Here is some relatively good news for manufacturers and brands: According to a Northwestern University study on minimum advertised price (MAP) policies, only about 15% of authorized retailers will violate a manufacturer’s MAP policy. The bad news, which you already know if your company sells products through resale channels, is that not all retailers of your products are part of your authorized resale network.
Indeed, according to that same study, more than half (53%) of unauthorized retailers will violate your MAP policy.
Of course, neither of these statistics represents great news for any manufacturer. If one in two unauthorized resellers, and one in every seven of your authorized resale partners, will advertise your products below your MAP-approved prices, then your brand clearly has a potential problem in the making, particularly if you don’t develop and deploy an effective MAP program to protect against these violations.
Actually, you’ll face several problems if you allow repeated MAP violations to go unaddressed. Here are a couple of the major dangers of doing so.
- If several retailers are able to advertise your products below your MAP levels, and the rest of your resale network sees these violations going unpunished, then more of your retailers will also advertise their inventory of your products below your approved pricing. This race to the bottom will weaken the public perception of your brand.
- If your flagship resellers — big-name online sellers, brick-and-mortar stores that enhance your brand by carrying your products — sees that your company allows their competitors to violate your MAP policy with impunity, then these large companies might decide it is not worth representing your lines if they are going to be unfairly undersold. This could harm your relationships with your most important resellers.
For these and other strategic reasons, your company should prioritize developing and deploying a MAP program if you haven’t already done so. There are several ways to go about this, which I’ll outline below — in order of least to most effective.
THREE WAYS TO ESTABLISH AND ENFORCE AN EFFECTIVE MAP PROGRAM
1) Create and manage your MAP program in-house (least effective)
At first glance, this option might seem to be the most cost-effective of the three I’m listing here. A manual, in-house MAP program would simply consist of dedicated resources at your company checking the web for possible violations, and then taking whatever actions your program calls for — sending a warning email to the offending company, asking the online marketplace to remove the listing, etc.
But if you stop to consider what is involved in monitoring and enforcing a MAP program, you will quickly realize that the dedicated resources your company will need to deploy to manage this function at all times will be far costlier than just about every other option available.
Moreover, if you consider how difficult it will be to track all resellers — authorized and unauthorized — selling all of your products across the Internet, you’ll also understand how much more likely it will be your in-house, manual method is the most likely to miss violations, which can lead to the significant damage I’ve discussed above.
And finally, when you consider the delicate nature of crafting a MAP policy in the first place — if done incorrectly, it can actually tip over the legal line into antitrust territory — you’ll understand that going it alone is not a wise strategy for developing your MAP program.
2) Work with antitrust counsel (more effective)
A second option, much more strategically wise in terms of drafting the MAP language itself, will be to engage the services of a law firm to help in developing your MAP policy.
You can find attorneys who specialize in antitrust law, and these firms can help you in several key ways. First, they can help you draft a MAP policy that has a much better chance than anything your in-house non-legal team could write of keeping your company on the right side of antitrust law. Second, because the attorneys have experience in litigating these pricing cases (often on both sides of the table), they can help train your team on how to police your MAP program yourselves, and they can often even help you investigate and build cases against violators. And third, having an antitrust law firm on retainer can also be helpful in the event your company ever has to settle a MAP policy dispute legally.
Of course, engaging an antitrust law firm has drawbacks as well. First, you likely cannot outsource all of the monitoring and enforcement of your MAP program to your attorneys. Doing so would in most cases simply be cost-prohibitive, assuming your attorneys themselves were dedicating their own internal resources to monitor and enforce your MAP program.
A second drawback of outsourcing your MAP monitoring and enforcement to a law firm — even if you could find a firm willing to do so, and even if it were cost-effective — is that your in-house team would lose much of the visibility into what was going on with your products’ pricing across your resale network. This visibility and these learnings are invaluable for helping you better understand, support and grow your resale channel.
For this reason, you wouldn’t want to turn over the day-to-day visibility of your products’ pricing to a third party — unless that party could also provide you anytime access to that data and a way of turning the data into useful intelligence for your brand.
Which brings me to the third — and best — option for an effective MAP program.
3) Partner with a MAP monitoring and enforcement team of experts, and leverage their online platform (most effective)
Your most strategically advantageous option for an effective MAP program will be to work with a team of MAP experts that have already developed a proven online platform for automated MAP monitoring, tracking and enforcement.
Such an automated MAP application will monitor your pricing across all online marketplaces in a far more comprehensive and cost-effective way than your company could manage with in-house dedicated resources.
An automated MAP monitoring and enforcement platform can also help you address violations and take the predetermined actions immediately in a far more affordable way than would be possible by outsourcing such responsibilities to lawyers.
Finally, the right automated MAP protection platform will continually monitor the Internet for your products’ presence across all resellers, compile and analyze all of this data, and present it to you in the form of intelligent, on-demand reports. This means that your company can simultaneously save time on MAP enforcement while at the same time gaining better insights into your resale channel and your brand’s public perception than you’ve ever had
To discover what a best-in-class MAP enforcement platform can do for your company, schedule your free demo.