There are different steps in enforcing a MAP policy, but a cease-and-desist letter is usually the starting point.
Cease-and-desist letters for MAP enforcement must say that noncompliance will result in litigation.
A minimum advertised price (MAP) policy is a document that outlines the minimum price that sellers are allowed to advertise products or entire brands. This is meant to prevent unfair competition among different retailers that offer the same products or brands so that one gains an edge over others.
A MAP violation occurs when a retailer deliberately advertises a product below the approved price as stated in a MAP policy. The manufacturer and retailers are supposed to agree on the minimum advertised price of a product or brand and adhere to it.
When a manufacturer has a MAP policy created, it expresses the minimum price by which their products can be advertised to keep things competitive yet fair in the market. The manufacturer and sellers of its products agree on that minimum price. However, if a seller strays from that agreement and lowers the price of a product or brand below the agreed-upon price, it means they are in violation of the MAP policy. The manufacturer can enforce the MAP policy by preparing a MAP violation letter, following through with penalties, cutting ties with problem sellers, elevating appeals and replies to an antitrust lawyer, setting rules within their sales and distribution network, working with the Amazon brand registry and tracking and monitoring violations with software.
The first step in enforcing a MAP policy price is to create a cease-and-desist letter over the MAP violation. It should state that the seller must revert back to the agreed-upon minimum price for products or face additional consequences in the form of certain penalties.
If the letter doesn’t stop the seller from continuing to violate the MAP price for the manufacturer’s product, the next step is for the manufacturer to follow through with the penalties outlined in the letter. This sends a message and shows that violating the agreed-upon minimum price will not be tolerated and discourages other sellers from violating the MAP policy as well.
The next step you can take if there are sellers who don’t comply with the terms of your MAP policy is to cut ties with them. If the seller doesn’t revert the minimum advertised price on the product or brand after receiving the cease-and-desist letter, you might want to consider ending your business with them.
If the seller refuses to comply with the terms of the MAP policy, you can direct their appeals and replies to an antitrust lawyer. You can discuss your litigation options if the seller continues to violate your agreed-upon MAP policy.
By setting rules within your sales and distribution networks, you are sending a message to your sellers that you are serious about enforcing your MAP policy. If they violate the terms of the pricing they agreed to, you can take action as you see fit.
Many sellers do their business on Amazon. Through the Amazon Brand Registry, brand owners gain access to a variety of tools to ensure that retailers that sell their products adhere to their MAP policy pricing agreement. If a seller continues to violate the minimum advertised price after receiving a warning letter, the manufacturer can use those tools to their advantage and take action against them. One of those actions may be the suspension of the seller.
In addition to Amazon’s options, manufacturers can rely on other software options to track and monitor MAP violations. While some of these are free, it’s more worthwhile to spend money on quality software to keep on top of everything. Trade Vitality is one of the best options for monitoring MAP pricing by their partner sellers. It’s easy to set up, doesn’t require contracts and offers daily monitoring, giving good peace of mind and alerting the brand owner to any violations quickly and efficiently.
Certain things should be avoided while enforcing a MAP policy. They include making it a policy but not an agreement, not negotiating with violators, not using a generic advertised pricing policy found online and not mixing and matching policies.
Although a MAP policy is often known as an agreement, you should avoid simply making it as such. Instead, making it an actual policy makes it a formal document that has unmistakable terms by which sellers must abide. If you only make it an agreement, it can be misconstrued as being too loose, which could lead to sellers price gouging to gain an unfair edge.
While some sellers may commit a single violation of your MAP policy and then revert back to the terms and never do it again, others can turn out to be serial violators. Avoid negotiating with these sellers because they won’t abide by your MAP policy and will continuously try to take advantage. If the seller is that insolent, they won’t listen to reason and you should cut them out as a partner.
It might be tempting to use a generic advertising pricing policy you find online to use as your MAP policy, but this should be avoided. Many manufacturers make the mistake of doing this, but there might be inappropriate language in the policy or it could even be illegal or at least make things confusing. The best thing to do is the customize your MAP policy for your brand or product’s needs. If you have trouble and are unsure where to begin, you can even consult with an antitrust attorney for help.
Avoid mixing and matching policies. Doing this can only lead to confusion so that your partner sellers don’t understand what’s expected of them. Having a single policy that is clear and concise can help protect your brand.
Although it is the right of each manufacturer to enforce their MAP policy, sometimes, a challenge may arise to it. This includes scope, consistency and the “gray market.”
The scope of your products or brands can make MAP enforcement a challenge. If you have multiple sellers who sell multiple products, it means you have more to monitor and makes it more difficult to enforce your MAP policy if several sellers violate it. This also allows for some violators to escape unnoticed, which can hurt your brand.
Consistency can be a challenge when enforcing a MAP policy as well. If you don’t treat all your sellers the same, it can cause problems. Not only does it make it seem that you favor one seller over the others, but it can also lead to antitrust situations and even lawsuits. Being consistent with every seller with whom you do business is the best way to proceed when it comes to MAP enforcement.
