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Build a MAP Pricing Policy for your Brand
What is MAP Pricing?
Minimum Advertised Price (MAP) may not be top of mind for brands, particularly new ones. However, it’s a topic many could benefit from contemplating sooner rather than later. Any company that plans to sell its products via an external retailer, such as an Amazon seller or even through a first-party relationship with Amazon, should first understand the pros and cons of utilizing a MAP policy. And those who find it’s the right strategy also need to know how to build a policy that works.
True to the name, a Minimum Advertised Price (MAP) is the minimum price a retailer can advertise for a product they sell. The MAP is set by the brand and should include a margin allowing retailers to profit reasonably. It applies to any retailer who carries the item and is intended to level the competition among sellers and avoid price wars. It can also provide brand protection against devaluation in the process.
MSRP vs. MAP
A familiar term to many is Manufacturer’s Suggested Retail Price or MSRP. This refers to the amount that a manufacturer thinks a product should sell for, but it does not create any restrictions on the advertised price. Instead, retailers may use the MSRP pricing to highlight their discounted sales price to attract buyers.
Brands can use MAP pricing to control the gap between MSRP and advertised prices. In this way, they can avoid the less-than-ideal message that a product is worth substantially lower than what the brand suggests.
Flexibility makes it legal
One nuance to take note of is the fact that MAP pricing does not dictate the final sales price of a product. It only addresses the advertised pricing used by a retailer. In the case of brick-and-mortar stores, a lower price can be offered once the customer visits. In contrast, e-commerce platforms can utilize additional clicks, such as adding a product to the shopping cart to see the final price, to comply with MAP pricing but still offer other discounts.
This flexibility in sales price, and the fact that’s not a MAP agreement as much as a unilateral MAP policy is what makes Minimum Advertised Pricing differ from price-fixing, which would violate U.S. antitrust laws. A successful MAP policy can encourage healthy competition among sellers by allowing those with value-added services to avoid being undercut by less customer-focused stores emphasizing volume and the lowest price over expert staff.
Brands need to be aware that the laws regarding MAP pricing may be different in countries outside the U.S. In addition, a MAP price that discourages stores from stocking competing products or favors a particular retailer may run afoul of the law. Experienced legal advice is valuable in building a new MAP policy for brands.
Create a competitive MAP Policy
When a brand decides setting a Minimum Advertised Price is the appropriate strategy for their business, it’s time to draft a policy, or possibly policies, that reflect the company’s goals and the product’s value. Designing a customized MAP policy rather than relying on a generic template is one of the best ways to ensure the outcome meets your expectations.
In addition to carefully considering the actual pricing restrictions included in your MAP, you’ll also want to pay close attention to the policy details. It should explain clearly the types of advertising that will be covered by it and include a plan to encourage participation. It also needs to communicate to authorized sellers the consequences of non-compliance.
Determine the reach of your MAP needs
While MAP policies traditionally applied to physical stores carrying a brand’s products, the age of e-commerce has resulted in more specific variations of MAP. Offline advertising such as direct mail, tv or radio, and billboards are no longer the only concern. Today, sellers may adjust their policy for different types of retailers and use a specific agreement that more aptly covers how sales are promoted online. When building a MAP policy for your brand, you will want to consider all the possible MAP pricing approaches required to protect your products. In addition to conventional MAP policies, a brand may also use:
iMAP (Internet Minimum Advertised Price) Policy – an iMAP policy addresses Internet-based advertising such as online display advertising and website sales pages. However, it would not govern other methods that an online retailer might turn to for marketing.
eMAP (Electronic Minimum Advertised Price) Policy – Brands looking for broader protection might instead opt for an eMAP. In addition to online advertisements and listings, this pricing strategy would also set the rules for other types of electronic communications. It would likely include emails or text messages, for example.
Regardless of the details, the most effective pricing policy is one that an authorized reseller will comply with. Obviously, clear and concise MAP guidelines are the first step to better compliance. But other strategies can also ensure your MAP strategy seems more like a partnership than a demand.
