Selling and purchasing have never been easier than it is today. With global production chains and online shopping, any product can easily find its way into the hands of a willing customer.
Good pricing can mean the difference between making a sale or not. To make sure that the price of a certain product remains the same no matter where it is bought from manufacturers across the United States enforce a minimum advertised price (MAP) policy.
A MAP is the lowest price that resellers of a product can advertise, whether it be in print or online. The purpose of a MAP is to protect both the manufacturer and resellers of a certain product, as well as preserve the value of a certain product.
Enforcing a MAP policy properly brings various benefits both to a specific manufacturer or reseller and to the business landscape in general. Here are some examples:
Promotes a Competitive Environment
A MAP is typically agreed on by manufacturers and retailers to the benefit of both. For retailers, a MAP guarantees a profit margin for them for each product sold. It also guarantees that a customer will not buy the same product from another retailer because of a lower price.
However, this then pushes retailers to compete based on service provided; this competition, in turn, benefits the manufacturer. While a retailer cannot advertise below the MAP, it can sell the product at a different price.
Thus, retailers compete by offering various benefits to customers, such as special discounts and free shipping, or by guaranteeing product availability and the possibility of choosing among different variations of the product (like different colors). This, in turn, promotes a more competitive business environment for all parties to thrive in.
Maintains quality and premium image
Price is typically used to communicate the value of a certain product. Therefore, if a product were to retail for a very low price, this says can affect the brand and perceived value of the product, which is detrimental to the manufacturer.
Setting a consistent selling price, thus preserves the product’s image and value. Furthermore, it encourages retailers to keep on ordering from the manufacturer, as they know that they are protected by MAP and that the product is worth its price, thereby also maintaining a healthy relationship between the manufacturer and retailers.
Eliminates underground and unauthorized selling
Underground and unauthorized resellers who sell a certain product for lower than its advertised MAP cause harm both to the manufacturer and retailer. Retailers are discouraged from ordering more product from the manufacturer, as they cannot compete with the low selling prices of the unscrupulous resellers.
Moreover, as a result of the low prices, the value and image of the product also decrease, further affecting the manufacturer’s business. With a MAP policy in place, it is easier to identify these unauthorized retailers and pursue appropriate action.
It also encourages legitimate sellers that they are being protected by the manufacturer, which makes them feel more confident in doing business with the manufacturer and thereby mutually benefiting both parties.
A well-arranged and well-implemented MAP policy can bring benefits far beyond any customer, retailer, or manufacturer. As MAP encourages competition whilst promoting legitimacy and exemplary service, it lets the product speak for itself, which, at the end of the day, is the very point of doing business in the first place.