Gray Marketing: An Overview

By: Dave Winer

You’ve probably heard the term “gray market” used in reference to certain goods or services that are neither authorized nor prohibited by law. The term refers to a gap in consumer protection between what is legal and what is permissible, mostly due to lax enforcement by government agencies. For example, pharmaceuticals companies pay huge sums of money to market their products in the “gray area” of medicines, helping establish brand loyalty in children and older adults who are unable to negotiate the cost of prescriptions.

Marketers and advertisers have been getting creative with digital marketing over the past few years, looking for new ways to target consumers. One increasingly popular approach is called gray marketing. Simply put, gray marketing is using digital marketing to target potential customers who aren’t sure if or when they’ll need your product or service. So rather than focusing on a single niche, you’re serving everyone from affluent retirees to young families with kids who are just arriving in the world.

The approach makes sense. After all, if you want to grow your business, you’ll need to appeal to as many consumers as possible, not just the ones who fit neatly into your target audience. The trick is in learning to market to this “gray area”, in a way that feels natural and unforced. That’s what makes gray marketing so intriguing – you’re essentially marketing to someone who isn’t sure if or when they’ll need your product. For more information on gray marketing, check out the links below.

Why Is Market Grey-Marketing Popular?

The rise of gray marketing has been fueled by several factors, including but not limited to:

  • The increase of the “Digital Nomad” lifestyle. If you’re traveling the world and working remotely, it’s easy to see why you may not necessarily want or need to purchase a house or car in one place. Living in a motorhome or tiny house trailer for months or years on the road is one example of a situation where a product like MailChimp could come in handy. As your business grows, you may decide that you want a remote office with a phone and a VPN connection. In this case, you could create a small office space and rent out a desk or use a desk phone and save the cost of a remote employee’s salary. You could even use a VPN to keep your personal data secure while working remotely.
  • The rise of “gig work”. If you’re doing contracting work or freelancing, you don’t necessarily need a company card or office – you could work remotely, or decide to work from home on occasion.
  • The growth of the “sandwich generation”. If you’re raising a family and have child care responsibilities, it’s not easy to find the time to go to the workplace. As a result, employers have become more understanding of the demands of working parents, creating flexible working and parenting environments.
  • The preference for value-added services. In many cases, companies that offer certain products or services charge an additional fee for these. While this can add up, these products and services can provide additional value to your business.
  • The prevalence of scammers and marketers who trick consumers. Unfortunately, there are both scammers and marketers who try to trick consumers, often times through email. Learning to spot a fake email can be difficult, but when you do, you’ll be able to tell them apart from a real one. With real emails, you’ll know right away if the sender has stolen your email address or you’ve been targeted by a scammer.
  • The rise of the “sharing” economy. In the sharing economy, consumers are partnering with one another to offer their services. For example, if you’re a graphic designer and you have a skill for creating logos, you could create a logo for someone who needs one but doesn’t have the time to complete one themselves. Or, if you’re a photographer and have the skill to take professional-looking photos, you could partner with another designer to help them with their logo. In cases like this, the designer would supply the skill while the partner provides the muscle (in this case, the camera). The gray market allows you to reach a wider audience, as you’re not confining yourself to one niche group.
  • More people are seeking value instead of just luxury – the desire to purchase items that provide value has increased, not just luxury goods. For example, if you compare the growth of luxury shampoo versus value-added shampoo, you’ll notice that the latter grew by 23% whereas the former only grew by 10%. In many cases, people are seeking out value-added services because they know they won’t necessarily need to purchase items they are marketing. That way, they can save money – which in today’s economy is always a good thing!

This is a relatively new concept, but one that’s certainly caught on, partly because it provides marketers with a wider audience, and partly because it’s easy to implement. In order to implement gray marketing, you’ll first need to determine if this is a strategy that would be effective for your business. Then, you can begin to implement the plan, measuring the results along the way. Just remember – this is a strategy that won’t work for every business. If you’re looking for a way to grow your business, it may be worth your while to explore alternative marketing strategies.

What Is The Difference Between Gray Marketing And Traditional Marketing?

There are several key differences between traditional marketing and gray marketing. First, with traditional marketing, you’re marketing to people who you know will need your product or service at some point in the future. In most cases, you have a clear idea of who the target audience is, and you know when they’ll use your product or service. With gray marketing, you’re marketing to people who you know may or may not need your product or service at some point in the future. As a result, you have less of a clue as to who the target audience is. This is one of the primary differences between the two strategies.

Another key difference is that with traditional marketing, you’re usually advertising your product or service in a way that is likely to make the target audience switch gears and purchase your product or service. With gray marketing, you’re trying to get the person who is in the process of making a decision whether or not to purchase your product or service to actually visit your website or engage with your social media accounts. In many cases, this involves using digital marketing to create a sense of urgency, in order to get the person to make a decision in your favor. This sense of urgency could take the form of a countdown to the end of the month, a pricing gimmick, or even a limited time-only offer. Creating a sense of urgency can be a useful tool in getting a potential customer to make a purchase decision.

A third important difference between the two strategies is how you measure the results of your efforts. With traditional marketing, you’ll usually take a measurement of brand recall or customer loyalty as a way to gauge the success of your strategy. With gray marketing, you’re measuring the results of your strategy in a way that isn’t so direct. Instead, you’re measuring the success of your strategy in terms of increased website traffic and social media engagement. While these metrics can be useful in demonstrating the success of a gray marketing strategy, they’re not always easy to track and verify.

This is one area where you can begin to see the appeal of gray marketing – you’re not tied to a specific product, you’re not limited in terms of who you can sell to, and you don’t need to commit to a set number of sales to measure the success of a particular strategy. Instead, you can begin to see the results of your strategy in terms of the growth of your business, in general – increased revenue, web traffic, and social media engagement, all of which demonstrate the growth of your business, rather than just a specific product or service.

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