A co-op advertising or distribution fund that rewards sellers who follow the rules is one of the ways that brands can reduce violations and foster goodwill. Rewarding authorized retailers for following the rules with this type of support can offset the damage done by unauthorized sellers or stores that undercut your MAP policy.
Another way to strengthen effective MAP pricing is by viewing your policy through the eyes of the authorized seller, not just the brand. Consider integrating additional pricing flexibility during promotional seasons when promoting sales may be most important. Creating exemptions for events such as Black Friday or other relevant holiday sales can provide authorized retailers with an opportunity to boost traffic. You can also make them dependent on living up to the MAP policy requirements during the rest of the year.
For the best brand protection, your pricing policy should be more than just MAP guidelines. It should also illuminate the consequences of violations. A warning for first offenses is a common approach, and many brands implement a three-strike system with escalating penalties. These may include:
- Preventing the seller from receiving more products for a period of time
- Reducing the number of products available to them
- Revoking their standing as an authorized retailer
While implementing these punishments can seem severe and have negative financial consequences for your brand, they will likely pay for themselves over time as your MAP policy becomes more potent.
Protect your Pricing Structure
Once you have a firm MAP policy in place, the real work begins. To truly protect your brand value, you’ll need effective MAP monitoring of the sales of your products. It can be time-consuming to patrol physical stores as well as online retailers, like Amazon and Google shopping, so be prepared to have the tools and team to do so correctly. Also, remember that platforms hosting your authorized or unauthorized retailers, may not be active participants in your efforts.
Amazon’s Role in MAP Pricing
Your brand’s relationship with Amazon will determine the platform’s role in your MAP policy. Currently, there are two main avenues for brands to sell on Amazon. Vendor Central (1P) Amazon sellers supply their products wholesale to Amazon, which handles pricing and logistics. Seller Central (3P) Amazon sellers use the marketplace to sell directly to their customers and set their pricing. In some cases, brands may also distribute products to authorized resellers or rely on Amazon to sell the product.
In any of these scenarios, competition for the Buy Box can create price wars and a race to the bottom. When one reseller opts to go below an established MAP price, others will follow suit, and it can quickly eat into your profits. Therefore, it’s critical to monitor and enforce MAP violations diligently as they arise.
Unfortunately, Amazon does not proactively enforce a MAP pricing policy and, in some cases, can be guilty of violations itself.
Monitor for MAP violations
An effective MAP policy only works when a brand’s resellers follow it. Crafting a solid strategy for your minimum advertised price also requires a commitment to monitor the marketplace MAP violators. You need a proactive approach that emphasizes consistency in both the short and long term. Sometimes, a brand opts for a dedicated person or team to take on this responsibility. Some software options are also designed to check for violations and respond to them automatically.
Plan for enforcement
Regardless of how you discover MAP violations, you will also need a plan to deal with them once they are identified. If the violator is an Amazon seller, you’ll first want to confirm who they are. Doing so could require substantial research and possibly ordering the product from them to help track it back through your distribution channels.
If you find it is an unauthorized reseller, you can take appropriate steps to remove them from the site. However, as we mentioned, you shouldn’t count on Amazon to manage your MAP enforcement with authorized resellers. In those cases, communicate your MAP violation directly and with clear evidence to the Amazon seller. You may start with a warning or offer the seller an opportunity to explain. Still, you should be prepared to enact the consequences described in your MAP policy for egregious or repeat violations.
MAP can be complicated, but Amify can help
Developing, monitoring and enforcing a Minimum Advertised Price policy is not easy. Balancing those demands with your other responsibilities can quickly become overwhelming. Fortunately, there are ways to lighten the load without risking your brand’s value.
Amify has an experienced team ready to guide you through any aspect of growing your Amazon business. From listing optimization, pricing and marketing, to the Amazon Brand Registry and logistics, we can be a full-service partner that gets results. Rather than adding another employee, consider turning to the proven capabilities at Amify and the confidence that your company will be heading in the right direction. Contact us today!
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