The faster the technology and consumer adoption of eCommerce evolves, the more important it is for brand-owners to adopt and enforce minimum advertised price policies (MAPP).
But far too many companies only have MAPP because they feel they HAVE TO rather than because they WANT TO. Whatever the impetus is, it’s good they have them. MAP policies present three major benefits to manufacturers:
1. Stable and Predictable Profit Margins
Although many of us enjoy what we do in our business lives, it’s ultimately about making a living. For brands, it’s about making a respectable profit by creating and selling great products to retailers. In order to do that, brand owners need stable pricing on the manufacturing and operational side. This allows them to create a fair wholesale price to charge retailers.
This may seem obvious, but given the nature of eCommerce (especially with online retailers like Amazon), the entire wholesale to retail model has been disrupted by uncontrolled distribution via resellers and hyper-discounting. Non-enforced advertised product prices caused by the intense competition in eCommerce cause online retailers to lose the necessary profit margins they need.
In turn, that causes them to ask the manufacturer for lower wholesale costs or risk them turning to a competitor. Along with a well-defined and strictly enforced MAP policy, using a price monitoring and MAP policy enforcement service like MAPP Trap helps the brands to protect their bottom line.
2. Improved Brand Image
One of the key components to brand value is price. Other factors include packaging, marketing and distribution. Unfortunately, the more ubiquitous online shopping becomes, the less important packaging becomes as a differentiator. It’s become more about the product promise and marketing than the box it comes in.
To make matters even worse, when distribution becomes opaque because of the broad access to the goods online sellers have, it becomes more likely that a brand's products are being sold by unknown resellers. This, in turn, causes intensified competition for the consumer dollars, which creates a race-to-the-bottom pricing scenario. Bye-bye value-based pricing.
3. Enhanced Retailer Relationships
Without retailers, most brands would not have a way to do business (although direct-to-consumer sales are growing). Brands rely on a stable population of eCommerce and brick-and-mortar stores to sell their products to consumers. For the most part, retailers with physical stores are at a disadvantage to online sellers that can store and ship inventory for low costs (the exception being very heavy items). But many consumers like to touch and feel a product before they buy it, so the physical store becomes a “showroom.” The consumer samples it in the store then buys it cheaper online. This is a huge friction point for retailers.
For online sellers, uncontrolled pricing causes them to lose profit on inventory they’ve already purchased and spent resources marketing. Lower prices, fueled by consumer desire for discounts and easily programmable repricing bots, create undesired competition and unpredictable sales cycles. Both of these are enemies to retailers.
Because a well-implemented MAP Pricing Policy stabilizes pricing, authorized resellers and retailers feel confident that the brand cares about their profits and values their partnership… both online and offline. It is, after all, a partnership.
These are just a few of the iceberg tip benefits that a brand enjoys by having and enforcing MAP. There are many more benefits that will help companies that have invested time and resources into developing great products and actually reap the rewards. See how MAPP Trap can help your business to enforce your Map policy and get a free eCommerce product assessment.