In today’s multichannel world, it’s hard to keep the market balance and enable retailers to play on a level playing field. Some apply the “make it up in volume” policy, which allows them to offer lower prices and still generate high gross margins. However, this is unfair towards small retailers. The concept of MAP price a.k.a manufacturer advertised price was implemented to keep the market game honest. At WorkIT Software, we help you track online prices with our price monitoring software.
DISCLAIMER: Minimum Advertised Price (MAP) is a US-only regulation. Therefore this article applies only to the US.
WHAT IS MAP PRICE – A DEFINITION?
Minimum advertised price is set by the manufacturer and marks the lowest price a retailer can use to promote the product. Whether it’s an online ad, a catalog or any other way of advertising, a retailer is not allowed to go below that price.Online retailers are not excluded from the policy; they are expected to honor MAP as well.
This doesn’t necessarily mean that a retailer must sell above a given MAP. The rule only concerns advertising of the product. Once a customer comes to the store, the retailer keeps the option of providing an extra discount to said customer.
There are good reasons to follow minimum advertised price (MAP) set by the manufacturer. For instance, if a retailer doesn’t honor it, the manufacturer may refuse to send him more products or his selling privileges may be revoked, damaging their business relationship together in the long run. On the other hand, a retailer who nurtures good relationship with the manufacturer might benefit from special favors, such as the possibility to send back to the manufacturer products that weren’t sold for instance.
MINIMUM ADVERTISED PRICE MONITORING
There are various professional MAP monitoring software available that can perform map pricing monitoring and provide insightful data for manufacturers and retailers alike. These tools help keep everything running smoothly by sending a notification as soon as a violation is made. (See “Alerts” by WorkIT Software)
Minimum advertised price monitoring software helps manufacturers assess prices for their products across retailers. The retailers, on the other hand, can monitor their competition. If a violation occurs, the software provides evidence by offering a screenshot of a product page. The manufacturers can then send a warning to disobedient retailers or even take actions against them.
BENEFITS OF MAP
MAP retail pricing is crucial for a lot of reasons, including:
- It promotes fair competition across various distribution channels – same rules of the game apply to both small and large retailers
- It prevents under-pricing and protects seller margins – no retailer can use the unfair “make it up in volume’ policy
- It maintains value of the brand – if someone offers a product at a ridiculously low price, it lowers the value of that product in the eyes of customers
MAP price monitoring is essential to keep this pricing policy functioning at a maximum level. In a nut shell, having a valuable checking system that discovers violations as soon as they are made helps to maintain the pricing integrity of the market.
Learn more :
Competitive Price Intelligence