Gray Market

1. impacts on Customers: grey market offer the same products in a cheaper price then the official store which will allow buyer to save cost, on the other hand, no warranty, some products in grey market doesn't have warranty so this market maybe risk because some products not protected by official warranty through serial number or label of the sale.

2. Impacts on manufacturer: it will increase number of sales > grey market keep goods highly available. > when the sales increase > it will attract industries. > it affects the reputation of the brand > due to no warranty and services after sales.

3. Grey items: are goods which they are sold in a legal way, but not official. the products are original but its been sold in an unauthorised channels. for example, cars, watches and electronics

4. Definition: grey market is where a product is sold under unauthorised channel from the authorised seller. It is illegal but in EU countries it’s legal. There are many products which are sold in grey market from cars, electronics, hand bags and pharmaceuticals.(reappoints, 2021).

5. Impacts of grey market:

5.1. Impacts on Dealers: 1- They will face a lower in sales> will cause a decrease revenue, since the same product is sold cheaper in the gray market.Why? because the price of certain product price is different between authorised dealers and grey market channels > because authorised dealers pay business running cost etc, but grey market are free riders. example, Toyota Land Cruiser in Saudi Arabia cost 50k USD but in Malaysia authorised dealers is 120K USD and it cost 60k USD in the grey market which they get the car from Saudi.

6. Differences between grey and smuggled items: with brief example. for q1.

6.1. Smuggled items: are product who are sold illegally, whereas, importing and exporting the items in secret way. without paying legal taxes.for example, alcohol and tobacco.

7. Why gray market occurs? Reasons?

7.1. 1- Price discrepancy: which means when a client find the same product in one market cheaper than in other market, this will encourage arbitrage practice to happen, so this attracts clients to buy. example, iPhone 12 Pro cost Rm 4k in Apple Authorised dealers and in other shops Rm 3700.

7.2. 2- Time issue: it means when a product is available in a certain region and not available in other region. for example, when iPhone 12 Pro was released last year on Sept the product was available in USA and Singapore but not in Malaysia, so this is a high reason why grey market occurs

7.3. 3- Exchange rate fluctuation: It allows Grey market to occur because Exchange rate float freely against one another, the different in prices, this will create an opportunity for gray marketers arbitrage.