Skip to content
Product cover

Competing With Gray Markets

October 15, 2004 | Kersi D. Antia , Mark Bergen , Shantanu Dutta | Strategy

In recent years, gray markets -- in which a firm's products are sold or resold through unauthorized dealers -- have become ubiquitous. They exist for tangible products (lumber and electronic components) and intangibles (broadcast signals, IPOs); for massive goods (automobiles and heavy construction equipment) and for light, easily shipped products (watches and cosmetics); for the mundane (health and beauty aids) and the life saving (prescription drugs).

Gray markets aren't going away soon. Although they ebb and flow as exchange rates, price differentials and supply conditions change, surveys confirm the increasing incidence and scope of gray markets. In many situations, their sales outstrip authorized sales.

An inability to compete with gray markets can wreak havoc on firms and industries. Unfortunately, because it is so hard to get data on gray-market activity and what firms are doing to deal with it, there is little published guidance to help managers. The sale of legitimate products in the wrong place or in the wrong channel poses unique problems to companies, but there are unique solutions that can successfully manage them. Describing several examples that show the scope and complexity of the gray-market problem, the authors explain how managers can apply a framework based on sensing, speed and severity in order to manage it. They also point out scenarios in which gray markets actually help and should be tolerated.

Purchase Options

Educator and Student Discounts Available. Learn more »

  BENCHMARKS  
Loading Time: Base Classes  0.0005
My Controller Construct  0.0003
Build Nav  0.0005
Controller Execution Time ( Products / Route )  0.0862
Total Execution Time  0.0867
  GET DATA  
No GET data exists
  MEMORY USAGE  
1.5568 MB
  POST DATA  
No POST data exists
  URI STRING  
store/competing-with-gray-markets
  CLASS/METHOD  
products/route
  DATABASE:  MITSLOAN_DEV   QUERIES: 68  (Hide)
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'b154a7c5fe55796a503d88f81e271880'
ORDER BY `created_at` DESC 
0.0002  

SELECT SQL_CALC_FOUND_ROWS cat_id
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `url_friendly` =  'competing-with-gray-markets'
AND `parent_id` =  1 
0.0065  

SELECT c.parent_id, c.format_id
                    FROM products AS p, products AS c
                    WHERE p.prod_id = c.parent_id AND
                        c.avail_id IN ('A','B','D') AND
                        c.type_id = 'V' AND
                        (
                            c.sku = 'competing-with-gray-markets' OR
                            if(c.format_id = 'Certificate', '', p.url_friendly) = 'competing-with-gray-markets'
                        )
                    LIMIT 1 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  1549 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '1549' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '1549'
ORDER BY `sort` ASC 
0.0001  

SELECT `cat_id`
FROM (`product_categories__products`)
WHERE `prod_id` =  '1549' 
0.0001  

SELECT *
FROM (`product_flags__products`)
WHERE `prod_id` =  '1549' 
0.0001  

SELECT `sku`
FROM (`products__xsell`)
WHERE `prod_id` =  '1549'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0629  

SELECT `products`.`parent_id`
FROM (`transaction_lines`)
JOIN `products` ON `products`.`sku` = `transaction_lines`.`sku`
JOIN `product_categories__products` ON `products`.`parent_id` = `product_categories__products`.`prod_id`
WHERE `products`.`avail_id` =  'A'
AND TO_DAYS(transaction_lines.updated_at) < (TO_DAYS(NOW()) - 90)
AND `product_categories__products`.`cat_id` IN ('249') 
GROUP BY `products`.`parent_id`
ORDER BY COUNT(*) DESC
LIMIT 6 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '361' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '361' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '361'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '3961' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '3961' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '3961'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '35' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '35' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '35'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '179' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '179' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '179'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '489' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '489' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '489'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '2465' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '2465' 
0.0001  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '2465'
ORDER BY `sort` ASC 
0.0002  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '1549'
AND `kind` =  'image_600x600'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0001  

SELECT *
FROM (`media`)
WHERE `media`.`media_id` =  '760' 
0.0001  

SELECT *
FROM (`mime_types`)
WHERE `mime_types`.`extension` =  'jpg' 
0.0001  

SELECT *
FROM (`media_metadata`)
WHERE `media_id` =  '760' 
0.0002  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '1549'
AND `kind` =  'gallery_image'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0002  

SELECT *
FROM (`products`)
WHERE `avail_id` IN ('A', 'B', 'C', 'H') 
AND `parent_id` =  '1549'
AND `type_id` =  'V'
ORDER BY IF(position = 0, 1, 0) ASC , `position`, `title` 
0.0001  

SELECT `c`.`format_id`, `c`.`price`, `c`.`sale_price`
FROM (`products` AS c)
WHERE `c`.`prod_id` =  '1550'
LIMIT 1 
0.0003  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '1550'
AND `kind` =  'thumbnail'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0002  

SELECT `product_categories__products`.`cat_id`
FROM (`product_categories__products`)
JOIN `product_categories` ON `product_categories__products`.`cat_id` = `product_categories`.`cat_id`
WHERE `product_categories__products`.`prod_id` =  '1549'
AND `product_categories`.`parent_id` =  1
AND `product_categories__products`.`cat_id` NOT IN (1, 261)  
0.0004  

SELECT `cat_id` AS id, `parent_id` AS parent, `status_id`, `name`, `description`, `url_friendly`, `page_title`, `meta_keywords`, `meta_description`, `position`, `updated_at`
FROM (`product_categories`)
WHERE `cat_id` != 1
ORDER BY `parent_id`, IF(position = 0, 1, 0) ASC , `position`, `name` 
0.0003  

SELECT *
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `parent_id` =  1
AND `cat_id` NOT IN (1, 261) 
ORDER BY `name` 
0.0001  

SELECT *
FROM (`site_settings`)
WHERE `option_key` =  'announcement' 
  HTTP HEADERS  (Show)
  SESSION DATA  (Show)
  CONFIG VARIABLES  (Show)