What is Minimum Advertised Price (MAP)? And How to Create a MAP Policy?

This article helps you understand what a MAP policy is, why you need one, the benefits of creating a MAP pricing strategy, and guidelines for implementing your MAP policy.

To begin with, policies on minimum advertised price, also known as MAP, are difficult to enforce across Amazon, Google Shopping, Target, and other digital channels! However, enforcing your MAP pricing policies does not just mean verifying that your MAP agreements are in place for your firm. It also demonstrates your commitment to your good resellers and retailers that you are serious about doing business with them by finding and policing the bad actors. And mid-term, it helps you enhance your brand value and continues to position you as a premium player.

The Minimum Advertised Price (MAP) is the lowest price that a manufacturer or brand allows a retailer to advertise a product for. This policy is enforced in both the United States and Canada. While retailers can still sell the product at a price lower than the MAP price, they cannot advertise it below that price in any form, including flyers, printed media, online sites such as search, marketplaces, and direct sites.

For instance, if a manufacturer sets the Minimum Advertised Price at $500, all authorized resellers who want to promote the product must advertise the product at $500 or higher. However, retailers may offer the product below the MAP by using discount coupons and offers.

The Manufacturer Minimum Advertised Price Policy is an agreement between the manufacturer and retailer to ensure the displayed price of the product does not fall below the specified MAP price. This means that even though retailers can sell these products below the minimum advertised price through coupons and discounts, they cannot advertise below the manufacturers’ MAP price as specified in the MAP policy agreement.

• Manufacturers and wholesalers set MAP price on their products to maintain the brand value and protect against negative image that can be impacted by low prices. MAP violations can have a devastating impact on a brand’s image. Consider this situation: a manufacturer discovers its $250 product is priced on Amazon at $50. This is a violation of the MAP agreement. The manufacturer can potentially lose customers and market share. Thus, a violation like this may destroy years of hard work that had established the manufacturer’s brand value, image, and reputation in the market; essentially leading to brand erosion. With a MAP policy, unauthorized retailers won’t be able to destroy the brand image and negatively impact sales from honest and compliant retailers who abide by the policy.
• The Minimum Advertised Price (MAP) is the minimum price at which a retailer is allowed to advertise its products in authorized sales channels. Retailers usually try to be very price competitive to win the sale. MAP helps prevent price wars between retailers and protect margins. However, with MAP policy, retailers focus on factors such as after-sales service, shipping, and other customer-centric features. This is beneficial from the consumer’s point of view, driving them toward retailers who deliver an exceptional customer experience and shoring up brand loyalty. It’s essentially a win-win.
• The Minimum Advertised Price is different from the MSRP price. In general terms, MSRP is the upper limit of the price targeted toward the consumer, but it is an unofficial limit. However, MAP Pricing is an official lower limit of the product price that resellers and retailers can advertise their prices at.

Yes, under U.S. antitrust statutes, the Minimum Advertised Price is legal. However, it is not considered a form of vertical price fixation between retailers and manufacturers because it allows resellers and retailers to sell below the set price. Therefore, it is legal, and retailers must strictly follow the policy. MAP policy is also legal in Canada and resellers must comply with MAP pricing policies set by the brand when they sell and market in Canada.

The Minimum Advertised Price is the lowest price assigned to a product by the manufacturer that retailers or resellers cannot advertise below. The MAP policy is very important for manufacturers and brands, helping them maintain brand integrity and a good relationship with their authorized and loyal retailers. Therefore, it is crucial to create an effective MAP policy that starts by finalizing the list of products in your catalog with you want to enforce MAP, and your corresponding MAP price.

To ensure that your Manufacturer Minimum Advertised Price policy is followed by your retailers, you must ensure your policy 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 willing to spend while ensuring your retail partners are getting good margins from your product.

With these goals in mind, setting up a competitive MAP is the trickiest part of policy formulation. Deciding on a price without reliable market information can negatively impact 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. Per the Harvard Business Review article “Pricing Policies That Protect Your Brand” written by Professor Ayelet Israeli and Eugene F. Zelek Jr., “Determining the “right” minimum prices is an art form that takes into account brand positioning and goals, resellers’ margin needs, and the competitive environment. Prices set too high will discourage sales, while those that are too low leave money on the table and can harm a brand’s valued resellers by allowing unhealthy discounts.”

From our perspective, the following are six steps that brand pricing and channel management teams can utilize to formulate a sound MAP policy document –

• Clearly define the MAP policies of your product
• Define the scope of the policy
• Describe the MAP compliance monitoring process
• Clearly state the enforcement process for your policy
• Provide the process retailers can follow to claim Map violation
• Create a reward system

The document should be created with all the criteria and include details on the actual MAP policy. 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 retailers. These measures will ensure retailer MAP compliance and control possible price wars between your retailers. The document should also define a clear process for retailers to flag map violations done by other retailers and motivate them to join hands with you to police MAP.

Now, let’s learn more about the aforementioned steps.

The MAP policy must clearly define the manufacturer’s minimum advertised prices by product that your authorized resellers must follow. Defining exact prices by SKU reduces any possibility of misusing the MAP policy. Your trusted retailers and other retailers will have complete trust with a clearly defined policy.

The policy must mention the scope of your Minimum Advertised Price. There are different versions of MAP based on its scope.

• IMAP: It stands for ‘Internet Minimum Advertised Price Policy’ and covers all Internet channels.
• EMAP: It refers to the ‘Electronic Minimum Advertised Price Policy’. It includes all electronic channels covering advertising prices on emails, text messages, and more.
• Lastly, a broader MAP policy covering the Internet, Electronic channels, and physical stores.

Therefore, the policy document should clearly state the scope of your MAP policy.

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. The system should allow you to send emails to your retailers that are violating your MAP guidelines. The violation email outreach system should be flexible to customize per the email frequency and tone you want to use to reach out to your resellers.

This article Minimum Advertised Price Violations Free Email Template and Best Practices shares best practices on this topic.

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 pricing 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”.

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. According to a study by Ayelet Israel 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 policy needs to cover:

• Map 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 stricter. Banning the retailer for a certain period can be a good practice to implement for a second violation.
• Do not overlook the third violation. The consequences can be from banning for an extended period to banning retailers from selling your products altogether.

The MAP policy should also cover the process where loyal retailers can report violations. The policy should also cover the process retailers can use to report violations they discover others have made. Ease of reporting and support offered to trusted retailers can motivate them to follow the rules in the MAP policy and report other violators. A best-in-class Enterprise MAP Policy Monitoring Solution like that offered by GrowByData helps the brand and retailer easily monitor and report wholesalers, distributors and retailers violating MAP policies.

Rewarding retailers that follow your policy guidelines helps you ensure loyalty and trust with them. We recommend you create a reward system for such retailers. Our article Police MAP Violators and Incentivize Sellers That Comply With MAP Rules describes tactics brands can use to reward their good resellers that comply with the MAP violation policies set by the brand in the US and Canada.

Manufacturer Minimum Advertised Price (MAP) policies can significantly impact your brand perception and should be top of your mind as you build your pricing and marketing strategies. Good solutions to offer Price Intelligence and Ad Intelligence can help you monitor marketplaces like Amazon, Google Shopping, Target, and even your close competitor’s website across multiple countries, and gain insight into pricing and product trends.

Insights from these will enable you to formulate good MAP pricing guidelines. These tools also offer capabilities such as MAP compliance monitoring and violation alert services, which are important for implementing successful MAP policies. A good MAP solution firm will evolve their offerings with changes in the marketplace and suggest best practices for creating a sound MAP price compliance and reward system.