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The Evolution of the MAP Policy in the Motosports Industry

Posted on 5th December '16 in Monitoring - Comments

The Evolution of the MAP Policy in the Moto Industry

Fear. It’s what stirs people and businesses to take action and make changes.

And it’s not too far from what happened in the motosports industry and the Minimum Advertised Price policy.


We’ll take you for a walk through the evolution of the MAP policy, looking at how it evolved from the automotive industry, why it was born in the the moto world, the brands that are paving the way, and the role MAP monitoring software can play in various company sizes.


You’ll also get a peek at how some moto brands are using Trade Vitality to improve their MAP management process.



IT STARTED WITH THE AUTOMOTIVE INDUSTRY

The combination of the recession in the early 2000s, as well as the events of September 11th, impacted car and car-related sales and the profitability of the automotive industry. Companies were scrambling. Just to make a quick buck and to keep afloat in the nosediving economy, brands turned to continual discounting. These were the brands that didn’t have a MAP policy in place or didn’t take very good care of their existing one.


Low and behold, these brands crashed. With all of the discounting, they let things get out of control, which deeply impacted their brand and marketplace position. They had the long and tedious task of having to pull themselves out of the economic rubble.


Yet during this time, the brands that stuck to their MAP policy or didn’t rely heavily on discounting were the ones who ended up standing and profitable.


Why was this so? Let us give you an idea.


In 2008 when the economy crashed, 50% of an online automotive marketplace business was done overseas. The brands with MAP policies did better than ever. With the US dollar so darn low, people from the UK, Europe, and Australia came running to the business with their currencies thinking these brands’ products were a bargain. They only wanted the best of the best -- the brands with the policies were already positioned with pricing during this time, and their sales took off.


The brands who disregarded their policy or relied on discounting saw their sales plummet. In the eyes of the international customers, these products were seen as cheap and lower quality.



BORN OUT OF FEAR

The rise of the Minimum Advertised Price policy in the motosports industry unravelled from the fear caused by the economic downturn in the automotive industry. Moto brands saw what happened to their auto counterparts, and didn’t want the same thing to happen to them.


At the same time, it became a necessity. In the early Internet days, moto brick and mortars laughed at online stores -- they couldn’t take these guys seriously, who would buy online? These were usually the brands who didn’t pay too much attention to MAP compliance, let alone have a policy in place. As the online world grew and became prevalent, these brands were no longer laughing.


The ones with MAP policies and who managed the enforcement process well were the ones with the last laugh. Whether they were offline or online, they recognized the measures that they needed to put in place to ensure their customers didn’t back door their brand.


Think about it.


Imagine you’re doing some in-store Christmas shopping for your bike at your beloved big brand retailer. There’s one product that you’re eyeing in particular, it’d make a great addition. You get to touch, see, and fiddle around with it. You even talk to a customer service rep to get all of your questions answered. You get everything you need to know and then some about the product. But instead of buying it right there and then, you decide to buy it later that evening because you know Amazon or eBay has it cheaper.


Without anything in place to ensure prices stay consistent across the board, customers will often go to the cheaper option (with all things held equal).



PAVING THE MAP POLICY WAY FOR THE MOTO INDUSTRY

Brands who first jumped on the MAP policy before it was the “popular” thing to do were big, well-known names like Alpine Stars, Dainese, Thor, and Sadie. They’ve become leaders in establishing and maintaining their MAP policy. Quite often, brands just getting started or trying to get their policy into shape will look to the likes of Alpine Stars and Dainese for how to get things done.


More than a decade ago, Alpine Stars and Dainese became the early adopters of the MAP policy. They knew the impact on their brand equity, and therefore revenues, and saw how the growing online world would play a role if a policy wasn’t in place and enforced. Up until now, they continually update their policies to include loopholes -- if left exposed, there are plenty of sellers who’ll take advantage of this “back door” and the brands’ name. These kinds of sellers are relentless.


These two brands keep their MAP policy tight: it’s an ironclad fist using a strike system that is unilaterally enforced. What it says in their policy goes, no ifs, ands, or buts -- you don’t mess with it or you’re out.


Do a quick search right now. You’ll see similar pricing across all major marketplaces and channels for Alpine Stars and Daisene.


You’ll even see countless threads asking about discounts on their newer items.


This is the type of impact that you want to see for your brand with your MAP policy. By helping your sellers maintain their profit margins, they’re more encouraged to reinvest into your products and marketing, which helps increase sales and revenues.


If you ever need a shining north star or a brand to aspire to be like when it comes to your policy, look to Alpine Stars or Dainese.


Now when 2014-15 rolled around, things were a different story. By this time, most brands had a MAP policy in place or were starting one, but no one was properly enforcing it. It was the new flashy thing to have to show a brand’s sellers that they were looking out for them. However, without proper enforcement, having a policy is almost as good as not having one. Through this frustration, Trade Vitality was born.



THE ROLE OF MAP MONITORING SOFTWARE

Trade Vitality was initially built for the moto industry to monitor and enforce their MAP policy. Our team members have experienced first hand what happens when a brand’s policy is not prioritized. Simply having a policy isn’t enough, brands need to make sure they’re managed.


You can drive MAP compliance in a couple of ways. The first is manually enforcing your policy. If you’re a smaller brand with few products to watch over, this may be the best option for you. Any other brand that falls outside of this should look to software. It can play a number of different roles depending on the size of your company.


If your brand is a large company, you may already have a single person who’s job is solely / primarily dedicated to monitoring and enforcing your MAP policy. In this case, software would be a great supporting tool to keep your employee organized.


If you’re a medium-sized brand, MAP compliance may just be a component of a single person’s job. Maybe, even multiple people’s. Again, software can act as a supporting tool to help the in-house team or can be used to do most of the work.


As a smaller company, MAP enforcement is probably a tiny sliver in the long job description of a single person (or multiple people’s). We know many hats are worn by team members in a brand this size. Software could then function as a supporting tool, be used to do most of the work, or be completely outsourced like with Trade Vitality’s Managed Service.



HOW MOTO BRANDS ARE USING TRADE VITALITY

A number of moto brands have turned to Trade Vitality to help with MAP compliance.


KFI, a manufacturer and retailer of ATV/UTV accessories, reduced the timeframe from finding violators and correcting violations from two weeks to two days. With the ability to get in touch with violating sellers in a few clicks coupled with our Automagic feature, their communication and compliance process has become more streamlined. This helped them increase business and build their brand’s reputation.


Arlen Ness, manufacturer of custom motorcycle parts, increased their productivity by 4X by keeping things organized and seamless. With Trade Vitality, they are able to organize their information in a central location with the relevant seller details that they need when they need it the most. The impact has been a domino effect: since sellers are seeing other sellers changing their prices, they are too.



CONCLUSION

Seeing the consequences unfold within the automotive industry, prompted brands in the motosports world to pay closer attention to their MAP policy. Although many brands enacted a policy to protect themselves, most aren’t properly enforcing them. This has allowed sellers to back door brands and damage their equity and profit margins.


Alpine Stars and Daisene are leaders in MAP policy enforcement, with many brands looking up to them as examples to follow. Depending on your company size, MAP monitoring software can play various roles. At the end of the day, you want to make sure whatever solution you choose helps protect your brand equity and seller profit margins.


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