Gray market sellers are those who get a manufacturer’s products through a third party. Unfortunately, they are also more likely to disregard the rules of a MAP policy and engage in price erosion to get ahead of the competition. This can significantly damage your brand and make it difficult to enforce your MAP policy. You may not even be able to directly contact sellers who come in through the gray market.
There are different reasons why you should enforce a MAP policy. Doing so helps you protect your brand’s reputation, preserves brand value, supports healthy competition, enhances retailer relationships, promotes brand consistency, protects smaller retailers, increases profit margins, discourages unauthorized sellers, provides legal protection and improves customer perception.
Enforcing your MAP policy protects the reputation of your brand. Sellers and consumers get the benefit of your brand’s integrity. It helps you to maintain a good reputation when customers have a positive perception of your products or your brand and ensures that they will stay loyal. Often, customers associate their satisfaction with a product with the seller, which means they are more likely to continue buying your brand from said seller.
You can also preserve your brand’s value when you enforce a MAP policy. When sellers violate the terms of your minimum advertised price and lower the price of your products too low, it cheapens your brand in the eyes of consumers and the market itself. Enforcing your MAP policy does the opposite and allows you to preserve the true value of your brand.
When you enforce your MAP policy, it causes your sellers to price your products at the appropriate cost, which allows for healthy competition. No particular seller gains an edge over the others due to price erosion, so everything is fair while allowing sellers to compete in a way that’s healthy.
Enforcing a MAP policy allows you to enhance retailer relationships. Sellers don’t have to constantly vie for more customers when they advertise products at the appropriate prices, so they can carry on better relationships without ugliness and negativity.
When consumers shop for a specific brand, they expect to see its products sold at a specific range of prices. Enforcing a MAP policy allows you to promote brand consistency. When all the sellers you associate with rely on the MAP price, they are maintaining a consistent cost for your products and cannot go lower. In turn, this brings integrity to your brand.
Often, smaller retailers are at a disadvantage when up against larger, better-known sellers. However, with MAP enforcement, these retailers are protected. They don’t have to worry about not getting a level playing field for selling products and get a fair chance just like any others.
When you enforce your MAP policy, your sellers have better opportunities to sell your products. This lets you enjoy increased profit margins and ensures that you are able to continue working with these quality retailers. In the end, it’s mutually beneficial.
Unauthorized sellers don’t necessarily want to abide by a MAP policy because they want to unfairly get ahead. To do this, they often lower the price of products too low, which makes things unattractive to consumers. Enforcing your MAP policy is more likely to discourage unauthorized sellers, so you don’t have to worry about fighting with them about price erosion and damaging your brand’s image to the public.
Enforcing a MAP policy provides you with legal protection. Sellers are obligated to comply with your minimum advertised price, but if they refuse, you can ultimately turn to an antitrust attorney to take action.
When you enforce a MAP policy, it improves the customer’s perception of your brand and products. When customers have a positive view of your products, they are more likely to be loyal to them and to sellers who carry them and buy more.
There are different ways you can communicate your MAP policy to retailers and resellers. They include reaching out to larger retail partners and communicating with online retailers and resellers.
Reaching out to larger retail partners gives you a better chance to get your MAP policy out there. Larger retail partners are often better known and have a good following of customers who trust them and buy the goods they sell. They can also inform smaller sellers about the MAP policy.
Communicating with online retailers and resellers makes them aware of your MAP policy so that they know how to appropriately price your products. This is an effective way to get your retailers and resellers who do business online to advertise your brand and products fairly while attracting consumers.
Monitoring sellers’ compliance with your MAP policy is crucial. You can do that by tracking the prices of products across different channels, analyzing consumer buying patterns and using automated monitoring tools.
You can monitor sellers’ compliance with your MAP policy by using Trade Vitality’s services and tools. One way to do so is to track product prices across different channels. It lets you see what price sellers are advertising your products and whether they are adhering to the terms of your MAP policy.
Trade Vitality can help you analyze consumer buying patterns to see where their money is going. If sellers are complying with your MAP policy, it’s more likely that you will notice consumers buying more of your products, and more frequently.
Another way to monitor compliance with your MAP policy is to use Trade Vitality’s automated monitoring tools. You have too much work to do as it is; don’t worry about having to manually track retailers and sellers you do business with and rely on the tools available through Trade Vitality for added peace of mind.
Update and adapt your MAP policy by adjusting target prices in response to market conditions.
Adjusting target prices in response to market conditions helps you to better adapt your MAP policy and update it according to how similar products are selling, and for what price.
Retail prices, also known as "manufacturer suggested retail price" (MSRP) are those a brand believes its products should sell for while MAP aims to simply set a minimum advertised price for any given product.
MAP price refers to “minimum advertised price.” This is the lowest price by which sellers are allowed to advertise a product or brand to keep things fair in the market.