Research On Supply Chain Pricing Decisions And Coping Strategies In Gray Market Environment

The grey market refers to illegal channels for selling trademark goods across borders without obtaining a trademark license.The existence of price differences between channels in various countries has led gray market speculators to transfer goods from lowpriced markets to higher-priced markets,resulting in grey markets.With the rapid development of e-commerce and logistics technology,such as the emergence of crossborder e-commerce platforms such as Tmall Global,JD Shopping,Vipshop,etc.,the reduction of people’s price comparison costs has further aggravated this phenomenon.The existence of a gray market will lead to more fierce competition between similar products,erode the brand value of enterprises,and affect the market share and profits of local licensing companies.Most of the existing literature inhibits the development of the gray market from the perspectives of law,product pricing,advertising incentives,etc.,and few literature discusses the combination of after-sales service and delayed sales response strategies of supply chain members to deal with the challenges of the gray market.Based on the shortcomings of existing literature research,this paper uses game theory and consumer utility theory from the perspective of incumbent licensors to explore how incumbent licensors adopt pricing and operational decisions to deal with grey market competition in the presence of third-party grey market speculators.The specific research content is as follows:(1)Build a secondary supply chain model composed of a single manufacturer and retailer as a reference benchmark,in which manufacturers sell directly in the low-price market,relying on retailers to sell the same products in the high-price market,the two markets are independent of each other,and third-party speculators channel low-price market products to high-price markets without permission to form a gray market.Explore the impact of third-party speculator entry on supply chain member earnings and pricing.Studies have shown that: 1)the existence of a grey market reduces the pricing and demand for products in the high-priced market,while reducing retailers’ profits;2)The emergence of gray markets weakens the double marginalization effect,increasing the total demand of high-priced markets,but the total profit of the supply chain has always suffered.(2)In order to cope with the challenges brought by the gray market,on the above benchmark model,consider the retailer’s after-sales service strategy for high-priced market products,and analyze and compare the optimal pricing and profit of each party in the case of having or without after-sales service strategy.Studies show that: 1)retailers’ after-sales service strategies increase pricing and demand for high-priced market products,while increasing the profits of manufacturers and retailers;2)Raise the threshold for third-party speculators to enter the gray market,while reducing the demand and pricing of gray products,and reduce the profits of third-party speculators.(3)In addition to the retailer’s after-sales service strategy,the manufacturer’s response strategy of delaying sales can also be considered,the impact of customer patience on the optimal pricing and profit of each party can be discussed,and the difference between the profits of each party in the two situations can be compared and analyzed.The study finds that: 1)manufacturers adopt a deferred offering strategy to increase the pricing and demand of high-priced market products,while increasing the profits of manufacturers and retailers;2)reduce the demand for gray products,while reducing the profits of third-party speculators;3)Customer patience is positively correlated with third-party speculators’ profit margins and negatively correlated with retailers’ profit margins.