Hard Vs. Soft MAP Pricing
September 7, 2008
Interestingly enough, a new trend is emerging within the world of product pricing strategy: hard versus soft MAP policies. As a reminder, MAP is the Minimum Advertised Price allowable at the manufacturer level for retailers to consider when selling online. However, some manufacturers are more adamant about their price control mechanisms than others these days.
The most important distinction to be made about MAP selling policies circles around keeping a solid relationship with the manufacturer of your brand. In some cases, manufacturers are extremely meticulous about where and when their merchandise can be sold, especially within the web of e-commerce. Keep in mind that these “hard MAP” manufacturers are accustomed to a more traditional supply chain: manufacturer sells to distributor, distributor sells to stocking retailer, and retailer fills its shelves with merchandise at a brick-and-mortar store. Therefore, expect established brands to take a more cautious approach to online retail sales. They may even discourage “hide price from consumer” shopping cart tricks as a means to competitively lower the final product selling price. In fact, don’t be too surprised if you find yourself unknowingly violating a manufacturer’s hard MAP sales policy!
On the flip side, many small and medium-sized manufacturers that have aggressively embraced internet sales will accommodate “creative” MAP selling strategies. Your retail business can benefit by leveraging this flexibility, as described in a different article published here.
The most important consideration regarding what to sell, where to sell it, and at what price depends on a simple suggestion: know your product. Take time to communicate with your authorized distributor about current MAP limitations. Perform market research to determine current price levels, but be careful not to assume the lowest price complies with MAP policy.  If another retailer is violating MAP, inform your vendor source. By understanding the subtleties of manufacturer pricing, your business will have a unique selling advantage: your vendors will love you.
