One question we often hear from manufacturers and brands researching TrackStreet’s MAP monitoring and enforcement platform is, “What is MAP pricing?”
These companies know that establishing a minimum advertised price (MAP) policy and implementing a solution to enforce that policy are important steps to protect their company and their legitimate resale partners. That’s why they are contacting us. But, surprisingly, they’re often not sure what MAP pricing actually means.
You can find a detailed discussion of MAP pricing programs — what their benefits are, their legal implications, pitfalls to avoid when setting up a MAP policy, etc. — on our MAP Pricing Program page. But here we’ll offer a short overview to answer the question: What is MAP pricing?
What is MAP pricing?
As its name suggests, a minimum advertised price (“MAP”) policy is a set of guidelines written by a manufacturer or brand that sets the lowest prices the company is willing to allow its resale partners to advertise its products.
MAP pricing, in other words, refers specifically and only to how a brand’s products are advertised. A retailer carrying a brand’s protects may actually sell those products for less than the prices stated in the company’s MAP pricing policy — as long as that retailer advertises the products at or above the MAP-approved amount and negotiates the lower prices with customers privately.
WHAT IS MAP PRICING USED FOR?
Implementing a MAP pricing program can provide many benefits to both the manufacturer and its resellers. The primary benefits include:
1. Protecting a brand’s legitimate resale channel
When a brand establishes and aggressively enforces a MAP pricing program, it protects its authorized resellers against being unfairly undersold by gray-market retailers who do not have a relationship with the brand and feel no sense of obligation to adhere to the company’s advertising policies.
2. Protecting a brand’s brick-and-mortar retail partners
Properly enforced MAP pricing also helps a manufacturer maintain strong working relationships with its brick-and-mortar retail partners. If retailers who operate physical stores know that they won’t be undermined by online resellers who can afford to advertise the same products for less, those storeowners are much more likely to carry and actively sell a brand’s products in their retail locations.
3. Protecting the reputation of the manufacturer and brand
If a manufacturer sells through a resale channel, and those resellers are allowed to advertise the company’s products for any prices they want, the pricing battles that emerge from this free-for-all can quickly lead to an erosion of the brand’s reputation. When shoppers see the prices of a brand’s products continuously falling, they might come to view the products, and the company behind them, as poor-quality or otherwise untrustworthy.
WHAT ISN’T MAP PRICING?
Now that we’ve answered the What is MAP pricing? question, it’s worth pointing out a couple of common misconceptions.
MAP pricing is not an agreement.
When a manufacturer drafts its MAP policy, the policy’s language should clearly indicate that it represents a one-way statement, a set of guidelines the company is telling its resellers to follow — but not a two-way agreement.
The reason for this is legal: MAP pricing must remain a unilateral policy to keep the manufacturer on the right side of federal and state antitrust laws.
Establishing MAP pricing is not the end of a brand’s responsibility — it’s the beginning.
Determining the proper MAP price levels for a manufacturer’s products, and then drafting and publicizing a MAP policy around those prices, are mission-critical steps for the manufacturer to protect its resellers’ margins, its relationships with key retailers and its reputation among the public as a quality brand.
But writing a MAP pricing policy and sharing it with resellers is only the first part of a manufacturer’s responsibility to control how its products are advertised. For that MAP policy to be effective, the manufacturer must also implement a solution to enforce it.
Ideally, this will be a fully automated MAP enforcement platform that enables the company to catch more violations, respond to those violations immediately and consistently, and eliminate the time-consuming processes involved in manually policing its resale channel.
For more detailed information about MAP pricing, visit our MAP Pricing Program page.