Due to the increase in the population, demands of people have also increased. As a result, this gave the opportunity to manufacturers to create a huge amount of goods the rising demand. However, it has given rise to black and grey markets, which are affecting the entire economy as well as all business related to these markets.
As the global market is developing, the grey and black market is one of the main markets of globalization. However, both of them are not the same but still affect the global marketing system and create several problems in the international market.
Black Market
It is a phenomenon that can be observed all over the globe and no matters how developed or under develop a country is. The black market in general refers to an economy, wherein majority of the transactions take place illegally. In simple words, the goods and services that are traded in these kinds of markets, do not come from legal channels.
Effects of black market
The main aim of this market is to avoid various taxes, which they have to pay to the government. Black market results in the less revenue to the government. These markets can easily attract people, as they target those who really need market goods.
Black market is illegal in the nature and all the transactions that take place in this are off the records. Therefore, in the absence of any record, it became very difficult for the government to estimate the actual income status of the country.
Grey Market
Unlike black market, grey market is not usually involved in any illegal activity. In this type of market, selling of unauthorized products takes place through normal distribution channels. These dealers may not have any relationship with the actual producer of that good.
Effects of Grey Market
The main effect of grey market is that it often affects the brand image of a particular brand and manufacturers cannot maximize their desired profit. Grey market may lead to the competition between the same company products.
Grey marketers do not ensure the quality, quantity and durability of the product, which further lead to dissatisfaction of the product and thus, creates a bad brand image.
Summary
Black market and grey markets are the result of high demand of the population. These markets are affecting the international market directly or indirectly. They can be a major cause of loss of revenue to the economy, or brands losing their image.
