MAP : Minimum Advertised Price Strategies

According to ABOUT.COM, Minimum Advertised Price (MAP) refers to a supplier’s pricing policy that does not permit its resellers to advertise below some specified amount.  This MAP price is often a formulaic percentage based on the manufacturer suggested retail price, or MSRP.  In some cases, retailers are instructed to sell only at MSRP levels, whereas other MAP-sensitive vendors employ a fixed percentage below MSRP as the low advertising price thresshold.  Either way, MAP policies are an inescapable part of online retail sales.  Your retail operation is bound to encounter this type of manufacturer policy, and having a proactive MAP selling strategy can set you apart from your competition.

Perhaps the most prevalent question about MAP policy is the most obvious one:  why do MAP policies EXIST?  Well, it really comes back to brand sensitivity and perceived price erosion.  If a manufacturer producing hand-signed sports memorabilia feels that the actual commodity value of their authentic signed football is the football itself, they’ll be sensitive to how consumers perceive the final retail price.  How much is an athlete’s signature really worth, after all?  This is where minimum advertised pricing “kicks” in.  The manufacturer instructs authorized retailers to not sell the signed football for less than 10% below original MSRP.  In our previous scenario, if the hand-signed football has an MSRP of $500.00, the lowest advertised price would be $450.00.

Keep in mind, not all manufacturers employ MAP policies.  Technically, MAP is but a few degrees away from bona fide price fixing, an illegal practice within the USA and many European nations.  However, because most online retailers aren’t stocking the products they’re promoting, a manufacturer or supplier can simply reserve the right to not sell said merchandise to the retailer should they violate MAP terms.  This can and does happen often within established product channels, particularly when popular consumer brands are involved.   Retailers that knowingly (and sometimes unknowingly) violate MAP Policy find themselves locked out of certain product lines without much notice.  Supplier policy enforcement is pretty much a finesse game that usually weighs considerations such as retailer sales volume, number of violations, etc.

One of the easiest strategies to consider regarding MAP policy is simply not to offer MAP-priced goods to the public.  I hesitate to identify this as an actual strategy per se, since the retailer is avoiding the MAP issue altogether.  Also, the retailer loses potential revenue that would have been realized by reselling price-sensitive product lines.

A truly legitimate MAP strategy is to take a closer look at the technicalities of most MAP policies.  Conventionally speaking, Minimum Advertised Price refers to the published price that consumers can easily retrieve by browsing a website, perusing through Google Product Search results, or reviewing at a price comparison site.  This is where your website presence can leverage the published versus non-published price strategy. By integrating a “add to cart for lower price” or “call for best price” marketing concept, many larger websites have successfully complied with policy while offering discounted prices below MAP.   For example, only when customers are logged in or have added the product to their cart are more aggressive prices revealed.  However, I’ll give you fair warning:  not all manufacturers agree that this strategy complies with MAP terms!  It’s important to confirm with your supplier which selling methods are in manufacturer compliance.

A second highly effective and commonly used MAP strategy is to offer free shipping in conjunction with related products.  Free shipping promotions really DO work, especially when your retail operation has little room to discount items that have tight pricing controls. In most cases, MAP prices are high enough that your business will have plenty of profit margin space to introduce a free shipping campaign.

One last consideration regarding MAP selling strategy:  if you have to sell a product at MAP price, so do your competitors!  This reality creates an even playing field for those retailers pushing the same product.  Maximizing your marketplace with smart MAP strategies can make all the difference and separate your retail brand from the rest of the pack.