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What is a MAP Policy?

Posted on 27th September '16 in Monitoring - Comments

What is a MAP Policy?

WHAT’S A MAP PRICING POLICY? This is the first post of our two-part series, A Beginner's Guide to a MAP Policy.
If you’re already familiar with the what, how, and why of a MAP policy, jump to our guide for setting up a monitoring and enforcement process.


MAP policies seem to be popping up everywhere. So, what the heck is a MAP policy? How do I get started with monitoring my policy? I’m sick of manually trying to find a needle in a haystack. Is there a way to automate the MAP enforcement process?


It doesn’t matter where on the spectrum you are, it’s time we all get on the same page. Let’s start at the basics of the MAP policy world. We’ll answer questions like, what’s a MAP policy? How did MAP policies come about? Why does every brand need one?

This will give you a fundamental understanding of MAP Policies and MAP Pricing Policies. You may need to revisit this section a few times as you start map monitoring and enforcing your policy. It’s your rhyme and reason, the “why” behind every email you send, deadline you set, and consequence you evoke.

...Then, what?

Don’t worry, we won’t leave you hanging. We’ll take you through a step-by-step guide of a MAP enforcement process that’ll kick your violators to the curb. Our system includes introducing your new policy to your sellers, contacting violators that we identify, measuring benchmarks, and regularly updating your network.

WHAT’S A MAP POLICY?
The minimum advertised price (MAP) is the lowest price that can be publicly displayed for a product on sale. A MAP policy is enacted by a brand to ensure their seller network doesn’t advertise their products below a certain price.
As your product expands in distribution, you should benefit from increased revenue. But deep discounts and sales at the retail level can undercut your control over the amount of cash consumers pay for your goods. Minimum advertised pricing (MAP) helps you compete by putting limits on the price offered by online and offline resellers. While retailers can charge whatever they want in-store, they can't lure new customers by advertising a price lower than the MAP. This sounds great, but as your business grows, it's increasingly tough to monitor the advertising of every retailer. You could put in the leg work yourself - but at great cost in time and dollars to your business. MAP monitoring offered by a third party is an economical and effective way to ensure MAP policy compliance.


WHERE DID IT COME FROM?
A decade ago, the hurdle to selling online was a big one. It was a space reserved for the younger, less risk-adverse, early adopter types. There were limited services targeting new retail businesses and existing brick-and-mortar shops wanting to make the switch online. You were on your own.

Yet, technology is an amazing thing that’s grown and developed quickly - almost too quickly. Now there are services like Shopify, Magento, eBay and Amazon storefronts that make selling online a breeze by removing the barriers to entry and by minimizing risk. Not to mention the many other peripheral and niche services specifically catering to online retailers. There’s no point to try to fight the online world, but learn the ropes to work with it - the amount of online sellers is now too enormous.

As online retailers started to appear, they often resorted to discounting, promotions, and lower prices to get a leg up on competitors and stand out. They still do. It’s a become a game of how low can you go? This leave little room to compete on anything other than price.

Because of this, brands and distributors often mistrust the online guys since they’re selling their products at lower price. With the ability to compare products across the web and all the pricing intelligence software, the discounting will eventually spread through a brand’s seller network quickly. The problem is that the 'best price' business practice creates a race to the bottom and misguided sellers will ultimately erode a brand's image. There's no longevity.

Since it's now incredibly easy to put products online and discount, minimum advertised price (MAP) policies started to show up on the scene to control the downward spiral.


SOME FACTS ABOUT MAP PRICING

At first glance, MAP might seem to run afoul of antitrust laws. But courts consistently uphold these agreements, partly because retailers can charge whatever they want in-store. In addition, MAP arrangements are sometimes funded in part by the manufacturer, who provides compensation to retailers in exchange for advertising restrictions.


With the explosion of e-commerce, it's been difficult to define "advertised price." While a listing in an online store might fall under MAP, perks for shopping online, like per-transaction price cuts, are more of a gray area. In order to maximize its benefit, manufacturers need a clear MAP policy with the realities of online coupons and discount codes built in.


Both retailers and manufacturers have to uphold their ends of these agreements, making MAP policy monitoring necessary. Your business depends on MAP enforcement, since there's little to stop a new reseller from breaking a contract, either deliberately or because of sincere confusion about your MAP policy.


