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Globalization and expansion to new markets are some of the marketing strategies used by the enterprises to improve their bottom line. Irrespective of the size of the business, enterprises make use of similar business tactics to increase the revenue. This is either done by increasing efficiency, production levels, quality or by cutting costs. However, with gray markets also thriving in the business environment the revenue and profit generation of the enterprise is greatly affected. As per Wikipedia's definition, “a gray market, also known as parallel market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.” These gray-market goods though legal are sold outside the regular distribution channels by enterprises or entrepreneurs without the permission and knowledge of the original manufacturer of the goods. Such parallel import of goods which are conducted mainly in case of electronic products, luxury items and expensive medicines or pharmaceuticals negatively impacts the brand reputation. Gray markets are unauthorized distribution channels that steer the products away from the genuine distributors and pass it to the consumer at a lower price. By importing the products to other regions at a lower price provides the grey marketers and the product manufacturers a large customer base, however, the difference in the price of products is what damages the organization's trademark and brand reputation. Such activities also strain the manufacturer and dealer relationship which again has an adverse effect on the business. Further, as these gray market products are not sold in the region for which it is intended to, can create legal liabilities for the brands. Globalization, organization's web presence and e-commerce are factors that have paved the way for gray markets to thrive in the business environment. This gray market activity is very detrimental to every industry sector, more so for the IT industry. Reports from the study conducted by KPMG showcases that IT product manufacturers collectively end up losing up to US$5 billion in profits annually as a result of the parallel market activities. Since the gray market is an age old phenomena, over the years, enterprises and the government have taken strategic actions and brought in compliance regulations to combat these unauthorized perpetrators. Nevertheless, to control the speed at which this parallel market is thriving, leading service providers have worked out a robust enterprise risk management solution for the global enterprises. Besides, their anti-counterfeiting solutions facilitate enterprises to locate the violators from the online marketplace so that proactive measures can be taken to stop or control such activities. Read More About: Brand Management, Anti-Fraud
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gray market, enterprise risk management, anti-counterfeiting, Brand Management, Anti-Fraud,
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