Gray Markets

Abstract

In recent years has been a dramatic growth in the size of the gray market, otherwise referred to as the parallel-import market. Gray market shifts among markets & countries because of its characteristics, its performance quality and the potential of gray market goods. A firm in an authorized marketing channel sells an authorized good to an unauthorized reseller making the good a gray market good. The firm violates in such a way the traditional business assumptions that firms and business people will behave ethically, will honor contracts and deal fairly. On the other hand the free riding of the unauthorized seller is not illegal but is unethical since the gray marketers use authorized goods and the strategy and firm’s identity to achieve their objectives. Gray market goods usually have: high resale potential, trade-marketed brand names, good market recognition, established price and performance, are easily stored and inventoried, are easily transferred and have multilingual packaging. Gray market creates a potential consumer risk and reduces the performance and benefit to society. Moreover gray market can be costly and lessen control in the channel over marketing strategy. The aim of this paper is to explain first of all the meaning of the gray market, the gray market goods involved in the process, and the process itself. In the Albanian reality there is a lack of studies in this aspect therefore this paper will serve as a contribution in better understanding the topic. In the future we believe that it will serve as a base for future research in the area.

DOI: 10.5901/ajis.2016.v5n3s1p467