WHY DOES EVERY BRAND NEED A MAP POLICY?
A brand without a MAP policy is like peanut butter without jelly - the formula won't deliver the desired result. It should be part of your business’ online DNA. It’s the fuel that encourages your sellers to promote your products and drive consumers to pay for your brand name. It’s your first line of defense against protecting your brand and maintaining your profit margins.

Who doesn’t want to maintain profit margins?
Introducing and proactively enforcing your MAP policy indicates your long-term commitment and investment to your seller network. Often times, brands forget that their sellers are their customers. Customers are the blood to your business, and anything other than putting your customers first will cause some major headaches down the road.

Just like any relationship, you need to put in the effort to strengthen your partnership - it’s not a one-sided thing. By simply saying “hey, we have you in mind 24/7”, you’re giving your sellers the confidence and reassurance that they will have adequate margins to invest in and educate themselves. In turn, they can advocate and sell your products with the right professionalism and competence. It’s a rub-their-back, rub-your-back kind of deal.

If you aren’t protecting your brand image and value, you’re destroying it. You’ve put in the blood, sweat, money, and tears to make, produce, and market your product and build up a brand name. Yet, it only takes a few sellers to take it all away.

Your financial success depends on your ability to recoup a healthy profit. Savvy sellers understand that they must maintain their profit margins to benefit from the groundwork that you’ve done. A MAP policy insures that your sellers follow best practices and avoid eroding the your brand’s position within the market, so everyone in your network can win.

Just like any team, your brand equity is only as strong as the weakest link within your business. Sometimes, breaking up with bad sellers is your best bet.

WHEN TO GET OUTSIDE HELP If your business is growing, you might be reluctant to invest in MAP policy monitoring services from an outside provider. Third-party MAP compliance is increasingly affordable, however, at moderate cost to your small- or medium-sized business and scalable as you grow your market share. Make sure you find a company that meets all your monitoring requirements. MAP violators cost you big time. In addition to wasting any money you've provided to fund an advertising restriction, lack of MAP policy compliance sends a bad message to consumers. If your end users come to believe your product is only worth a deeply discounted price, they will never pay more. WHAT TO LOOK FOR IN MAP COMPLIANCE Once your brand is out there in the marketplace, you want to monitor all elements of its image. That includes how much it costs. After all, your ideal price point is a number carefully chosen to appeal to your target market. An unauthorized price slash by a retailer can appeal to an entirely different demographic, damaging your marketing strategy. That's one major reason manufacturers implement MAP policies. Fortunately, with third-party MAP monitoring, you do not have to spend hours scouring e-commerce sites or searching for online versions of paper flyers to confirm whether resellers are keeping up with their obligations. MAP monitoring can be done through a cloud-based, software as a service (SaaS) platform. The right partner can search for violators and inform them of a breach, and a comprehensive database can track seller history, so you know who is repeatedly trying to get around the MAP agreement. TRADE VITALITY'S COST-EFFECTIVE SERVICE Trade Vitality offers monitoring, notification and database services in a user-friendly platform. You don't have to spend hours tracking your sellers; our software does much of the heavy lifting. With a few clicks, you can notify violators that you've spotted an infraction, satisfying the first step of enforcing your legal rights under the contract. Best of all, you're protecting the people who buy your product from unpredictable price fluctuations. MAP is especially complicated in the age of e-commerce, but our platform offers comprehensive, high-quality data. You won't have to worry about ruining a relationship with a valued retailer because of a misunderstanding. If we report a violation, you can have confidence in the reliability of our data. That reliability is the result of not just our technology, but also of the real-life human beings who review all of that data. Our people provide a valuable second-check of anything our platform may find. What Trade Vitality does is unlike other agencies because of our secret sauce. No one but our clients has access to the unique technology that calls out signatures of MAP violators. That technology is supported by a dedicated team of people who are on your side - keeping the secret sauce up to speed and your platform working smoothly. Even better, Trade Vitality's product comes at a price you can afford. Instead of hiring someone to monitor for MAP violations or spending your precious time keeping up with your resellers, you can rely on our team. You can then focus on expanding your distribution channels and satisfying customer demands. TAKE ACTION MAP Pricing policies are an excellent tool to help you manage and maintain your product brand. Compliance should not be a headache. Contact us to learn how Trade Vitality can give you the benefit of MAP enforcement for a modest investment, and maximize your business returns.

HUNGRY FOR MORE?
It’s the bread and butter to every successful MAP policy: a consistent, repeatable process. Catch our second post of this two-part series where we dive into the how to start MAP monitoring in 30 days.


Get actionable steps on how to monitor and enforce your MAP policy: