MAP Pricing Policy

The Ultimate Guide to Minimum Advertised Price policy

I have read dozens of articles about Minimum Advertised Price policy (MAP) as well as reading hundreds of actual MAP policies.  I have yet to find an article that is both complete and accurate.  Many articles actually contain information that is more than just confusing but is actually wrong.   I’ve seen sites that promote themselves as “MAP enforcement companies” that have information on their websites that could get you in legal trouble if you followed it!  That’s scary when the supposed experts don’t know what they are talking about.  Here is just one example.  This is a quote from the website of a MAP enforcement company:  “A minimum advertised price policy, or MAP policy, is a pricing agreement between a manufacturer or brand and its resellers”  Please, whatever you do, do not believe that!  I am not an attorney but I do know enough to know that a MAP policy is NEVER an agreement.  An agreement between a manufacturer and a reseller about pricing would put the manufacturer in grave danger of a price-fixing lawsuit!  Knowing that there is a lot of confusing and contradictory information out there I want to write a complete guide to Minimum Advertised Price policies with everything you need to know and not much of what you don’t.  I don’t want to write a whole book, but I want a complete guide so you know what you are getting into if you decide to start a MAP program, or maybe what you could be doing wrong if you already have a policy in place.

What is a MAP pricing policy?

Step one.  Let’s define exactly what a map pricing policy is.  In the simplest terms, a MAP policy is a unilateral policy issued by a manufacturer.  The word unilateral is important.  It is not an agreement.  Resellers retain the right to sell and advertise products any way they see fit.  But, that being said, the manufacturer retains the right to state, in their MAP policy, what it considers a violation of the policy and what steps it will take if a reseller violates it.  It is all pretty simple.  Another important point is that the policy only applies to the advertised price, not the actual selling price.  On the internet, these two things are usually synonymous but from a legal standpoint, it makes quite a difference.  If the policy only deals with advertising, and it is not an agreement, a manufacturer does not need to worry about being accused of price fixing.   Another good thing about an advertised policy is it does not have to be only about the advertised price.  It might state that certain words are not allowed in an advertisement.  For example, many policies state that the phrase “See price in Cart” may not be used in an advertisement.  This has nothing to do with the price but it might imply that there is a lower price in the cart.  There are many other nuances that can be added depending on the situation and the strategic plan of the brand.  Please set up a consultation if you would like to discuss details.

When is a MAP Pricing Policy necessary?

Ok, now that we know what a MAP policy is a question might be; “Do I need one?”  Not every brand needs to have a minimum advertised price program in place.  If one of the strategic advantages of your product is being the lowest price, then a MAP policy is probably not for you.  A MAP policy is generally for a premium product.  It is for products that need a higher margin to support research and development, customer service etc.  Maybe a product that needs a large brick-and-mortar presence because of specialty installation requirements.  Another time a MAP policy becomes important is when a brand is growing and expanding into new distribution channels.  Many wholesale distributors and some brick-and-mortar dealers will not carry a brand that does not have a well-enforced MAP policy.  The reason for this is that they do not want to get stuck with inventory.  Dealers might spend significant money buying stock of a product.  If customers come in and look at the product but then find it cheaper to buy online the dealer is at risk of getting stuck with unsellable inventory.

The advantages of a minimum advertised price policy

So, if you have decided that a minimum advertised price policy is for you, here are some advantages:

  • Expanding your dealer network gets your product in front of more customers.
  • When more customers see and touch your product their familiarity will increase.
  • With increased familiarity comes more demand and more sales!
  • Wholesale distributors are more likely to carry your product.
  • Margins for dealers are higher so they can spend more money advertising your product.
  • A well-enforced MAP policy avoids the race to the bottom and price erosion.
  • By creating a level playing field dealers compete on service and not price.  This greatly increases brand value.

To sum it up, if you have or want to have a premium product and you want to grow your brand, a well-enforced MAP policy is essential with convenient map minimum advertised price.  Keep in mind that a minimum advertised price policy is only one component of a growth strategy.   In eight years of creating and enforcing MAP policies, I have only seen it fail one time.  I was working with a company that did a fantastic job implementing and especially enforcing their MAP program.  They got all the violators in line faster than any company I had ever worked with ubefore.  The problem was, they did not have a quality product and people had been buying their items because they were cheap.  When they enforced their MAP policy the items stopped being cheap and because of this sales slowed.  They ended up abandoning their MAP program.  But, every other MAP program I have helped create and enforce has led to growth for the company and the brand.  But just making your items more expensive does not make the public value them more.  There has to be a strategy in place.  Some companies have a MAP policy in place for one brand but they will also have a second economy brand that is not MAP protected.  This way they can capture sales at both ends of the market with economic map minimum advertised price.

There are lots of other tricks and strategies we can share with you.  Please reach out for a free consultation and let’s see if we can help you achieve your growth goals.

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