You have the right to remain silent…but you shouldn’t. Not when it comes to Minimum Advertised Pricing (MAP) violations.
For manufacturers who want to maintain their brand integrity, create a level playing field for their retailers, and avoid degrading their revenues, the key to any good MAP policy is enforcement. You can write the “best” policy around, but if you don’t consistently enforce it, your MAP strategy won’t be worth much more than the pages it’s written on.
Research from Harvard Business School validates that sending a MAP violation notices to non-compliant resellers improves policy adherence. Conversely, and not surprisingly, compliance drops when manufacturers discontinue these important notices. Take, for example, one brand that reportedly implemented a new MAP notification system via email, which led to the ultimate termination of two resellers. In doing so, that company realized an estimated 40%-80% reduction in MAP violations among its authorized resellers in just a few months.
So, despite experiencing the simple truth that consistent notifications do have a positive impact on MAP compliance, for a variety of reasons, many manufacturers are allowing pricing violations to slip through the cracks and are simply turning a blind eye to offending resellers. But why?
Manufacturers face several obstacles and even excuses when it comes to enforcing their Minimum Advertised Pricing. One of the biggest challenges is how to identify and keep track of the overwhelming number of MAP violations from online retailers on a constant, daily basis. With nearly 30 million online retailers in the world – a number that has only drastically increased since COVID-19 – any given manufacturer has its hands full when attempting to keep track of prices from both authorized and unauthorized resellers of their products. In particular, unauthorized dealers create many pricing headaches for producers, with one study finding these types of resellers violate MAP approximately 50 percent of the time!
Certainly, the daily burden of monitoring MAP violations online can be taxing due to the sheer volume, despite unsolicited help from competitive, compliant resellers who assist in identifying offenders. However, technology has made vast strides in this area with MAP monitoring software programs, such as MapCop. These programs provide 24/7 scanning of the Internet and produce easy to digest reports on non-compliance, taking the manual burden off the manufacturer’s plate. This removes the obstacle of overwhelming tracking (and the excuse for not doing so) while still keeping price controls in the hands of the manufacturer.
Another reason why some manufacturers choose to look the other way when it comes to MAP enforcement is because their policy has too much “wiggle room” in it and, therefore, is subject to far too loose an interpretation. The non-compliance problem and the confidence to enforce it stems from the manufacturer’s policy itself. By using weaker verbiage, such as “may result in…” or “subject to our discretion,” this provides ambiguity when it’s time to address MAP violators. Without more clear specifics, resellers will not only read between the lines, but will cross right over them. With lack of clear direction in their arsenal, manufacturers may be tempted to capitulate instead of carrying out the terms of their own MAP requirements.
Oddly enough, this policy vagueness is not rare when it comes to manufacturers’ MAP mandates. Additional research from Harvard Business School showed that only 41% of MAP policies reviewed were clear in their consequences of policy violation. As such, it’s not surprising that so many producers are struggling with their pricing policies – weak policies pave the way for weak compliance.
To remove this obstacle to enforcement, the better solution is to build a MAP policy from the start that clearly explains the terms of your pricing requirements, sets expectations for resellers up front, and includes firm verbiage on the consequences of non-compliance. When you don’t address these important elements in your MAP policy from its creation, you end up “kicking the can” down the road for later issues and even debates with violators on policy interpretation.
Actions may speak louder than words, but inaction sends a much clearer message to your resellers.
Even if you are clear in the terms of your MAP policy, including strong statements about the consequences of non-compliance, without enforcement, you’re right back where you started – hollow words on a page.
If you don’t enforce your MAP policy with violators, your lack of action will tell your reseller base that your pricing strategy is simply a polite request: please don’t violate our MAP. The unfortunate truth is that many e-tailers will see what they can “get away with,” and, too often, the gamble pays off when manufacturers don’t enforce MAP.
Perhaps most important, consistency is key in your enforcement. Continuing to monitor violations, promptly sending out notices to violators, and not turning a blind eye to infractions – WITHOUT FAIL – will send a strong message to both your authorized and unauthorized dealers that you mean business: You will continue to be your own MAP cop; policing prices, prosecuting violations, and protecting your products, brand value, and revenue.
If you’d like some help, MAP Cop offers you a comprehensive, affordable, and user-friendly monitoring solution that provides you with 24/7 transparency into pricing violations. Click here for a no-obligation, free trial today.