You can learn a valuable (and totally counterintuitive) lesson about your company’s minimum advertised price (MAP) policy from a direct-marketing success story. The anecdote I’m about to tell you might not seem at first like it’s relevant to your MAP policy, but I promise you there’s an important takeaway for you here regarding your reseller pricing strategy – whether you use a MAP policy or a minimum resale price (MRP) policy.
When producers of the infomercials for NordicTrack changed their call to action from “Operators are standing by; please call now” to “If lines are busy, please call back,” sales of the company’s home fitness equipment skyrocketed. At the time, that change in message must have seemed like a risky and counterintuitive move: Telling people they might have to call more than once to place an order could actually turn off prospective customers, right?
But it had the opposite effect. A person watching those infomercials, who might have previously had an image in her head of phone operators sitting at desks waiting for the phone to ring because so few people were interested in a NordicTrack (“Operators are standing by…”) could now envision a chaotic call center with operators so overrun by eager buyers that you might have to call a few times to claim your own NordicTrack (“If lines are busy, please call back”). This likely triggered a sense of scarcity. The company enjoyed an exponential increase in revenue as a result.
How the right MAP policy can make your brand attractive to high-quality retailers
The counterintuitive lesson here is that creating a sense of scarcity and exclusivity – even if that means you appear to be warning away some of your would-be customers – can actually act like a magnet and draw more customers to your door. The same is true of your MAP policy.
Yes, your MAP policy is, first and foremost, a brand protection strategy. It’s a preventative measure against price wars among your resellers that can erode margins, hurt your relationships with key retail partners, and ultimately weaken your brand value in the marketplace. But that’s not all a MAP policy is.
As we’ve written here before, proper MAP policy execution can be a powerful marketing tool that actually attracts new retailers to your channel – often the types of retailers who can bring your company the most value.
Because your resale partners have to be selective about which companies’ products they carry. They are making an investment in your brand, after all, when they start selling your lines. That investment includes putting their own brand behind your products, purchasing your inventory, and devoting time and resources to building sales pages and ads for those products. In the cases of your brick-and-mortar retail partners, investing in your brand also means devoting in-store shelf space to your products and, in some cases, even training their sales reps on your products’ features and benefits.
These resellers don’t want to have to worry about being unfairly undercut by an unscrupulous reseller, or discovering that the inventory they’ve already purchased from you is now the subject of a price war among their competitors and that they’ll probably have to sell it off at a loss.
So, while many of the manufacturers who approach us here at TrackStreet worry about making their MAP policy’s language and their enforcement of the policy too harsh – for fear that they’ll scare away potential new resale partners – the opposite is often the case.
Just as the warning to customers that “If lines are busy…” actually drove more sales, the more effective – even aggressive – your MAP policy sounds, and the more you publicize that policy, the more attractive your company will appear to the right retailers, who will view carrying your products as a smarter, safer investment than working with a manufacturer who won’t actively police its channel to protect their interests.
So, how can you create a MAP policy that brings retailers to your channel?
3 tips to set a MAP policy that draws the right retailers to your brand
1. Draft an effective MAP policy.
Because these reseller policies can so often be written incorrectly, and because some of these common mistakes can even put the manufacturer at risk of legal trouble with antitrust regulators, we highly recommend not trying to write your MAP policy in-house (unless you have legal counsel onboard). Instead, work with a team of brand protection experts.
2. Publicize your MAP policy across your industry (and anywhere else you think a new retail partner might learn about it).
Once you’ve drafted an effective MAP policy, there are benefits to publicizing it, including potentially luring in new high-quality retail partners.
When a reseller you’d like to be carrying your products – say, a respected national chain of physical retail stores – discovers your company has issued a strict policy to safeguard your reseller pricing, they’re much more likely to view you as a brand worth investing in.
So the more attention you can get for your shiny new MAP policy, the better. Issue a press release announcing the policy. Write guest articles and blogs for your industry’s trade pubs about the value of having a MAP policy as a way to protect your honorable resale partners’ margins. Make some noise across your industry. Get creative here.
3. Set up an effective enforcement system for your MAP policy.
One of the worst pitfalls a manufacturer can fall into – even if the company has drafted a properly worded MAP policy – is to then try monitoring and enforcing that policy manually.
Why is this such a risk? Because even if your team puts in a good-faith effort to police your products’ pricing across your resale channel, you simply can’t cover all of the ground at all times. (Your products, after all, might be advertised at any given moment across thousands of web pages and online ads.) If one of your resellers is violating your policy online without your knowledge, and a prospective retail partner spots it when they’re researching your company, you’ll likely lose that new partner.
Which is why we strongly recommend using an automated platform for MAP policy monitoring and enforcement, like the one we offer at TrackStreet.