Gray marketing and its impacts on brand equity

The purpose of this study is to investigate the impact of parallel importation on brand equity in high and low product involvement arrangements.

A 2 × 2 (authorized goods/gray‐marketed goods)×(high involvement/low involvement) between‐subjects experimental design is utilized; consumer electronics and ballpoint pens are examined.

The results of this empirical study show that source channel (authorized goods versus gray goods) has a significant impact on brand equity; among the five brand equity dimensions, consumers are most concerned about the difference in “perceived quality” between gray goods and authorized goods; given the levels of stimuli, sourcing channel stimuli are found to have more powerful effects than product involvement on consumer evaluations of brand equity.

Marketing implications of the study are as follows. For authorized agents: they could emphasize the “perceived quality” of their products in order to prevent market “squatting” from gray marketers. For manufacturers: authorized goods have a stronger effect on brand equity than gray goods; therefore, manufacturers could adapt the contents and packaging of their products to match consumption behavior in each different country to achieve the purpose of market segmentation and to prevent the products from being diverted. For gray marketers: they should not only emphasize the lower prices of their products, but also highlight their brand knowledge and the brand recognition and provide a valid and sensitive reflection of the brand's standing to their customers.

The most notable finding from this study may be that given the levels of stimuli, sourcing channel stimuli were found to have more powerful effects than product involvement on consumer evaluations of brand equity.