Typically, manufacturers set the MAP to safeguard their product and reputation. However, sellers may violate it to sell a product at a lower price than what they agreed upon when they signed the MAP contract.
These MAP violations cause frustration among manufacturers as they are left to deal with the aftermath, i.e., lower profits and general disdain from other vendors.
The trouble is that resellers are an integral part of a manufacturers’ distribution process as they help manufacturers reach more customers and make more sales. However, they can also impact brand perception negatively by violating a manufacturer’s MAP policy. Manufacturers put in a considerable amount of research to decide the price point for their products so it maintains brand value and helps them build a loyal customer base – a MAP violation undermines this process.
What leads to resellers violating Minimum Advertised Price (MAP) policy?
Retailers put immense pressure on their teams to achieve sales targets. As a result, sales reps often start relying on large volume discounts and other methods to attract prospects and stay competitive.
MAP Violations can happen when a manufacturer’s marketing team fails to communicate its goals to sales teams, leading to pricing problems. In fact, poor communications have cost businesses more than $37 Billion, according to a Holmes report.
The sales team finds it frustrating not to reach targets, as they deal with wasted resources and falling productivity.
This especially escalates when sales season rolls around and resellers resort to:
- Asking customers to contact them for a quote, overcoming the need to advertise a price
- Not offering prices to consumers unless they proceed to checkout. They’re not advertising a price, so it becomes a loophole for them to get away with a lower discounted price.
- Offering a buy-one-get-one-free deal that allows them to sell at a lower price than the MAP without advertising it – sales do increase, but retailers lose money per unit sold.
A sales playbook can help keep things on track
A sales playbook documents your sales process and outlines call scripts, customer profiles, email templates, call agendas, questions to qualify buyers , proposals and competitive intelligence guidelines.
Manufacturers can find this useful in their efforts to increase productivity across sales teams and ensure that they follow practices that are beneficial for the company’s bottom line.
They can use the sales playbook in addition their MAP policy to guide the selling behavior of their retailing partners.
Monitoring price regulations is important
Additionally, manufacturers can monitor MAP violations and stop them by taking the following measures:
- Automate the monitoring of prices: It can be time-consuming to find individual retailers violating your MAP policies, but a software like Sniffie can help you to find out retailing partners who are in direct violation of your policies.
- Don’t overlook top retailers as they may take unfair advantage of their status in consumers’ search results – as a manufacturer your revenue is at risk, so it’s essential to check prices regularly so you don’t lose brand equity.
- Keep an eye on retailers pricing the MSRP – 20% of retailers are pricing below the MAP most of the time.
Manufacturers need to enforce their MAP policy to avoid losing brand value, perception and trust. Prospects have the freedom to compare prices – but manufacturers and retailers must present accurate information about the prices of products to maintain their reputations and bottom lines.
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