Solutions for manufacturers: how to handle violations of the agreed price
Minimum Advertised Price – MAP (or Targeted price, RRP, MSRP etc.) is an agreement between suppliers and retailers that qualifies the lowest price at which each product can be advertised. This means that retailers can go above the specified price but not below it.
Map policy can either be a policy imposed by the manufacturer/supplier or an agreement between a manufacturer, supplier and its retailers.
Briefly, the main purposes of the policy are to:
- Promote fair pricing and competition among different brands
- Protect small retailers in order to compete with big ones
- Maintain brand awareness and value
- Protect seller margins
Of course, it does not mean that the advertised price must be the retail price for the product. Actually, retailers are free to sell the products at any price they want above MAP.
Solutions for Manufacturers/Brands to be able to fight MAP Violations
Apart from huge democratization of the market, eCommerce has brought another problem: ever-emerging players on the market with very little expertise to offer can fight using only one weapon: low profit margin. These new players can hugely undermine the brand value and market position that has been carefully built in the past years/decades.
At this point, huge responsibility arises for the manufacturers. Prevention of this situation requires huge efforts. Manufacturers should keep an eye on MAP pricing in order to spot and document a MAP violation.
Here are the some suggestions to help you minimize this problem:
- Spot and document violation cases
- Make sure your retailers know that you have a reliable way of monitoring their pricing policies
- Identify which retailer has fired the first bullet in the pricing war
- Automatically get informed in the case of MAP policy violations
- Make sure that you have technical equipment to avoid bans/blocks to obtain healthy price monitoring results
(Our price monitoring tool Price2Spy can help you apply these suggestions. To find out more please click here)
So, to sum up, we can help you in preserving your brand’s value and monitoring whether your retailers respect the agreement on prices that you have. However, the best way for manufacturers and the retailers to work is to communicate openly about the conditions. They need to work on policy terms without breaking rules they and to find the considerable way to sell their products without making problems to each other.
