Because the automotive-parts and accessories industry is among the most competitive of all consumer goods industries, you need to be strategic about drafting and enforcing your MAP pricing policy.
Failure to leverage industry best practices when it comes to your MAP policy — or worse, failure to implement a policy in the first place — could harm your most valuable retail partners, cost your company sales, and eventually undermine your brand’s value.
In this post we’ll discuss a few strategies that automotive-parts companies like yours should consider when rolling out and enforcing your MAP pricing.
1. Set your MAP prices high enough that your brick-and-mortar retailers don’t need to mark them up further.
Many automotive accessory makers set their MAP pricing as low as possible, reasoning that they’ll attract more retail partners if they allow sellers to offer their products at attractive prices.
There’s nothing inherently wrong with this strategy. But you also need to make sure you’re building in enough of a margin for your brick-and-mortar partners, such as the regional or national store chains your company hopes will carry and promote your products.
Because these physical store chains have higher overhead than pure eCommerce retailers, they might need to mark up prices above manufacturer MAP pricing to cover their costs. And because most consumers are now internet-savvy comparison shoppers, this can put your brick-and-mortar retailers at a disadvantage. It has become common for shoppers to visit automotive-parts stores just to “showroom” products like yours — to view them, ask salespeople questions about them, etc. — and then leave and buy the products online for less.
Be strategic when setting both your products’ wholesale distribution prices as well as the MAP pricing you’ll want your retailers advertising those products for. Make sure that the price spread allows all of your retail partners — particularly your high-overhead brick-and-mortar sellers — to earn an attractive profit by advertising at your MAP prices.
2. Determine if you’ll allow coupons or other discounts that would effectively take the advertised price below your MAP levels.
One of the most important aspects of a MAP policy is that it allows a manufacturer to protect the value of its brand in the marketplace. If retailers are regularly slashing the advertised prices of a brand’s products, the public will begin to wonder about the quality of those products and the health of the company behind them.
You obviously don’t want automotive-parts shoppers finding your products online next to large “50% Off” signs or phrases like “Huge Discounts” on their sales listing pages. That could damage the public’s perception of your brand.
But you can give your retail partners more subtle ways to offer incentives that will, in effect, bring your products’ advertised prices below your MAP levels — while still ensuring the original prices customers see still reflect your MAP pricing.
For example, you could allow resellers to offer customers a storewide coupon that could be applied to your products, even though that would take their advertised price below your MAP. You could also let your retail partners offer other incentives such as free shipping or a free gift with the purchase of your products. You could even allow retailers to offer an added discount on a bundle of your products if the total price is over a specified amount.
Building incentives like these into your MAP policy can create several benefits. It can make carrying your inventory more attractive to potential retail partners. It can help those retailers entice more customers to buy, and increase overall sales of your products. And it can do all of this without compromising the MAP pricing of your products — which will protect your brand’s value and reputation.
Before your draft your MAP policy, consider which if any incentives you will want to allow your retailers to offer and which you won’t. If you’ve already drafted a MAP policy and haven’t included any such incentives, you might want to revisit that policy and considering updating it.
3. Get serious and systematic about MAP pricing enforcement.
None of these MAP pricing strategies, or any others you might have heard, will do your brand much good if you are not actively and aggressively monitoring your resale network to ensure your partners are abiding by your MAP policy.
You’ll need to take several steps to effectively police your MAP policy. For example:
- Create an Authorized Dealer Network
This will help you better control your inventory as it makes its way from your factory to a retail shop or a sales listing on Amazon.com or other marketplace.
Ideally, you’ll implement an online dealer portal to help you administer and manage your Authorized Dealer Network. This will be the fastest, most cost-effective way to get your dealer network started or to streamline the one you’ve already begun.
- Use MAP pricing software
At any given moment of every day, your company’s automotive parts or accessories could be appearing on tens or even hundreds of thousands of eCommerce sites and digital marketplaces. And the prices on any of those listings could change at any time.
It simply isn’t feasible for your team to monitor the entire internet to make sure your products aren’t being advertised below your MAP pricing. You’ll need an automated solution — such as an application designed for MAP monitoring and enforcement.
Final tip: contact a MAP pricing expert
If you’d like help putting some of these (and other) MAP pricing strategies in place, and your company doesn’t have the in-house experience, don’t worry. Let a TrackStreet MAP pricing expert help.