Manufacturers Get a Fright Post-Halloween

Ghosts…goblins…monsters…as we near Halloween each year, frightful images are easily conjured up – especially for manufacturers engaged in Minimum Advertised Pricing (MAP). Okay, sure, it's not the cliché scary slasher-movie images haunting manufacturers, but more the "slashing prices" they must face with online retailers each year as holiday shopping time quickly approaches.

If you haven't yet noticed the Christmas decorations already decking the shelves at your favorite retailers, you've probably been stuck in the costume aisle trying to decide between Barbie or Spiderman. But if you walk just a few feet away, you'll recognize the not-so-subtle hints that Thanksgiving, Black Friday, and Christmas are all around the corner. Yes, Black Friday has become almost a holiday for those who celebrate hot deals and deep discounts.

For manufacturers using a MAP strategy, this means it's also time to be on high alert as pricing violations are typically more prevalent during the holiday shopping season, especially among online retailers. With nearly 60% of consumers doing their holiday shopping online this year, there are several reasons why the holidays turn into open season on pricing across e-tailers: the most important being intense competition.

Ho, Ho, Hope You Don't Violate MAP

During the holiday season, many retailers are competing aggressively for consumer attention and, consequently, their dollars. This heightened competition can lead some retailers to disregard MAP policies entirely in an attempt to offer lower prices and gain a competitive edge. To win the buy box, many e-tailers simply feel the pressure to undercut the competition.

Another key reason MAP violations spike at the holidays is due to price-savvy shoppers. With tight budgets, long lists of recipients, and a still strained economy to boot, consumers are expected to once again be highly price-conscious during the upcoming holidays. Who doesn't want the best deal or hottest discounts on toys, electronics, gifts and more?

Moreover, it's not uncommon these days to see smart consumers price shopping online all the while they stand in front of products at an actual brick and mortar store. In fact, it's estimated that 63% of shopping occasions start online, before shoppers ultimately purchase from an e-tailer or a retailer. With such a cost-conscious, knowledgeable customer base scanning the Internet for prices, resellers will be feeling the pinch again this year to drop prices, even where there is MAP in place.

An estimated 63% of shopping occasions start online, before consumers make their ultimate purchase.

You Better Watch Out!

A third and perhaps the most controllable factor in MAP violations during the holiday shopping season is a lack of price monitoring. During the holiday rush, manufacturers often have limited resources and time for monitoring MAP compliance, making it easier for some of their resellers to slip through the cracks. On the flip side, retailers, too, may not have the resources to monitor their own MAP compliance during such a busy time of their selling year. This is especially true for small and mid-sized retailers that may not have robust compliance enforcement systems in place. The more complex the manufacturer's supply chain is, the more retailers may unintentionally or unknowingly violate MAP policies. And, if in doubt, retailers may opt for the buy-box-win now and ask for forgiveness later.

For manufacturers engaged in MAP, there's simply no reason to take their eyes off the prize (or price) when it comes to policy enforcement. With easy-to-use, affordable online price monitoring services, like MAPCOP, producers can keep up-to-the-minute with their current pricing in the online marketplace, 24/7. A critical aspect of this is being able to obtain real-time data, like MAPCOP offers, rather than feed-based pricing information that can cause significant delays in processing MAP violations.

In addition, manufacturers need to ensure their MAP policies are up-to-date ahead of the holiday shopping season. Along with checking their MAP policy twice, producers need to communicate throughout their supply chain what their policy stipulates and how violations will be handled. A weak MAP policy – especially weak on enforcement – is a sure-fire way to invite non-compliance.

Given Black Friday has its origins in putting retailers "back in the black" in their accounting journals, making up their annual revenue goals in the last quarter of the year, there's a lot of money left on the table thanks to MAP violations. From a manufacturing standpoint, online reseller's deep discounts ultimately erode the producer's brand, revenue, and its rest-of-the-year pricing.

Put a Free Trial on Your Wishlist!

In the end, to address upcoming holiday discounting challenges and maintain pricing integrity, manufacturers and brands need to reinforce their MAP policies during the busiest retail season, establish robust monitoring and enforcement mechanisms, and communicate effectively with their retail partners. Retailers, on the other hand, should be aware of the potential consequences of MAP violations and work with manufacturers to ensure compliance while still offering competitive pricing to attract holiday shoppers.

Price monitoring systems like MAPCOP can make all of this easier for manufacturers. If you haven't yet tried out MAPCOP, you can get your free, no-obligation trial today. Violation-tracking is immediate, so you'll be ready for the holidays before you can even say "wish list."