There are, by definition, three different trading markets in the world. There is the regular market, the market where companies are authorized and pay taxes, and we, the consumers, buy products daily. Then there is the black market. The black market is illegal, where stolen or illicit products are often sold, and lastly, there is the gray market, which falls between the two mentioned markets. To better understand how a pricing tool can be your ally in protecting your brand, let's dive deeper into the nature of the gray market.’
What is the gray market?
The gray market is the unofficial trade of genuine products through unauthorized distribution channels. Unlike the black market, the gray market deals with legitimate goods but lacks the proper authorization or adherence to established distribution channels. Such activities may involve the sale of products without legal registration to avoid taxes, trading products suspended from the official market, or pre-launch selling of new products. While the gray market operates outside conventional channels, it may not necessarily be illegal.
Numerous consumer goods are commonly traded in the gray market, particularly when significant price differences exist between different countries. These products span a wide range, including popular electronics, luxury cars, designer handbags, clothing, cosmetics, pharmaceuticals, and cigarettes. Unauthorized dealers often import large quantities of these products, offering them substantially lower prices than the local market rates.
The gray market negatively affects the brands of the sold goods, but some products are more vulnerable to the gray market than others. As mentioned above, perfumes and cosmetics are products often largely sold in this unauthorized market. This has large consequences for the brands that pay the price when the products go through this distribution channel. It can hurt your brand identity when your products are traded on the gray market,
- Lack of control over the use of their products in the market.
- Lack of brand recognition among consumers.
- Inconsistent sales policies and declining profitability.
- Deterioration of the brand's image.
How do you protect your brand?
So, how can you safeguard your brand against the challenges of the gray market? The key lies in gaining comprehensive visibility into the marketplaces and distribution channels through which your products are sold. Manual tracking of such vast market data can be daunting, which is where a sophisticated pricing tool like PriceShape comes into play.
PriceShape's price monitoring software enables you to precisely monitor the sales and pricing of your products across various markets. This lets you identify unauthorized sellers who undercut the recommended prices. Additionally, we provide valuable insights into resellers leveraging marketplaces to flood the market with discounted products, potentially damaging the perceived value of your brand. Our platform collects essential data, including the number of your products in resellers' assortments, stock availability, price differentials compared to the market, and the recommended retail price (RRP) provided to resellers.
Click here to explore how PriceShape can safeguard your brand against the challenges of the gray market.
