Clever MAP policies to effectively avoid Minimum Advertised Price violations
How to create fair, legal and effective MAP policies to avoid minimum advertised price violations?
A Minimum Advertised Price (MAP) is a term for the lowest price point a reseller is expected to advertise the product. It is important to note, that any Resale price maintenance (RPM) done by manufacturers might be unlawful, if combined with set of restrictions or enforcement. Although, manufacturers cannot state the price levels for their resellers by law, it is a common practice that resellers follow an expected Recommended Retail Price or Manufacturer’s Suggested Retail Price (MSRP), which is the price recommended by the manufacturer to the retailer.
Manufacturers often conduct market research and analyses to decide their product price levels. So it’s reasonable for manufacturers to worry about pricing, as it affects their bottom line. A low price can lead to losses, while too high a price might discourage buyers. That’s why they use MAP policy to get the pricing right, especially if they offer cooperative advertising funds to the resellers. We examine how you can use MAP policies without being against the law.
What is a MAP Policy?
A Minimum Advertised Price policy is a contractual document that a manufacturer enforces. It is important to note, that resale price maintenance can easily be unlawful.
A clever MAP policy covers the manufacturers’ plan on how to create value with its product for the reseller. It lists the marketing support, planned price levels, and joint marketing efforts the retailer or reseller can achieve if they follow the guidelines. Instead of setting sanctions for not following the policy guidelines, it is wise to concentrate on the positive you can offer.
Naturally, with fierce competition, manufacturers are pushed to protect the perception and quality of their products. Enforcing a MAP policy becomes essential in such a scenario, but it might be unlawful.
Here’s how a clever MAP policy helps you both:
- Ensure fairness of competition across storefronts
- Build a brand that supports your resellers
- Safeguard profit margins for both parties
- Ensure consistency in product value and returns
- Avoid underpricing of products, but set support for the reseller to cope with that
Who Does The Minimum Advertised Price Policy Affect?
The modern marketplace is highly competitive as sellers look for novel ways to out-perform the competition. Even if it means lowering the prices to implausible levels.
Most manufacturing brands rely on these pricing structures for relevance in their target market.
For instance, fashion brands place a premium on products to maintain the perceived quality of their merchandise. When retailers sell these on bargain prices, they run the risk of tarnishing the brand image and reputation of the manufacturer.
It also leads to an inconsistent image for the brand because consumers often ask them about these price inconsistencies. They also run the risk of alienating resellers who follow the recommended pricing strategy.
In short, a MAP policy can help both retailers/resellers and manufacturers clear up any ambiguities about pricing, ensuring that everyone is on the same page.
What Does Violating Minimum Advertised Price Policy Mean?
If an online reseller advertises a product for less than the price outlined in the MAP policy, it results in a violation, therefore the manufacturer can penalize them as per the MAP contract.
Here’s how a manufacturer can approach this issue:
· Firstly, identify all resellers with violations under their names
· Inform all resellers that the MAP will be enforced
· Remind resellers to respect the MAP or risk getting banned as a reseller
· Give an initial warning to the violators
· Blacklist routine violators, ban them from redistributing your products
· Continuously monitor MAP prices across distribution channels
Many manufacturers draft a reseller policy of some kind, but fail to ensure that retailers and resellers are informed of it.
That’s why manufacturers need to communicate their MAP policy clearly to all their resellers from the get-go. They can then use an automated system like Sniffie to monitor pricing across all channels on the internet.
For resellers and retailers, it’s essential to avoid these MAP policy violations because once they get banned by one manufacturer, others may follow suit.
Their business can be completely shut down when more people get to know that they’re banned from selling certain brands. This means they won’t have the products needed to attract buyers, which means reduced store traffic and decreased overall sales.
Sellers can use software like Sniffie to monitor their prices across various channels to see that they’re advertised in line with manufacturer’s MAP guidelines.
Interested in price monitoring?
How To Avoid MAP Policy Violations
If you’re a reseller or retailer, Minimum Advertised Price violations can do irreversible damage to your reputation as well as your bottom line.
You must do your research when you sign on the dotted line and know the MAP policies in effect for the products being sold at your store.
When you come into agreement with a manufacturer, make sure you understand how to correctly advertise and sell their products online, so your business doesn’t suffer in the end.
Whether a manufacturer calls it ‘branding’ or ‘pricing’ guidelines, a MAP will be viewed as a legal pricing agreement between retailer/ reseller and manufacturer.
Pricing agreements are not taken lightly by law and their violation can endanger business for both retailers and manufacturers.
If you’re unclear about the MAP policy, consult an attorney or an antitrust lawyer to help you explore the subject – the same goes for retailers and manufacturers.
It’s always better for the two parties to discuss their issues and try to negotiate the clauses of MAP policy before finalizing it.
Overcoming Internal Factors That Contribute To MAP Violations
Retailers often put their sales teams under immense pressure, driving them to reach targets at all costs. They end up offering large volume discounts and advertise prices lower than the MAP to achieve these goals.
Sometimes the manufacturer’s marketing teams fail to communicate their goals causing strategic pricing issues. This leaves teams frustrated for not reaching their targets, as they deal with wastage of resources and lower productivity.
Retailers are left hanging come sale season when they don’t know how to approach the pricing issue while also avoiding MAP policy violations.
Treat the resellers fairly and help them sell excess stock in line with your policies as a manufacturer.
It might also be a good idea to develop a Sales Playbook to increase productivity across the sales team. This helps outline best practices for them and ramp up your products as a manufacturer.
A sales playbook details:
· Sales processes
· Buyer personas
· Call agendas and scripts
· Email samples
· Discovery, demo and qualification question
· Proposal and competitive intelligence guidelines
These tools can help the sales team achieve their goals as they follow the tenets of a MAP policy.
It’s also advantageous to use software such as Sniffie to collect actionable data. Creating real-life scenarios for your sales team helps them avoid MAP violations and other problems down the road.
Such exercises lets everyone on your team know their role in maximizing the returns for your business, including your retail/reselling partners.
Are you ready to optimize your MAP guidelines with Sniffie’s comprehensive set of pricing tools? Get in touch!