Question

What are parallel/gray market exports and how do they harm the exporting company and its brand names? Please explain.

Answer 1

The grey market, also known as the parallel market, refers to a market where a product is bought and sold outside of the authorized trading channels of manufacturer, thus the goods are imported and sold in the market without the consent of the owner of the trademark in that market.

In the grey market the goods are usually sold at a lower cost in comparison to the cost decided by the company, thus affects the profitability of the exporting company. Moreover if the product bearing a brand name fails to meet the expectations of the customer, the loyalty and customer satisfaction results to an erosion of brand loyalty