Minimum Advertised Price or MAP is by definition, the minimum price that retailers can display publicly. It is the lowest price assigned to a product by the manufacturer so that retailers or resellers cannot advertise the product below that price. MAP Policy is a mutual agreement between the manufacturer and retailer to ensure the displayed price of the product does not fall below the MAP. This means that even though retailers can sell these products below the MAP through coupons and discounts, they cannot advertise below the MAP established by the manufacturers in the MAP policy.
Ayelet’s study of nearly 500 MAP policies, for example, found that just 41% of them were clear about the consequences of violations.
MAP policy is very important for manufacturers and brands, helping them to maintain brand integrity and a good relationship with their authorized and loyal retailers, by ensuring good margins on a brand’s products. Therefore, it is crucial to build an effective MAP policy which starts with finalizing the MAP price of products.
Set Up Competitive MAP Price:
To ensure your policy is followed by your retailers, you need to ensure your MAP price is competitive enough in the market, compared to similar products from other brands. You must also consider the price which establishes your brand authority in the market. The price should be optimum for consumers in the market willing to spend while ensuring your retail partners are getting a good margin from your product.
With these goals in mind, setting up a competitive MAP price is the trickiest process of MAP policy formulation. Deciding on a price without solid market information in hand can have a negative impact on your brand. The most effective way to have market visibility is to analyze the market and gather information on products closely related to your product specifications. Price intelligence and ad intelligence tools can help you scan huge marketplaces like Amazon, Google Shopping, Walmart, and even your close competitor’s website, providing insight on their pricing and product specifications. These insights will enable you to formulate good MAP guidelines. These tools also come with capabilities such as MAP compliance monitoring and violation alert services, which are important for successful MAP policies.
Formulate Detail MAP Policy Document
The policy document should be created with all the criteria and details included from the actual MAP price of the product. It also needs to include violation enforcement processes and reward systems for loyal retailers. The document should be motivating to you as a manufacturer and your authorized retailer, who cares about the profit margins. These measures will ensure retailer MAP compliancy and control possible price wars between retailers. The document should also define a clear process for retailers to claim violations by other retailers and motivate them to join hands with you.
1. Clearly Define the MAP Prices of Your Product
The MAP policy must clearly define the set minimum advertised prices of your product, across every channel. Defining prices reduces any possibility of misusing the MAP price. Your trusted retailers as well as other retailers will have full trust with a clearly defined MAP price.
2. Define the Scope of the MAP Price Policy
The policy must mention the scope of your MAP Pricing. There are different versions of MAP based on its scope.
- iMAP policy or Internet Minimum Advertised Price Policy covers all internet channels
- eMAP or electronic Minimum Advertised Price Policy covers all electronic channels (covering advertising prices on emails, text messages, and more)
- The MAP policy that is broader scoped covering the Internet, Electronic channels, and the physical stores
Therefore, the policy should clearly state the scope of your MAP policy
3. Describe the MAP Compliance Monitoring Process
Manufacturers and brands need to monitor retailers’ prices across all channels to protect their brand image/value. However, the MAP compliance monitoring process can be tedious if done manually. To achieve an optimum tracking system, one can use MAP monitoring software. Tracking retail pricing across various channels such as Amazon, Walmart, Big-commerce, and more must be thorough so that retailers will be alerted if they violate the MAP policy. Therefore, MAP policy needs to cover the process of MAP monitoring and the condition of violations i.e. “what is a violation” and “what is not”.
4. Clearly State the MAP Enforcement Process
The success of any MAP policy can only be achieved if they are enforced. Unenforced MAP policies can degrade and deteriorate your brand value/image. If the MAP monitoring process tracks any kind of violations, the policy must cover the consequences and after-effects of such violations. According to a study by Ayelet Israeli on nearly 500 MAP policies, only 41% of them were clear about the consequences of MAP violations. He states that a lack of clarity when it comes to MAP enforcement can make a company seem indecisive and timid which can invite resellers to see what they can get away with. Therefore, a MAP policy needs to cover:
- Violations will need to be corrected within a certain period for the first violation (the rules can be different for authorized retailers vs. unknown retailers). The first violation can be corrected with an official warning process
- The second violation should be more strict. Banning the retailer for a certain period can be a good practice to implement for a second violation
- The third violation cannot be overlooked. Consequences can be from banning for an extended period to banning retailers from selling your products altogether.
5. Provide the Process Retailers Can Follow To Claim MAP Violation
The policy should also cover the process where loyal retailers can report MAP violations. The policy should also cover the channel through which such retailers can report any violations from others. Collaboration between such trusted retailers can motivate these retailers to follow the rules in the MAP policy.
6. Create a Reward system
Rewarding retailers who have always followed the guidelines in your MAP policy helps you ensure loyalty and trust with them. It is recommended to cover any kind of reward system for such trusted retailers.