Minimum Advertised Pricing, referred to as MAP, is a brand/supplier defined pricing policy. Though not legally enforceable, it is also beneficial to retailers as it ensures an even playing field while selling that supplier’s products. Still, it does place certain constraints on how you promote that product.
MAP and Retail Marketing
MAP is defined by the supplier when the retailers buys products from them for sale. It is not a binding agreement in that suppliers cannot enforce it legally. However, they can take other actions against MAP violators, like not providing support to them, even up to terminating their contact, which will make the violator a third party seller, not an authorized reseller with all its benefits.
What is MAP Pricing?
Minimum Advertised Pricing or MAP is an advised minimum amount for a product. Retailers cannot advertise that product for any amount below the MAP. If they do, the supplier can take actions like withdrawing preferential treatment like discounted prices, support, etc.
Why Is It Needed?
MAP Pricing helps both brands and retailers. For brands, unethical price undercutting leads to an erosion of brand value. When consumers see the products being sold in some stores at a price much lower than the regular price they see for that brand, they may begin to think that the regular price is overblown, that the product is actually not worth that much. This will lead to a drop in sales for that brand.
For retailers, MAP helps to ensure that even small retailers can sell the products, without fear of other authorized resellers advertising deep discounts to lure customers away. In addition, those who comply with the MAP Pricing policy get the best support from suppliers/brands.
How it Affects Marketing
Now, with a MAP in place, resellers cannot advertise these products at a value below the MAP, to get customers into their store. This may put some limitations on the marketing strategies as regards pricing.
Stores cannot run marketing campaigns that shows a product listed for a price below the MAP, they cannot announce deep discount sales that will effectively pull the price below the MAP. Price undercutting is controlled so it cannot be used as a way to lure customers away from other resellers. Brands can and will take action against MAP violators.
However, retailers have found workarounds to stay MAP compliant yet give their customers special discounts.
The important point to be noted is that MAP Pricing refers to Advertised Price, or Actual Price. Retailers use this difference to their advantage to retain pricing flexibility. They can’t use below MAP pricing in marketing campaigns to get customers to their store. However, once a customer is in the store, the rules change. Retailers can offer these products at below MAP prices in their shops, they can promote bundle offers in-store, offering, for instance, one or two accessories with the product, in effect reducing the actual price of the main item.
They can use buy-one-get-one-free strategies, they can offer a discount on the product once the customer is at the checkout – like a customer loyalty discount, discount offered on total shopping cart value etc, These are not considered Advertised prices, so the retailer still stays within the MAP constraints.
Online retailers also use similar strategies. In online retail, product search results and product pages are considered Advertising, because the price is displayed for everyone to see even before they commit to making a purchase. The checkout page does not come under the Advertising definition, because the shopper has already added the product to the shopping cart and is proceeding to the next step, paying for it. So, online retailers list a MAP compliant price on the product page, but can say something like “See Actual Price on Checkout” or they can provide a coupon code to be applied on checkout to get a discount. These and other strategies like offering free shipping for that product are commonly used methods in e-commerce websites, to get around MAP Pricing constraints to provide discounts for their customers.
MAP policies help protect a brand’s image and value, they also facilitate fair competition among authorized retailers. Still, as MAP Pricing only restricts advertised pricing, there are ways for retailers to give discounts to their customers in-store or on checkout. This helps in retaining customer loyalty for the sellers.