Minimum advertised pricing strategy
Minimum Advertised Pricing or MAP strategy is a pricing agreement between a manufacturer and its dealers or retailers. The manufacturer sets a minimum price that the dealer or retailer cannot advertise or sell the product for less than. This strategy is aimed at ensuring that the products are priced consistently across all channels, maintaining their brand image, and preventing price wars between dealers and retailers.
Benefits of minimum advertised pricing
Minimum advertised pricing strategies are particularly useful for businesses that sell premium or luxury products. By maintaining a consistent pricing strategy across all channels, these businesses can avoid undercutting their prices and reducing the perceived value of their products. This helps to maintain brand image and prevent the commoditization of their products.
Another benefit of the minimum advertised pricing strategy is that it helps prevent price wars between dealers and retailers. By setting a minimum price, manufacturers can prevent price wars that can lower profit margins and harm relationships between dealers and retailers. This, in turn, helps to maintain a healthy distribution network and ensures that dealers and retailers receive a fair return on their investment.
Impact of MAP pricing strategy to ecommerce and retail pricing
Brand protection: Businesses can use MAP strategy to protect their brand and maintain a certain level of pricing integrity for their products by preventing retailers from advertising prices that are too low.
Maintaining margin: Businesses can use MAP strategy to maintain margin on products by preventing retailers from undercutting prices and reducing profit margins.
Protecting the value: Businesses can use MAP strategy to protect the perceived value of their products by preventing retailers from advertising prices that are too low.
Maintaining control: Businesses can use MAP strategy to maintain control over the prices of their products and prevent retailers from undercutting prices to the point of devaluing the brand.
Sales and promotions: Businesses can use MAP strategy as part of their sales and promotions strategy to create a sense of urgency and encourage consumers to make a purchase.
Minimum Advertised Pricing (MAP) strategy refers to a pricing agreement between manufacturers and retailers that sets a minimum price at which a product can be advertised. In ecommerce and retail businesses, MAP strategy can impact pricing by protecting the brand, maintaining margin, protecting the perceived value of products, maintaining control over prices, increasing sales and predicting the long-term impact of changes in price. It is a strategy that can be used by ecommerce and retail businesses to maintain a certain level of pricing integrity for their products, protect their brands and maintain margin on products.