Manufacturers work with retailers to open gateways to sell their products to a widespread audience. This can often serve as a disadvantage, when the retailers sell their products at prices lower than the one fixed by the manufacturers.
This is the reason Minimum Advertised Price(MAP) came into existence. It is the lowest cost retailers can advertise or print. This, however, does not limit the price at which the products can be sold. After negotiations with the manufacturers, the products can be sold at an agreed price which is always above the Minimum advertised price(MAP).
Why Do You Need An MAP Pricing?
Products sold at prices lower than the Minimum advertised price(MAP) can affect the business for retailers. It also hurts the brand and in most cases, affects the profits made by the manufacturer. The main reason Minimum advertised price(MAP) should be in play is so that any retailer can step in and have a fair shot at selling the product in the market. If one retailer does sell the product below the Minimum advertised price(MAP), the sales for that retailer will shoot up, while the others are left at a disadvantage.
Minimum advertised price(MAP) prevents retailers from finding a shortcut to gaining popularity in the market. This is the case with online retailers that have been in the business for a long time. Facing new competition every day leads to a drastic drop in pricing schemes, thus creating an imbalance in the market.
10 Reasons MAP Pricing Must Be Monitored
- The market has several similar products that are being sold every day. A fixed Minimum advertised price(MAP) on the product gives a clear-cut margin of the profits made by retailers.
- Assessing the competition by comparing the Minimum advertised price(MAP) is a lot simpler.
- The manufacturers also have an idea of the price of the product and how it is selling in the current market.
- If priced too low, it can affect the brand name and lower the value of the product. This can cause long-term damage. Setting a MAP can assure that the cost is worth the value of the product.
- A great way of promoting a product is setting high margins for the retailers. The retailers represent and sell the products for the manufacturers. So, in a way,Minimum advertised price(MAP) sets the standards of the product.
- MAP levels the field. Those who have higher operational costs can recover them at any price above the MAP. At the same time, any retailer can get in play and sell the product in the market.
- Most importantly, MAP price monitoring needs to be in place to ensure there are no retailers underselling the product in the market.
- Several retailers, both online and from brick-and-mortar stores, lower the prices to clear their inventory. This can be damaging to retailers and manufacturers. MAP price monitoring will prevent this.
- If there is no MAP price monitoring in the market, those who follow the MAP will be affected.
- Those who follow Minimum advertised price(MAP) will be at a disadvantage because of those who don’t. This might prevent them from purchasing from the manufacturers again. This will be a disadvantage for the manufacturers.
How Can Manufacturers Force Retailers?
MAP monitoring can be used to procure all the evidence needed to ensure that the retailers are complying with the MAP pricing policies in place. Here is how it can help ensure that all the retailers are following the MAP set.
- Evidence can be collected to prove the MAP price violations from those set in place. Any screenshots or solid proof will suffice as proof.
- The collected evidence can be used to show to the manufacturers and make the others compliant. This proof can be collected by both retailers and manufacturers.
- The pricing can be renegotiated to ensure that all retailers are on the same page and agree to the Minimum advertised price(MAP).
- The MAP monitoring is a great way to follow up and keep a check on the selling price.
- The MAP monitoring will give you all the information about MAP price violations made. It can track and show the details you need to use as evidence.
- If there were MAP pricing policies signed, the manufacturers are liable to take legal action against the retailers. They can even choose to terminate their listings. Retailer websites like Amazon and eBay are also liable to follow the set Minimum advertised price(MAP). If the retailers don’t comply even after a warning, then legal action can be taken.
Difference Between MAP And MSRP
The MSRP and MAP are very different from each other. MARP is the Manufacturer’s Suggested Retail Price. This is the price at which the retailers have purchased the product from the sellers. This is the price at which the sellers suggest the product be sold in the market. However, there is no restriction or limit at which the retailers sell the product in the market. Once the sale is made by the manufacturers, the retailers are at liberty to set any price they want.
This is where Minimum advertised price(MAP) comes into play. It sets the base price at which the retailers have to sell the product. It is a policy they need to adhere to. If it’s only the MSRP that is set, there is no balance enforced. While resellers can set any profit they want, the brick-and-mortar stores can rarely compete with their pricing.
However, there are also positives to MSRP. It is of great benefit to the customer as they can get products at good prices. This increases their options too. In the automobile industry, the MSRP has to be revealed to the customers. Making a comparison between the two can encourage customers to make a purchase.
How Can Retailers Stand Out With the MAP In Place?
Speaking of ways in which retailers can attract customers, there are ways in which they can use MAP to their advantage while adhering to the MAP. The spike in the free shipping offers given by online retailers is a great way to encourage shoppers.
Most shoppers research products before making a purchase. When there are discounts combined with few shipping policies, it increases the appeal to the customer. A successful method in which retailers benefit is by giving discounts on the products in the cart, while complying to Minimum advertised price(MAP). Many shoppers leave products in the cart itself. Offering them at a lower price is bound to get more sales while adhering to the policies.
When retailers follow the set Minimum advertised price(MAP), the manufacturers also inform them of new products before anyone else in good faith. The MAP pricing policies are good as they create a healthy relationship between the manufacturers and the retailers.
Brands and Retailers prevent excessive discounting among reseller’s with our industry-leading automated MAP compliance solutions – including triggered alerts with hourly, real-time updates for MAP pricing violations.
The supreme court set a ruling that the manufacturers and the retailers can work together to set a minimum advertised price. This is for the benefit of both the parties in play. By working together, they can sell commodities at the best valued price to the customers. It helps establish a level of uniformity. This also serves as a stepping stone to creating a balanced economy. The MAP pricing policies are essential for the retail industry. It will make sure that the product is not sold at a price lower than it is valued. MAP and MSRP both play a vital role in e-commerce and retail.