Minimum Advertised Price (MAP) policies are a cornerstone of many brands’ strategies to maintain pricing integrity and protect their market positioning. Despite their importance, there are numerous misconceptions about MAP compliance that can lead to misunderstandings and ineffective implementation. This post will address some of the most common misconceptions about MAP compliance, hopefully providing clarity and insight to help brands and retailers navigate this crucial aspect of retail strategy.
Misconception 1: MAP Policies Control Selling Prices
One of the most prevalent misconceptions about MAP policies is that they dictate the final selling price of a product. This is simply not true, but you may be surprised to learn that this point bears constant clarification both for retailers and internal stakeholders as well. In reality, MAP policies only regulate the minimum price at which a product can be advertised, not the price at which it is actually sold.
Clarification:
MAP policies are designed to prevent price erosion and maintain brand value by ensuring consistent advertised prices. Retailers are free to sell the product at any final price they choose, as long as the advertised price adheres to the MAP policy. This distinction is crucial for legal compliance and maintaining healthy relationships with retail partners. One example of this can be retailers offering a promo code that applies to all products in a shopper’s cart or offering a non-advertised price on their site (“see final price in cart”). While the brand may not always agree with this approach, a MAP policy cannot prevent a retailer from discounting the final price as they see fit.
Misconception 2: MAP Policies Are Illegal
Some believe that MAP policies are illegal or constitute price-fixing. This misconception often stems from a misunderstanding of antitrust laws and how they apply to MAP policies.
Clarification:
While MAP policies are not allowed in many countries outside the US (e.g. European retailers operate off of what’s known as the RRP – Recommended Retail Price – which is essentially MSRP in the states) MAP policies are generally legal in many jurisdictions, including the United States, as long as they are implemented correctly. They differ from resale price maintenance (RPM) policies, which set the actual sale price and can be subject to more stringent legal scrutiny. MAP policies should be unilaterally established by the manufacturer and focus solely on advertised prices to ensure they comply with antitrust laws.
Misconception 3: Only Large Brands Need MAP Policies
Another common misconception is that only large, well-established brands benefit from MAP policies. This is a common misconception that has occasionally (and unethically) been used by retailers to dissuade a brand from implementing a policy altogether. Smaller brands or startups might believe that MAP policies are unnecessary or too complex for their operations, yet – ironically – it’s this very belief that can often cause the brand’s products to be commoditized and can even negatively affect sales right out of the gate.
Clarification:
MAP policies can be beneficial for brands of all sizes. For smaller brands, maintaining price integrity upon launch is critical for building a strong market presence and competing against larger players. MAP policies help ensure that products are perceived as valuable and prevent undercutting that can erode brand equity. Implementing a MAP policy early can set the foundation for sustainable growth and market stability.
Misconception 4: MAP Policies Are Too Difficult to Enforce
Some brands avoid implementing MAP policies because they believe enforcement is too challenging, especially with the proliferation of online marketplaces and price scraping blocking measures that retailers put in place to try and prevent brands from monitoring their sites.
Clarification:
While enforcing MAP policies can be complex, advances in technology have made it more manageable. Automated monitoring tools like Pervasive Mind can track advertised prices across a multitude of sites and marketplaces, quickly identifying violations. Brands can also establish clear guidelines and consequences for non-compliance, removing what can sometimes be a lengthy, subjective decision-making process and making enforcement more straightforward. Consistent enforcement is essential for maintaining the policy’s effectiveness and credibility.
Misconception 5: MAP Policies Harm Retailer Relationships
There is a belief that MAP policies can strain relationships with retailers, who may view them as restrictive or unfair.
Clarification:
When communicated effectively, MAP policies can actually strengthen retailer relationships. Retailers benefit from the stable pricing environment that MAP policies create, which protects their margins and allows for fair competition. Brands should engage with their retail partners, explaining the benefits of MAP compliance and working collaboratively to ensure mutual success. Transparent communication and support can turn MAP policies into a partnership tool (aka win-win) rather than a point of contention.
Misconception 6: MAP Policies Are One-Size-Fits-All
Some brands assume that once a MAP policy is set, it applies universally across all products and retailers without the need for adjustments.
Clarification:
MAP policies should be tailored to fit the specific needs of the brand and its market dynamics. Factors such as product categories, market conditions, and retailer types can influence the design and implementation of MAP policies. Brands may need to adjust their policies (and sometimes even prices) over time to reflect changes in the market and feedback from retail partners. A flexible approach ensures that the policy remains relevant and effective while signaling to retailers that you want to be a good partner over time.
Misconception 7: Consumers Don't Care About MAP Compliance
Another misconception is that consumers are indifferent to MAP compliance and only care about getting the lowest possible price.
Clarification:
While price is a significant factor in purchasing decisions, consumers also value consistency, credibility, and trust. When prices are consistent across different retailers, it builds consumer confidence in the brand and reduces confusion. Moreover, consistent pricing helps avoid situations where consumers feel misled or frustrated by significant price discrepancies which can raise red flags and force them to opt for a different product entirely. Savvy brands recognize that MAP compliance contributes to a positive consumer experience and reinforces brand loyalty, ultimately increasing the lifetime value of a customer.
Misconception 8: MAP Policies Are Only Relevant for Online Sales
Another misconception is that consumers are indifferent to MAP compliance and only care about getting the lowest possible price.
Clarification:
While price is a significant factor in purchasing decisions, consumers also value consistency, credibility, and trust. When prices are consistent across different retailers, it builds consumer confidence in the brand and reduces confusion. Moreover, consistent pricing helps avoid situations where consumers feel misled or frustrated by significant price discrepancies which can raise red flags and force them to opt for a different product entirely. Savvy brands recognize that MAP compliance contributes to a positive consumer experience and reinforces brand loyalty, ultimately increasing the lifetime value of a customer.
Misconception 9: MAP Policies Are a One-Time Effort
There is a misconception that once a MAP policy is established, it requires little to no ongoing effort, and nothing could be further from the truth.
Clarification:
Effective MAP compliance requires continuous monitoring, equitable enforcement, and occasional adjustment to either market demands or retailer sales. Brands need to regularly review their policies to ensure they are up-to-date with market trends and legal requirements. Ongoing communication with retail partners and investment in monitoring tools like Pervasive Mind is crucial for maintaining compliance. Treating MAP policies as an ongoing process rather than a one-time effort ensures their long-term success and effectiveness.
Misconception 10: MAP Policies Guarantee Sales Success
Finally, some brands may assume that implementing a MAP policy will automatically lead to increased sales and market success.
Clarification:
At Pervasive Mind, we are rooting for you and want to see all brands maximize sales and optimize profits. While MAP policies are an important tool for protecting brand value and maintaining pricing integrity, they are not a standalone solution or a silver bullet. Long-term success in the marketplace requires a comprehensive strategy that includes quality products, effective marketing, ongoing monitoring, strong retailer relationships, and excellent customer service. MAP policies can support these efforts by providing a stable pricing environment, but they must be part of a broader strategic plan to achieve sustained growth and profitability.
Conclusion
Understanding and addressing common misconceptions about MAP compliance is crucial for brands looking to implement effective pricing strategies. The creation and enforcement of a well-designed MAP policy can seem like a daunting task and will require constant supervision and review, but – when done correctly – MAP policies play a vital role in protecting brand value, ensuring fair competition, and supporting retailer relationships. By clarifying these misconceptions and adopting a proactive, flexible approach to MAP compliance, I hope we’ve shown that brands can leverage these policies to enhance their market positioning and achieve the long-term success you’re planning for.
