Minimum Advertised Pricing (MAP) is a best practice for manufacturers looking to maintain their profit margins and brands.
A MAP policy creates a pricing floor that is the foundation of sustainable revenue for both manufacturers and retailers. It can help prevent differentiation on price alone, which would lead to a profit-killing price war.
But it can also uphold the manufacturer’s brand image over time, as consistently low prices tend to foster a perception of lower quality. An impression of lower quality can eventually degrade customer loyalty and retention, which would impact revenue growth without an expensive and time-consuming rebranding campaign. So investing in a well-thought-out MAP policy can not only save a business money in the long run, but can also set the stage for ongoing profitability and strong competitive positioning.
But once a business has developed a MAP policy, it must consistently enforce the policy to protect its margins and brand image. Without consistent and predictable enforcement, if a single retailer or reseller violates MAP without timely remedial action, other retailers may follow suit, putting at risk the manufacturer’s margins and long-term prospects.
In order to consistently uphold its MAP policy, a business needs to understand what to look for in a MAP violation, automate monitoring and reporting of MAP offenses, and track MAP offenders.
Identifying MAP Violations
Assuming a manufacturer has defined a MAP policy, the first step in enforcement is knowing what to look for in a violation. While some smaller resellers may just advertise a lower price and hope their small size will keep them from getting caught, others are more artful in finding new ways around MAP policies, making MAP enforcement an ongoing process.
Here are some prevalent methods resellers may use to get around MAP policies:
- Add-to-cart pricing: This is the practice of showing the customer the price after it’s added to an online shopping cart. These retailers usually show one price on their product pages, add a statement that says something like “Price displayed in shopping cart” to the product page, and then show a lower price in the buyer’s cart. This is not technically a MAP violation because an encrypted shopping cart is not considered advertising, but it’s still a practice manufacturers should keep their eye on when protecting margins.
- Price available upon request: A first cousin of add-to-cart pricing, this tactic is just as it sounds: the customer requests the price, which will typically be below the MAP.
- Buy One, Get One (BOGO): This is the ever-present “Buy one, get one” promotion retailers often use to lure customers into buying the item and, through the psychology of loss leader pricing, buying other items as well.
- Bundling: Resellers pull several different products into a single bundle with its own price.
- Relisting: Upon receiving a MAP notice, resellers take down the product and relist it the next day under another name.
- Hiding: This practice shields product pages from manufacturers’ enforcement methods by listing inaccurate or atypical product descriptions, brand names, purchase quantities, or other buy page details.
- Price or quantity evasion: Listing abnormally low prices or high purchase quantities that fall outside a manufacturer’s realm of monitoring.
Knowing how retailers may attempt to circumvent MAP policies can help manufacturers develop an effective MAP monitoring solution.
Automating MAP Monitoring
MAP enforcement is made even more difficult by the limitations of manual monitoring. One study found that companies that use manual methods to monitor MAP policies still had violations by 15-30% of retailers, with instances as high as 80%.
The challenge here is one of scale. Human-only methods of monitoring can never keep up with all online channels. This is where automated agents can do the heavy lifting of online channel monitoring, and provide actionable insights in a timely manner.
Overview of MAP Monitoring
The main objective of MAP monitoring is to gather evidence of a retailer’s compliance or non-compliance with a brand’s MAP policy. The specific steps in MAP monitoring include:
- Collecting Actionable Evidence: This includes screen captures of advertised prices, as well as recorded metadata like date, time, URL, etc.
- Presenting Evidence: This could go from the manufacturer to the retailer to highlight potential violations. Retailers themselves could also use it to prove their compliance to a manufacturer or point out competing retailers’ violations.
- Facilitating Renegotiation: MAP monitoring brings more visibility into the marketplace, including trends in competitive pricing and price elasticity, so it may spur a rethinking of MAP policies among brands and retailers alike.
- Initiating Enforcement: Clear evidence of MAP violations should trigger actions to remediate those violations, which could include providing an electronic cease-and-desist letter, engaging a professional E-enforcement team for hard-to-reach, unauthorized resellers, and/or legal action.
The steps above typically require robust capabilities for data capture, organization, and management, which is the wheelhouse of automated solutions.
How to Set Up Automated Monitoring
Automated MAP monitoring solutions enable brands to cast a wide net over their retailers and find potential violations in time to do something about them. Initializing automated monitoring typically involves the following steps:
- Identify the retailers: This step involves simply listing out all the online retailers for a given product.
- Find the buy pages: For each retailer identified above, go to the buy page for the product in question and copy the page URL.
- Configure data collection: Using the buy page URLs, create extractors for each page in the automated monitoring tool. This step tells the tool where to periodically check for pricing.
- Define data elements: Specify the product name and pricing combinations to monitor.
- Configure reports: The tool should provide the option to specify data elements for compliance reports as well as the frequency with which they’re generated and sent. Actionable data elements include, but aren’t limited to, product name, previous and current price, retailer, date pulled, and associated screen captures.
- Review pricing changes: Upon receiving the report, brands should have the information they need to follow up on potential MAP violations at their fingertips.
Benefits of Automated Monitoring
Proper use of automated monitoring solutions positions manufacturers to gain significant advantages with pricing, brand image, and enforcement. These benefits set the stage for sustainable revenue growth and customer engagement.
First, as suggested above, automated solutions save significant time and dramatically increase brands’ MAP coverage compared to manual methods.
Second, MAP monitoring solutions provide greater insight into market trends that could impact price, enabling more timely pricing adjustments.
Third, automated MAP monitoring, coupled with effective enforcement, helps prevent the profit and brand erosion that comes with advertised discounting and price wars.
And fourth, automated monitoring positions brands for timely and effective MAP policy enforcement and remediation.
Addressing MAP Offenders
Before enforcing MAP policies, a brand should first pursue consistent and open communication with resellers about their policy. The following are best practices for managing this dialogue:
- Explain the value of MAP for both the brand and the retailer: The benefit of short-term sales due to advertised discounting ultimately harms the profit margins and brand image of brands and retailers alike.
- Clearly define the policy: Brands should be clear and transparent about what is and isn’t acceptable per their MAP policy. This will make enforcement much easier.
- Publicize change in a timely manner: There are lots of good reasons to modify a MAP policy. Brands should attempt to notify resellers in advance of the change taking effect.
- Enforce MAP policies quickly and consistently: If a large retailer violates MAP for even a day, it could degrade profit margins and brand image. Brands should hold all retailers to the same standard and prompt enforcement timeline.
Adhering to these best practices should help resellers align with MAP policies, reduce infractions, and expedite remediation of any violations that do occur.
Once an automated MAP monitoring solution surfaces a violation, the brand should take decisive and timely steps to address the issue as described in “Overview of MAP Monitoring” above. In addition, the business should periodically chart out each MAP violation by product, Manufacturer’s Advertised Price, competitor price tracking, and price difference for trending analysis and long-term MAP enforcement planning.
Online retailing offers tremendous opportunities to manufacturers. It provides expanded reach into new markets that may have lower barriers to entry versus traditional channels. It also provides unprecedented opportunities to build brand awareness, customer loyalty, and customer retention. But threats to a brand’s price could imperil all these benefits by reducing profits and brand equity over time. So, thoughtful MAP policies, coupled with automated monitoring and timely enforcement, are key building blocks for a brand’s profitability and long-term viability.
How has your company used MAP monitoring and pricing enforcement to protect your business? Share your thoughts in the comment below:
Sign up for a free trial to see how Import.io can you help you with MAP monitoring and pricing enforcement.