Why Retailers Prefer Selling MAP'd Brands

We don't want to scare anyone (boo!), but there are innumerable mistakes to be made in online retail.

What payment gateway should you use? How much inventory is too much? How lax should your return policy be? The fortunate will have most of their questions answered by experience and ultimately preference, but what about things that might not be entirely within your control? Should moans and groans from customers about pricing be cause for concern?

When a brand has a minimum advertised price (MAP) policy, it specifies the lowest price that retailers are allowed to advertise the brand's products. While this concept may sound overly restrictive and controlling on the part of the brand, it actually ends up protecting profit margins and creating a better experience for everyone in the supply chain, not to mention the end user- the customer. 

INVESTMENTS IN EDUCATION

Retailers need to invest in educating sales staff on the brand's products, so the front-line reps can extend that knowledge to the customer. If they're not making enough money on the brand's products, the retailer won't have the resources to accomplish this goal.

AVOIDING THE RACE TO THE BOTTOM

Consumers can compare pricing in seconds on the internet, whether they check it on their computers or look at mobile devices in-store. Online retailers are in a race to the bottom with their product pricing, and no one wins in that situation. If a MAP wasn't in place, then there wouldn't be a profit margin to run the operation at all, let alone excel at product knowledge, support and customer satisfaction.

Retailers want to invest time in their customers and provide an excellent experience. However, they have to make money, and it's difficult to do that if they have to match ridiculous bottom feeders that only compete on price. Someone will always be willing to make a few bucks less, so the cycle continues to spiral downward until it destroys the brand's equity.

CUSTOMERS GET CONSISTENCY

Customers know what to expect when they purchase products from a brand with a MAP policy. They don't have to stress out over searching for the lowest possible price, dealing with unscrupulous online sellers or trying to haggle with cut-rate retailers. After that, they end up stuck with a sub-par product and have little to no post-sale support. They're on their own if they have problems, and they'll never know whether they're going to have a good or bad experience. Many customers are willing to pay a bit more to avoid this painful situation.

BRAND INVESTMENTS

MAP allows the brand itself to make a healthy profit margin on its products, so it can invest in several areas to improve their long-term prospects. Employees, manufacturing, marketing, retail co-ops, research and development and a robust warranty and customer support program are some of the ways that they can use this revenue.

The retailer and the customer are both taken care of in this scenario. This is how to build a proper brand. Every channel and vertical are fed and nurtured, not skinned alive on razor thin margins.

PRICING STRATEGY

A set maximum discount that's based on a certain percentage of retail is normally an amicable strategy for the brand or manufacturer, distributor, retailer and customer. However, premier brands stand out by insisting that their products are sold at retail price, and no less.

These brands have the name recognition to pull this pricing strategy off. They're at the top of mind with their audience. They dominate the marketplace with beautiful branding and provide a quality experience. They cover every aspect of customer and dealer support possible, and the consistency really shines through in markets where good customer service is rare.

This strategy opens up the possibility for public works events, charitable contributions and affiliations. They also have the breathing room to simply do good things for people. What a concept!

FOCUS ON VALUE, NOT PRICE

Once you remove concerns about pricing from the equation, you have more opportunities to focus on the value that the brand and retailer bring to the table. Top end brands may not have the lowest prices on the market, but they make up for that in many ways. The retailer and brand have the flexibility to look for ways to improve the experience. The brand can offer extensive pre- and post-sales resources for the retailer, allowing the store's front-line employees to guide customers to the best selections.

They'll know exactly how to present the benefits and the sales techniques that help with sell-through, and the customer gets a far different experience than a hands-off online one.

BUILD LOYAL CLIENTELE

Both the brand and the retailer can grow their repeat business with MAP. The customer experience is dialed-in to make each interaction as pleasant and enjoyable as possible. Many consumers place a heavy emphasis on the quality of their customer experience, as they want to do more than purchase products.

In particular, Millennials and generation Z want to support brands that share their values, support causes they believe in and have an authentic voice. It's difficult to meet any of those criteria when you're in the middle of a vicious price war. MAP eases the pressure and puts you in a position where you can position yourself for this demographic, as they're quickly becoming the ones with the highest spending power.

PUT INTO ACTION

None of these advantages would be possible without a MAP policy in place. If you find yourself steering away from brands that use this approach, it's time to take a second look. Everyone in the process comes out ahead, from the retailer to the customers.

Trade Vitality arose out of necessity. Sellers and brands alike have been entangled in a struggle to remain competitive, often losing sight of the fact that they are on the same team. We extend this thinking to the end user- the customer, who is the ultimate beneficiary of a MAP policy.