A minimum advertised price policy can go a long way toward protecting your resale channel, your company’s bottom line, and your brand’s reputation in the market. But simpl having a minimum advertised price policy won’t all by itself prevent the problems that reseller price wars on your products can create for your brand.
In fact, if you draft your minimum advertised price policy incorrectly, enforce it improperly, or enforce a MAP policy when you should be using a different type of reseller policy altogether, you can create a whole set of new problems for your company — maybe even problems with the law.
Developing and enforcing a successful minimum advertised price policy can be a complex undertaking if you decide to go it alone — which is why we strongly recommend that you work with a team of Brand Protection Experts instead.
And if you do choose to draft, publish and enforce your MAP policy on your own, we recommend you first research the best practices, pitfalls and legal implications. One place to start is with our free eBook: How to Draft and Enforce a Successful Reseller Pricing Policy.
Because creating an effective and legally sound MAP policy is such a complicated task, we can’t describe all of the steps here. So in this post we’re going to offer you some of the broad concepts you’ll need to keep in mind.
4 Things You’ll Need to Get Right When Creating Your Minimum Advertised Price Policy
1. The policy’s language must be written to avoid legal risk.
There are two things to keep in mind here.
First, you need to know that a minimum advertised price policy is indeed the reseller pricing strategy you should be using. There are other types of policies — notably the unilateral pricing policy (sometimes called a unilateral policy or UP) — that might be a better fit for your company. We discuss the differences between reseller policies here, but one quick test is that if your company doesn’t offer cooperative advertising money to your resellers, you might not want to use a minimum advertised price policy at all.
Second, your MAP policy must include clear language stating that the policy pricing you refer to is for advertising only — and that your resellers are free to actually sell your products for whatever amounts they choose. You should also include language stating that your company has determined its minimum advertised price levels on its own and not through any discussion or coordination with any of your resale partners.
2. You need to enforce the policy consistently across your resale channel.
Manufacturers and brand owners can get into legal trouble when antitrust regulators or courts deem their behavior as collusion, price fixing, or “restraint of trade” that favors certain resale partners over others.
Even if your company has no intention of working with a few preferred large retailers at the expense of smaller resale partners, you could still find yourself on the wrong side of antitrust law if your staff treats different resellers differently when they violate your minimum advertised price policy.
This inconsistent enforcement can be entirely innocent. Maybe your policy is to withhold ad dollars from anyone who violates your MAP policy, but then your biggest retail partner commits a violation and your staff agrees to let them off with a warning, not wanting to upset such an important partner. This innocent error could still create legal troubles — so you need a companywide rule to enforce your policy consistently across your entire network of resellers.
3. Make sure everyone knows the policy exists.
This is another common misstep that manufacturers make with their new minimum advertised price policies — they draft and maybe even publish the policy on their website, but then fail to let their resale network know it’s there and that they need to review it.
A big part of successfully protecting your brand through your minimum advertised pricing policy is by building a process to introduce the policy to your resellers. This should include sending out the policy to your resale network directly, as well as issuing a press announcement about the policy (which also has the added benefit of attracting new resellers).
Remember, the point of a minimum advertised price policy is to serve as a deterrent against your resale partners trying to undercut each other by marking down your product’s advertised prices. But only if your resellers know you have rules in place against such behavior — and that there are consequences for violating those rules — can the deterrent effect work.
4. You need to monitor your products’ resale presence across the Internet, 24/7/365, for violations.
This is another common shortcoming of many (even most) manufacturers’ MAP policy strategies. They push out their minimum advertised price policies but then don’t develop a comprehensive strategy for monitoring the Internet to find out if and when a reseller commits a violation.
Failing to quickly catch and address a violation could also put your company on the wrong side of our third suggestion in this post — to enforce your policy consistently. After all, if you miss a violation because your team doesn’t see it — and your other retail partners do — they could view your company as playing favorites, letting one company openly violate your MAP policy when they themselves wouldn’t be able to get away with it.
Best Practice: Get Help from Experts for Your Minimum Advertised Price Policy
As you can see, creating, communicating and enforcing a minimum advertised price policy successfully will be an extremely complicated initiative — one that can even have legal consequences if you get it wrong.
Which is why we strongly suggest that you work with a team of Brand Protection Experts to craft your reseller monitoring and enforcement program. If you’d like to see how the right program could work for your company, schedule your free demo.