Today’s business environment with the copyright and patent thefts causes deep rooted damage to the brand name and reputation. Though technological innovation has created a number of opportunities for the growth of the global economy, the changing technology landscape has also paved way for growth of grey market sales and counterfeiting activities. Challenges brought in by technology include the wide use of the internet and the World Wide Web paving way for online brand presence as well as for online frauds. Wikipedia defines a gray market as, “the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.” Though differences in the mode of operation, counterfeiting and grey market sales are reasons for grave concern for the profit oriented business environment. Gray markets occur when a product designed for a particular mArket, is introduced into a second market by an intermediary at a price less than the listed price. Unlike the black market which involves counterfeiting, gray marketing is completely legal with scarcity of product and reduced price tag driving this in most cases.
For global enterprises gray market sales bring in product diversion that costs brand owners hundreds of billions of dollars worldwide. Gray marketers while understanding the inability of the brand owners, make use of fraudulent methods to create product diversions through complex distribution channels. Such actions have a precipitous effect on the brand distribution network leading to a reduction in profits, market share and brand equity. Further, by creating a demand supply imbalance, the gray marketers not only change the competitive pricing but affect the warranty and liability concerns thus leaving a negative impact on the manufacturers, distributors and consumers alike. With every commodity from automobiles, electronics, computer games, cell phones, photographic equipment, luxury food, cosmetics and even pharmaceuticals, thriving in the e-commerce market, the fraudulent activities and gray market sales also thrive on these business sectors. Brand owners, irrespective of the industry sector should implement adequate measures to ensure brand management and brand protection as a part of the enterprise risk management framework. Outsourcing help from expert professionals will facilitate enterprises to protect their brands from issues related to gray market sales. The growing need of such protective measures on the part of the global enterprise has led to leading service providers developing innovative solutions to combat the gray market sales and counterfeiting activities prevalent in the business environment. Advanced anti-counterfeiting solutions offer enterprises brand protection measures and helps them detect counterfeits and significantly reduce unauthorized movement of commerce through fake distributors and channel partners.