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The One Big Mistake Brands Make Monitoring Their MAP Policy

Posted on 15th April '16 in Monitoring - Comments

The One Big Mistake Brands Make Monitoring Their MAP Policy

You’ve created and launched a MAP policy -- congrats! That’s the first step in the right direction. You do what you can to monitor every so often and enforce it when there’s a violation. That takes time. Sometimes, too much time.


It’s no wonder that many brands rely on their seller network to help them out. We understand, it can be a time consuming process to manually go through every single retailer and dealer -- it’s like finding a needle in a haystack (yikes!). Yet, relying on your distributors and sellers to police themselves is a big mistake.


If you just introduced a policy or already have one in place, we have the inside scoop on your distribution network (read: secrets)! Sellers may be poorly representing your brand and you don’t even know it. So let’s walk through a common scenario that we hear about (what we like to call “Tattletale Reporting”). We’ll break down why this occurs and the costly consequences. At the end, we’ll provide tips on how to make sure you're always protecting your brand.



WHAT IS TATTLETALE REPORTING?

Think back to grade school. Remember that one kid who always got others in trouble, even if they did the exact same thing? Early on, we learn about tattletaling.


Unfortunately, this concept doesn’t leave when we “grow up”. In fact, it gets worse. Now, there’s much more at stake than just a timeout and not being allowed on the playground. Tattletaling in the business world means money.


Let’s put this in the context of a brand, their products, and their MAP policy.


“Tattletale Reporting” is when a retailer tells on another retailer for advertising products below a brand’s MAP policy.


The best way to explain this is through a typical interaction we have with prospective clients at Trade Vitality. Usually we’ll ask a brand how they currently monitoring MAP compliance, and quite often we’ll hear the same answer:


“...the retailers and dealers in my network are policing for me. [Insert major retailer] will just tell me if the smaller retailers are violating my MAP policy.”


Eeek! This is when our ears perk up and red flags flash in front of us. We hate to be the bearer of bad news, but that major retailer is often that one kid in grade school.


In response, we explain Tattletale Reporting and break it down:


  • A customer sees Product A at a smaller retailer.

  • The smaller retailer is selling Product A at a lower price than at a big retailer, or below the brand’s minimum advertised price.

  • The big retailer has a price match guarantee.

  • The customer shows the smaller retailer’s product price  to the big retailer.

  • The big retailer sells Product A at the lower price to match the price advertised by the smaller retailer.

  • Then, the big retailer will turn around and tell the brand that the smaller retailer is violating their MAP policy,


All of this unknowingly happens to brands and once they find out, they begin to question why.



WHY DOES THIS HAPPEN?

New technology and the internet has allowed brands to greatly expand their distribution networks. With this comes a need for companies to ensure consistency in how their products and brands are represented to ensure they're maintaining profit margins. A MAP policy is one of the many ways a company can do this.


More distribution channels means more retailers and dealers to track and manage. For a MAP policy to be effective, it’s critical to regularly monitor your distributor and seller prices and enforce against violations. For brands with a large number of sellers, they often don’t have the time or resources to proactively and properly follow-up on violations.


This is when many brands resort to relying on their major sellers to report others who are not complying with the brand’s MAP policy. It’s the cheapest and easiest way......right?


On the surface, it may seem like a brand is saving time and money - they’re leveraging external resources to do the work for them (for free!!). Yet, this isn’t the case. In fact, relying on sellers creates more work, wastes more resources, and does more harm to the brand (more on that shortly).


The one who benefits the most is the retailer who tattletales by:


  • Gaining a customer, while preventing them from purchasing from a competitor. Sometimes, this is at the expense of making a profit in the initial purchase, in hopes that they become a recurring customer

  • Generating revenue and moves inventory

  • Maintaining a good image and rapport with the brand, while highlighting the other seller as the “bad guy”.


Unfortunately, while this retailer gains, the brand and its business suffer the consequences.



THE CONSEQUENCES TO THE BRAND

Imagine taking one step forward, then two steps back. Similarly, this is what happens when Tattletale Reporting takes places. A brand has a MAP policy to maintain its reputation and integrity. When a seller tattletales, this undermines everything that a brand is trying to accomplish with their MAP policy, unbeknownst to them.


Let’s take a closer look at how Tattletale Reporting impacts your brand, your customers, and your sellers.


Cheapens your brand and product value

Price is a benchmark that helps customers measure product quality (even if this may not be the case!). In their eyes, a lower price often means lower quality which can diminish a product’s value. If you’re positioning yourself as a premium brand, it’s crucial that you're protecting your brand and maintaining control over how you're being represented.


The moment customers begin comparing your product to others based on price, it becomes a steep hill to climb back up.


Sets a bad expectation for customers and other sellers

Once a customer is able to buy a product from a retailer below your minimum advertised price, he will likely continue purchasing from that seller. We can all agree that if we can get Product X for a lower price at Store A, why would we go anywhere else?


As a customer, this is good. For the brand and all other sellers, this is bad. When enough customers catch on to this “cheaper deal”, other sellers will start to notice. Eventually, they’ll begin to drop their prices just so they can compete. This done nothing for maintaining your profit margins.


Diminishes trust with the other sellers

Failing to properly monitor and enforce a MAP policy signals inconsistency in business practices. This can dwindle a seller’s trust and confidence in the integrity and reliability of the company that they’re investing in.


Sellers are an extension of your brand, and they want to know that you have their back and best interests in mind! If they see others easily getting away with non-compliance, the adverse effects on your seller relationships can impact your bottom line.



HOW TO PREVENT TATTLETALE REPORTING

Alright, so now you know what it is, why it happens, and the impact of Tattletale Reporting to your brand -- now what?! Here are our top time-saving tips to prevent tattletaling in your seller network.


Use one software/tool to centralize sellers, products,  violations, and communication

Monitoring and enforcing a MAP policy exhausts resources when information is poorly organized. It’s everywhere: emails, computer folders, spreadsheets, documents - we’re sure you know what we mean!


If your brand is widely distributed with hundreds or thousands of products, just going back and forth across X number of tools to manage and track your sellers takes up time and leaves room for error.


Having sellers, products, violations, and communication around your MAP policy on one platform enables you to access the right information at the right time. You won’t have to rely on your sellers to get the information that you need.


Create a habit to monitor and enforce your policy

In other words, set up a process that includes checking sellers, contacting those in violation, and following up. Create a step-by-step list and timeline that anyone on your team can follow. Once a process is in place, no one needs to spend time wondering and figuring out what they need to do next.


By regularly monitoring and enforcing your MAP policy, you are more likely to catch violators who may change their prices often (to avoid getting caught), making it more difficult for them to get away with non-compliance.


Whatever you do, be consistent

Whether you’re manually or automatically monitoring and enforcing your MAP policy, the key to success is consistency. That’s right, doing the same thing over at the same time.


Setting up a process and using the right tools create a framework that enables brands to be consistent so they can properly implement their policy, while demonstrating to their sellers that they have their best interest in mind.


If a seller believes they’re fully supported by the brand that they are investing in, they’re more likely to comply. It’s a “you’ve got my back, and I got yours” kind of deal (the right way).



CONCLUSION: BE PROACTIVE

Tattletale reporting is a backseat approach to your MAP policy. Relying on your sellers to do your work for you has significant consequences to your brand’s value, and your customer and seller relationships.


At Trade Vitality, we put you in the driver's seat. It starts with the right map monitoring software/tool, creating a process to monitor and enforce your policy, and being consistent. A properly enforced MAP policy will ensure your brand maintains its reputation and integrity. We all know the hard work you put into developing your brand, so let’s not harm it!


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