In order to avoid fees by hiring an attorney to write their MAP Policy, many brands simply implement minimum advertised price policies they find on the websites of their peers and competitors. But what if your peers and competitors did the same thing? That might mean the brand is using a policy that’s not actually legal.
Besides the potential liabilities of using a policy document that hasn’t been written or reviewed by a lawyer, there really is no one-size fits all policy. There are definite commonalities, but brands need to consider their individual objectives, as well as their abilities to follow through on non-compliant resellers.
As a reminder, a MAP Policy does not dictate the “selling” price of a product, only the “advertised” price. Therefore, because MAPP is an acronym for minimum advertised “pricing” policy, let’s begin with the most important part: MAP “Pricing.” When planning your minimum advertised pricing policy, here are some important considerations to bear in mind:
Important MAP Pricing Considerations
- Will MAP apply to all items or only to specified items?
A brand does not need to include all of its products in a MAP policy. We recommend the 80/20 rule.
- Will the MAP price be the MSRP, a percentage of the MSRP, or a MAP specified price? What is the objective of the MAP Policy? Is it to maintain a level playing field between online retailers and brick and mortar? Or is it for brand protection? Is there an acceptable margin that will satisfy both of these goals? We recommend that MAP and MSRP remain unique and that brands have a set formula to determine both.
- Where will the MAP prices be listed for the retailers to follow? Will this be on a retailer portal of your website, catalogs and line sheets? Will it be the retailer’s responsibility to know the MAP price or will the brand publish and distribute the initial product pricing and any subsequent changes?
- Reserve right to change pricing at any time. Since MAPP is a unilateral policy determined by the brand, the brand can change the pricing any time it wants.
Once the pricing and product decisions regarding MAP Pricing have been made, we recommend that brands define the “advertised” part of MAPP. What constitutes an advertised (or listing) price? Not every brand thinks the same way. Since there are many ways for sellers to reveal this to consumers, here are some considerations:
Must-Haves for Your MAP Listings
- May a retailer advertise free shipping? Some ecommerce retailers use a low sales price but inflate the shipping fees in order to still get margin. Although consumers most likely see through this, they will still think the product is cheap and it will hurt the brand image.
- Does the MAP apply to physical stores or online only (IMAP)? Mail order catalogs and local newspaper ads are a mainstay of brick and mortar stores. But does that affect online pricing? If the brand does want to include this, they must consider how to implement price monitoring for that segment of the market.
- Will MAP apply to website features such as “click for price” and automated “bounce back” pricing emails? Some brands forbid this, others don’t. Since the consumer (and most repricing bots) don’t see the click for price result it may not be an issue.
- May a retailer advertise that it has the lowest prices or use language that suggests that its retail price is lower than the MAP price (“our prices are so low that the manufacturer will not allow us to show them”)? This is similar to the “click for price” question but since it insinuates a direct MAP violation it may be something to consider in the policy.
- Will it be a violation of your MAP policy for a retailer to bundle your products with other of your products such that the effective advertised price will be below the MAP price (e.g., gift with purchase)? This contemplates assigning value to a gift that would offset the listing price and potentially cheapen the product being purchased. Bundling is a common practice so this needs to be contemplated. Caution, however, because bundling is a very difficult practice to monitor.
- May a retailer advertise your products bundled with another supplier’s products? For some brands this is unacceptable. But since a MAP Policy has to do with prices, does it belong in the MAP? It may be more appropriate for a reseller agreement.
- Will you permit storewide sales that would have the effect of setting the advertised price below the MAP price? Much like the “click for price” question, since no actual advertised price is being listed, is it appropriate? It is something that can be monitored?
- Will you permit additional discounts, coupons, gift cards, or incentive programs (buy this now and get a $$$ gift card) that would have the effect of setting the advertised price below the MAP price? The question the brand needs to ask itself is, “are we enforcing an actual price or are we enforcing an insinuated price?”
Beyond the two main areas of “price” and “advertising” there are a number of other concepts to think about when creating a MAP Policy.
- Will there be MAP holidays (periods when MAP will not apply, such as end of season, end of year or holiday exceptions)? This is considered a best practice but how and when is something that varies from brand to brand. Will the policy state specific dates or simply “reserve the right to change it’s pricing and/or temporarily suspend MAP.” Also, how will retailers know? Is it their responsibility to check a special webpage or will the brand publicize the holiday?
- Will you provide images to be used for advertising purposes and prohibit retailers from using product images (other than provided by you) in advertising? Although this is generally considered a part of a retailer agreement, many brands keep in their MAP as a possible penalty. Suspension of the use of brand-owned images and trademarks is a powerful arrow in a brands enforcement quiver.
- What kind of penalties could a MAP violator face (suspension of account, loss of terms, loss of discounts, etc.)? Some policies list out the sequence of penalties, as in a three-strike policy. Others don’t do this as it tips their hand and gives the retailer permission to violate at least two times. Stating exact penalties may also force the brand’s hand to follow-through exactly the same with all accounts when they don’t actually need to. PODCAST TOPIC: Selective MAPP Enforcement
- Contact information for dedicated MAP administrators. It is highly recommended that a brand assign one person to deal with MAP compliance issues. Too many people involved could create the opportunity for mixed responses and that could be construed as negotiation, which is not allowed.
As you see, there are many things to consider when creating a MAP Policy. MAPP Trap has experts that will review and make recommendations regarding policies, as well as special arrangements with a consumer products attorney. We urge brands to be very careful when adopting policies. Not only are there no one-size fits all policies, but there are technology, sales, and internal bandwidth considerations that need to be made. If you’d like our opinion about MAP or other policies, free of charge, give us a call.