Minimum advertised pricing simply means maintaining the pricing costs specified by the manufacturer. It also means that distributors and retailers cannot sell below that specified cost. Though in theory, this rule is self-explanatory, the situation is quite different.
Big brands have issues monitoring authorized vs unauthorized sellers and are turning towards Minimum Advertised Pricing (MAP) policies as a tool to address these challenges.
These MAP policies allow businesses to monitor and tackle unauthorized sellers. It also helps prevent diluting brand reputation. Let’s find out how.
What is Minimum Advertised Pricing (MAP)?
Minimum Advertised Pricing is a policy that sets the lowest price at which a retailer or seller can advertise a product. MAP policies don’t dictate the actual selling price, what it does is ensure no one violates the agreement.
Businesses today need this tool more than ever due to their presence on marketplaces. And, having numerous sellers too.
How MAP Protects Revenue Erosion in Retail?
Image Source: Price2Spy
Revenue erosion occurs when products are sold at heavily discounted prices. It diminishes profit margins and undermines the brand’s value proposition.
MAP policies help prevent this by:
1. Ensuring Price Consistency
Retailers that adhere to minimum advertised pricing create uniformity. This is applicable across all platforms both online and offline. When there’s consistency, the likelihood of price wars is reduced. Profit margins and protected and consumer trust is built.
2. Maintaining Perceived Value
Too much of a discount, frequently, leads consumers to perceive a product as cheap. It can seem less valuable. When MAP is enforced, brands preserve their perceived value. Customers then see their products as high-quality and worth the investment.
3. Leveling the Playing Field
Larger players have an unfair advantage compared to smaller retailers. Larger retailers have the option to offer steep discounts without much thought on profit. With MAP policies, the playing field is leveled. All sellers advertise product prices at or above the same price threshold.
How to Identify and Address Unauthorized Sellers with MAP?
Unauthorized sellers are one of the biggest challenges for brands in the e-commerce space. These sellers often source products through unofficial channels. And then, sell them at much lower prices. What that means is –
- Brand Reputation: Inferior customer service or counterfeit products mean unhappy customers. This can easily tarnish the brand’s reputation, snowballing into bigger outcomes.
- Price Undercutting: Sellers that disregard MAP policies, lead to price inconsistencies. So essentially, the brand makes much less revenue on the product.
- Customer Confusion: If a customer sees the same product from multiple sellers at different price points, it can create mistrust. Over time, the customer may choose not to shop from the brand at all.
To combat these issues, brands must adopt a proactive approach to monitor and identify unauthorized sellers. Seller intelligence tools help here providing much-needed insights. This will be about pricing trends and potential violators. It also shows seller ratings and details for brands to be fully aware.
How to Tackle MAP Violations Effectively to Protect Brand?
MAP violations occur when a seller advertises a product below the agreed-upon minimum price. These price violations mean there’s a loss in revenue and brand devaluation. It can also create mistrust and bad relationships with authorized sellers.
Addressing these violations properly requires –
- Robust Monitoring Systems: Digital shelf analytics tools like 42Signals enable brands to monitor pricing across multiple platforms and marketplaces. These tools also allow brands to identify MAP violations quickly. Which creates prompt responses by brands.
- Clear Communication: Establishing clear MAP policies and ensuring all retailers understand and agree to them is so important. This minimizes misunderstandings and fosters better compliance.
- Enforcement Mechanisms: Brands must enforce MAP policies consistently. If there’s a failure to act against violators, then non-compliance can become an issue. It can also lead to it becoming widespread.
How Digital Shelf Analytics Enhances MAP Compliance & Monitoring?
Digital shelf analytics tools are essential for brands aiming to maintain MAP compliance. They provide a detailed view of pricing data, positioning, and competitor insights. It also looks at multiple platforms at once giving a thorough data overview.
Key benefits include –
- Real-Time Price Monitoring: Allows brands to track violations across retailers. Also marketplaces. This helps identify any sellers going under the minimum advertised pricing.
- Competitor Insights: Looking at competitor pricing strategies to stay relevant. This means adjusting prices without compromising value.
- Trend Analysis: Pricing trends over time to identify patterns. This means MAP violations and unauthorized selling are addressed promptly. This will enable root cause addressing effectively.
Role of Seller Intelligence in Enforcing MAP Compliance
Seller intelligence tools complement digital shelf analytics by offering deeper insights into seller behavior and activities. These tools help brands:
- Identify Unauthorized Sellers: By analyzing seller profiles and sales patterns, brands can detect unauthorized sellers and track their sources.
- Monitor Seller Compliance: Seller intelligence tools highlight which sellers consistently comply with MAP policies and which do not.
- Evaluate Marketplace Health: Understanding the overall health of the marketplace allows brands to refine their strategies and focus on areas with the highest impact.
Building a Comprehensive MAP Strategy
An effective MAP strategy goes beyond merely setting a minimum advertised price. It requires a multi-faceted approach that includes:
- Policy Development: Clearly define the MAP policy, including the rationale behind it, the consequences of violations, and the enforcement mechanisms.
- Retailer Education: Provide training and resources to retailers, ensuring they understand the importance of MAP compliance and how it benefits them.
- Proactive Monitoring: Use digital shelf analytics and seller intelligence tools to monitor compliance and detect violations.
- Consistent Enforcement: Take prompt and consistent action against violators to maintain the integrity of the MAP policy.
- Regular Review: Periodically review and update the MAP policy to address emerging challenges and changes in the marketplace.
Conclusion
Minimum Advertised Pricing is a critical tool for protecting revenue and maintaining brand equity.
Preventing revenue erosion can be accomplished with unauthorized sellers and addresses violators effectively.
Here, 42Signals prevents any dilution and helps businesses stay aware of what’s happening. Our data looks at ecommerce and quick commerce platforms.Schedule a demo today if you want to see the product in action.
