Why Your Minimum Advertised Pricing Policy May Be Leading Resellers Astray

Does Your MAP Lack Direction?

Minimum Advertised Pricing (MAP) policies help get manufacturers from point A to B when it comes to protecting their brands from price erosion. By design, MAP allows producers and suppliers to set and control a minimum price for their products. Moreover, it paves the way for a variety of positive results, including:

• Leveling the playing field for resellers
• Preventing both prices and revenue from deteriorating
• Protecting your brand's perception and overall value in the marketplace

But a MAP policy that lacks direction can lead resellers astray when it comes to compliance. In fact, without key elements, a MAP policy can cause confusion, leave loopholes, and inhibit adherence. As a manufacturer engaged in a Minimum Advertised Pricing strategy, it's important to ask yourself two critical questions:

1. When was the last time we reviewed and updated our pricing policy?

2. Does our MAP policy have all the necessary elements for compliance?

At least once a year, it's important to review your MAP policy — even more than annually if you are often bringing on new dealers, launching new product lines, making changes to your supply chain, or are revising your business strategy, especially pricing. To make sure this gets done, consider making the policy review tied to the start or end of a new fiscal or calendar year. It's easy to let your MAP policy gather dust and just roll with the status quo when there's no deadline set for review.

Additionally, as you assess your policy, it's important to have others weigh in. Gathering feedback from key internal departments (including sales, marketing, finance, operations, legal, etc.) and resellers themselves can help you determine if your policy is still relevant, fair, and enforceable. Surveying key members of your retail base or creating a focus group among various e-tailers in your supply chain can be extremely helpful. Don't just assume they will stack the deck in their favor; remember, one of the key advantages of a MAP policy (that is enforced!) is to level the playing field for resellers.

In reviewing your MAP policy to make sure it is complete, fair, and enforceable, it's highly advisable that your requirements include the following:

1. Stated purpose: The policy should state the reason for implementing MAP and the benefits it brings to both the manufacturer and the retailer. Part of "playing ball" is that you understand the benefits of the "game."

2. List of included products or product lines: The policy should clearly list the products or product lines that are covered under MAP. Some manufacturers exclude certain products from MAP requirements while others include all products. Moreover, some manufacturers allow "clearance," "discounted," or "special purchase" items to be excluded from MAP. Regardless of your strategy, it should be clearly defined for your resellers which products/product lines are affected. This clarity is required to avoid the "I didn't know" response when it comes to MAP violations. And it's easier to enforce.

3. Minimum advertised price: Your policy should specify the minimum advertised price or how resellers can find the listed MAP for each of your products covered under the policy. Once again, transparency is required in order to simplify compliance.

4. Advertising guidelines: Among the more important elements a MAP policy should include are the guidelines for advertising the product. This includes what is considered a MAP violation, how to handle things like "price in cart," and the use of trademarks and brand names. While it's extremely important that these guidelines are written clearly and simply, it also needs to provide specific details. This portion of the policy is what some e-tailers will comb through looking for loopholes (and the savvy ones will find them if you don't have your policy locked down tight!). You want a solid policy that is easy to understand.

5. Enforcement: The most important part of any MAP policy is the enforcement. There's almost no point to having a MAP policy if you don't insist on or follow-up on compliance; it will be as useless as the "virtual paper" it's written on. Yet, research shows that only 40% of manufacturers and suppliers enforce their MAP policy all of the time, while 25% enforce it most of the time. Your MAP policy should clearly outline the consequences of violating it, including the possible suspension or termination of the retailer's account. And... course... YOU MUST ACTUALLY ENFORCE IT! One of the main reasons companies struggle with repeated violations is because they do not act on them quickly and consistently. Sending a message to your e-tailing base that you mean business goes a long way in preventing future violations.

6. Monitoring: Your enforcement needs some empowerment. To give your MAP real "teeth" and communicate to your resellers that you do take compliance seriously, your policy should also include information on your price monitoring efforts. It should spell out how you will monitor pricing, including the use of mystery shopping, price tracking, automated price monitoring services like MAPCOP, or other methods. MAPCOP can help you with your monitoring 24/7 with accurate, real-time data. It's easy and affordable, and we're happy to provide you with MAPCOP price monitoring information for your MAP policy.

7. Updates: Lastly, your MAP policy should state how you will provide and communicate updates with your retail base. MAP policies often need tweaks and enhancements, and at least an annual review, so it's important for your e-tailers to know how to access your MAP policy updates.

Overall, a MAP policy should be clear, fair, and consistent to ensure its effectiveness in maintaining pricing integrity and protecting your brand image. MAPCOP is here to help! Sign-up today for your free, no-obligation trial. Give us some SKUs and we'll give you real-time data.