entrepreneurs could still enter the market successfully. Finally, by following the free-riding strategy, entrepreneurs are able to “nibble” at the market shares of the larger firms. This is possible because of the difficulties and costs faced by the larger firms in countering entries made by the entrepreneurs. Thus, the larger firms are left with little choice but to accommodate the entry of the entrepreneurs into the market. When the costs of countering the entrepreneurs' entry are sufficiently large, the free-riding strategy becomes feasible for entrepreneurs even if they do not posses competitive advantages over the larger firms. Our paper thus demonstrates that entrepreneurs do have an alternative market entry strategy besides the commonly prescribed niching strategy. It also shows them when such a free-riding strategy would be most beneficial and most likely to succeed. These are further illustrated and supported through two real-life cases involving companies in the luxury cars and cosmetics industries in Singapore.

Entrepreneurs and start-up companies often face resource constraints. They lack financial and manpower resources, do not have wide distribution networks, and do not have the sales volume nor the product range to take advantage of scale and scope economies. All these limit their strategy options Chaganti 1987, Miller and Toulouse 1986 and Wright and Parsinia 1988 and hamper their growth and successes Vesper 1980, Cooper et al. 1986, Weinrauch et al. 1991 and Eden et al. 1997. The extant literature on business strategies (see, for example, Porter 1980, Grieve-Smith 1990 and Collis and Montgomery 1997) often does not specifically address small businesses in that they do not take into account resource constraints faced by start-up companies in their strategy prescriptions (Lee et al. 1999). These researchers often recommend that start-up companies seek out unmet market niches and avoid direct competition with the bigger incumbent firms in order to maximize their chances of success [see, for example, Table 1 of Carter et al. (1994), p. 24–25]. This niching strategy, similar to what Porter (1980) referred to as the focus strategy, is perhaps the one most often advocated in the small business literature (see, for example, Cohn and Lindberg 1972, Kao 1981, Cooper et al. 1986 and Rugman and Verbeke 1987/88; Weinstein 1994 and Kotler 1996). Furthermore, these researchers seem to suggest that niching is the only strategy option open to entrepreneurs and small start-up companies, given that their limited resources require them to make choices regarding strategy and organizational structure simultaneously (Rugman and Verbeke 1987/88).This paper proposes that gray marketing can be an alternative market entry strategy for entrepreneurs and small start-up companies. Gray marketing is said to occur when authentic branded products reach the consumer through marketing channels other than that of the authorized distributor (Weigand 1991). In following a gray marketing strategy, entrepreneurs thus provide an alternative channel of distribution that rivals that of the authorized distributor's. There is a fundamental difference between the niching strategy and gray marketing as a strategy (Lee et al. 1999). In niching, the focus is on differentiation, whereas in gray marketing, the core products parallel-imported are identical. Any “differentiation” of parallel-imported products is essentially peripheral. More importantly, the success of gray marketing relies not on differentiation but on product substitutability. This has been proven theoretically in Lee et al. (1999). Gray marketing has traditionally been viewed as a problem to authorized distributors (see, for example, Ramirez 1985, Lowe and Rubin 1986, Maskulka and Gulas 1987, Cavusgil and Sikora 1988, Duhan and Sheffet 1988, Armstrong et al. 1988 and Weigand 1991). The extant literature has concentrated on identifying the causes of gray marketing and on the types of strategies that authorized distributors can use to overcome this “unfair” competition posed by gray marketers. The predominant view in the literature is that gray marketing occurs because manufacturers discriminate on price and that authorized distributors should always react aggressively to the entry of gray marketers (see, for example, Cavusgil and Sikora 1988, Weigand 1991, Chaudhry and Walsh 1995 and Mathur 1995). Under this view, gray marketing cannot coexist profitably alongside authorized distribution (Tan et al. 1997). However, in reality, this is not the case, as it is often observed that authorized distributors continue to coexist with gray marketers even though the former charge a higher price compared with the gray marketers (see Lim 1996b). Tan et al. 1995 and Tan et al. 1997 argued that it is more appropriate to look at gray marketing not as a price discrimination problem but rather as an issue in free-riding and that fighting gray marketers is not always the optimal response for the authorized distributors. One implication of this free-riding perspective of gray marketing is that, as we argue in this paper, the possibility of gray marketing presents an opportunity for entrepreneurs to penetrate an existing market. Such a market entry strategy is particularly suitable for entrepreneurs and small business start-ups, which often face constraints in terms of financial resources, human capital, and marketing expertise and clout. This paper thus takes the perspective that gray marketing can be an alternative market entry strategy for entrepreneurs and not merely a marketing or legal problem. We present a game theoretic model of gray marketing and investigate its feasibility as a market entry strategy. This represents a new and interesting approach to gray marketing. With insights gained from the game theoretic perspective, we examine two cases of gray marketing to provide empirical validation of our theoretical model. Overall, this paper also contributes to our understanding of new venture strategies for entrepreneurs and small business start-ups.

It is more appropriate and useful to view gray marketing as an issue in free-riding. Following this particular perspective on gray marketing, we show that gray marketing can be an alternative market entry strategy for small businesses and entrepreneurs. These businesses usually face resource constraints. They are also not in a position to reap the advantages of being the first mover in the market. Instead, they should try to capitalize, via gray marketing, on the market development efforts of the larger firms and their reluctance to counter aggressively entries into their market when their optimal strategy is to target the more risk-averse segments of the market coupled with a price-skimming strategy. In this paper, we identified the conditions for successful market penetration via gray marketing (drawn from the extant literature on gray marketing and supplemented by the free-ridership model of gray marketing). The two case studies (C&C and B&N) provide empirical illustrations of how entrepreneurs can successfully penetrate a market through gray marketing when the six conditions identified in Table 2 are satisfied. In both case studies, the authorized distributors did not retaliate aggressively against the entry of the gray marketers as predicted by Proposition 2. Furthermore, the fact that gray marketing persisted in these markets provides indirect support for Proposition 1. That gray marketers can sell at a lower price even though their costs of sourcing the product are higher than the authorized distributors' (The Straits Times February 1, 1999; Lim 1996b) provides support for Corollary 1. Finally, although we have no empirical evidence to verify whether or not the gray marketers in both cases have a cost advantage over the authorized distributors, this is not important under the free-ridership perspective (Corollaries 2 and 3). Even if gray marketers in both cases have a cost advantage over the authorized distributors, they would not price aggressively to threaten the survival of the authorized distributors. This is because, as free-riders, the gray marketers' survival depends on the continued investments by the authorized distributors in market development efforts. The price discount offered by gray marketers is thus a way for them to demarcate the market between the risk-averse and the less risk-averse consumers. On the other hand, the price discrimination perspective would suggest that gray marketers use their cost advantage to undercut the authorized distributors' prices, even to the extent that the authorized distributors are forced to exit the market. The two cases showed the co-existence of the gray marketers with the authorized distributors, and the persistence of the gray marketing problem, consistent with the free-ridership perspective of gray marketing.The Straits Times 1994, The Straits Times 1996 and The Straits Times 1999