Brand Alliance Insights

Practical News & Information for Tech Marketers

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In This Issue
AGMA In the News
Consider This Before Buying Goods from Online Auction Sites
Three Keys to Effectively Addressing the Gray Market
In The News

Counterfeiting is a Problem in All Consumer Markets, Not Just IT


According to the International Chamber of Commerce, businesses lose about $600 billion a year to counterfeiters, a figure that's on track to grow to $1.2 trillion by 2009.  As counterfeiting becomes more and more pervasive across all consumer products-based markets, the mainstream media is taking note, especially when the results pose a danger to consumers. 


ABC News recently reported on a toothpaste scare, where tubes of counterfeit Colgate toothpaste, tainted with a toxic chemical, were being sold in discount stores across the United States.  This all too familiar story is a reminder that counterfeit products are often sold in the United States without consumers' knowledge.  The problem reaches far beyond toothpaste. The ABC News report cites that drug manufacturers lose $32 billion a year to counterfeit medications, which can leave patients sick or injured.  


China is a huge source of the problem, as statistics show that China accounted for 81 percent of the phony goods seized at U.S. ports last year.  Counterfeit products, such as toothpaste, share a common characteristic with counterfeit IT goods - they often have misspellings on the packaging.  Consumers are advised to avoid products labeled for sale in other countries and be wary of those sold at flea markets and discount stores, where fakes are most often sold.


In addition, a BusinessWeek article titled "Faking Out the Fakers" examines new technologies that fight against counterfeiters in a variety of industries including gasoline, pharmaceutical, designer fashions, wine and spirits, and luxury goods.  After years of taking abuse from counterfeiters, the article claims that companies, and even nations, are investing in advanced technologies that can help them win back control of brands and ward off mishaps associated with fakes.  


As the United States and the European Union slowly inch toward creating anti-counterfeiting standards, many companies have decided not to wait any longer. According to the BusinessWeek article, companies are applying the latest advances in molecular science and nanotechnology to fight counterfeiters.  Some of these new technologies include injecting products with nanotracers, dyeing them with invisible DNA markers, and engraving them with microscopic laser etchings.  This allows stores, customs officials, or investigators to see whether a product is real or fake by scanning it with a handheld reader and, in some cases, by matching it against an electronic database.  


One technology offers a laser engraving technique that etches code so tiny each letter or number measures just 3.5 microns in height. Another process takes the equivalent of a fingerprint of each handbag, plastic bottle, or paper package as it rolls off the line, turns that into code, and stores it in a database retailers can access to verify a product.


Member Survey
Participate in AGMA's Brand Protection/Compliance Team Mini Survey: With our diverse member base, we are interested in understanding how, where and why organizations address brand protection and piracy/licensing management. PLEASE NOTE: survey questions are voluntary, the confidential feedback will be collated and presented at the upcoming AGMA Quarterly Meeting. Please click on the link below to access the survey:

Welcome to Brand Alliance Insights!  This newsletter is brought to you by AGMA, the Alliance for Gray Market and Counterfeit  Abatement.  This quarter we would like to update you on new developments, best practices and valuable information to help keep your brand safe from gray marketing and counterfeiters.  We'll also keep you up to date on what we've been doing to highlight these issues to IT companies, consumers and media outlets around the globe.  We'd also like you to take a moment to complete our member survey using the link provided in the lower left-hand column of this newsletter.Featured Article


Consider This Before Buying Goods from Online Auctions


Online auction sites continue to grow in popularity among consumers worldwide due to their convenience and ease of use.  But these auction sites have also become a hotbed for the illegal selling of gray market and counterfeit goods by unauthorized resellers.  A recent article published by Dr. Dobbs Journal titled "Is Buying from Online Auctions a Smart Choice?" touched on AGMA's cause by warning buyers to beware when shopping online through auction sites.


As AGMA often warns, the article explains that not all IT resellers, solution providers and systems integrators are authorized by IT manufacturers. Unauthorized resellers often prey on online auction sites because they lack standards for sellers to provide information about auctioned goods.  This lack of standardized information allows unauthorized dealers to easily mislead buyers.  


Many of the goods sold on auction sites are from the gray market, meaning new, genuine goods that are being sold by unauthorized dealers.  But counterfeit, pirated, stolen and fraudulently obtained goods can also be sold on the gray market through auction sites.  In both cases, manufacturers will not offer any assurance as to how these goods have been handled, stored, or supported, and may void warranty and other support.


The article also urges buyers to be aware that authorized distribution channels generally do not sell their goods on online auctions because their contracts with the manufacturers of those products usually prohibit them from doing so.  For some good tips on avoiding gray market and counterfeit goods on online auction sites, you can read the Dr. Dobbs article in its entirety at


Three Keys to Effectively Addressing the Gray Market


Most companies today are aware of the damaging effects of the "gray market," however many have been unable to develop and implement an effective program to fight and prevent it.  Gray marketing poses risks to customers and can tarnish the reputation and value of quality brand names. For example, a research study by KPMG indicates that the gray market costs the IT industry up to $5 billion annually and negatively impacts customers who knowingly or unknowingly purchase from the gray market.


AGMA believes that manufacturers who identify, fight and prevent gray marketing will have more success in protecting consumers from potentially poor quality goods as well as securing brand integrity.  In order to help them do this, AGMA developed the "Three Keys to Effectively Addressing the Gray Market." 


The first key to addressing the gray market is to build corporate awareness.  It is important to ensure that all employees understand the gray market issue and how to combat it.  The second key to addressing the gray market is screening of applicants seeking to enter distribution channels to ensure they are legitimate reselling entities.  Manufacturers should perform diligent screenings prior to authorization of a reseller or distributor.  The third key to addressing the gray market is to develop an effective serial number tracking program: Implement a serial number tracking program that increases visibility of the flow of products - from the manufacturer through the channel to the end user.     


To access valuable tips and recommendations on implementing AGMA's "Three Keys to Effectively Addressing the Gray Market," please view the news release at ADD LINK.

Calendar of Events

AGMA EMEA Council Meeting

September 14, 2007

London, UK


AGMA Americas Quarterly Meeting

September 19-20, 2007

San Francisco, CA


AGMA APAC Council Meeting

September 26, 2007

Bangalore, India

Please let us know how we are doing and share with us your experiences and thoughts.
Lily Mei
Executive Director
Alliance for Gray Market and Counterfeit Abatement
40087 Mission Boulevard Suite 208
Fremont, CA 94539