Ever since the United States Supreme Court ruled in 2007 that vertical price restraints do not violate antitrust law in principle and should be judged based on the rule of reason, minimum advertised pricing policies (MAPP) have proliferated. Since that ruling, brands in industries ranging from automotive parts to pet products and toys have adopted the use of this strategy as a way to guard against brand and price erosion.
On its face, MAP Policies are fairly clear cut. If a reseller lists a product for a price below a level set in the brand’s policy, the brand has sole discretion to suspend that reseller from purchasing its products. The policy only dictates the “list” or “advertised” price of the product, not the actual sale price. In a physical store, that would be the price charged at the cash register. Online, it would be the checkout price.
Over time, brands have created different nuanced approaches to MAP Policies that have caused some confusion. The distinctions, however, are quite simple and we will lay them out here.
MAP – Minimum Advertised Price Policy: This refers to the list price of products in any medium. That includes the virtual and physical world. Therefore, MAP prices would apply in ecommerce, brick-and-mortar sticker price, mailers, catalogs, circulars, social media, advertisements (physical and virtual), etc. The list is very comprehensive.
IMAP – “Internet” Minimum Advertised Price Policy:This refers to the list price of products online only. IMAP would include the list price shown on ecommerce store(s) as well as online advertisements, special deals, emails, etc.
EMAP – “Electronic” Minimum Advertised Price Policy: Basically, the same as an IMAP.
UMAP – “Unilateral” Minimum Advertised Price Policy: The use of the word unilateral does not refer to the included locations of the policy. It simply notifies resellers that the brand’s policy was created unilaterally; a condition that is required for all MAP Policies. It may be assumed that a UMAP is comprehensive and includes the physical and virtual.
These policies are sometimes confused with MSRP, or “Manufacturer’s Suggested Retail Price.” There are a few differences between MSRP and MAP pricing, primarily that MAP specifies the lowest price that a reseller may “advertise” a product, while MSRP is the manufacturer’s “suggestion” for a fair selling price. MSRP is not binding in any way, while distributors can enforce penalties against resellers with MAP violations.
As a brand, the choice of which MAP Policy type to use is completely up to them. A note of caution, however, the successful enforcement of any MAP Policy really depends on the brand’s ability to have oversight and to enforce compliance. If the company can find a way to monitor pricing in the physical world, they should use the widest range of restraints possible. However, given the costs of this, plus the fact that brick-and-mortar pricing is rarely affected at the same velocity as ecommerce, it would seem unnecessary.
Ultimately, a MAP Policy is one of the ways that a company communicates part of its terms and conditions of doing business. Some brands adopt MAP in order to keep a level playing field for offline customers. Others maintain the policies to ensure consistent brand perception (e.g., a higher list price conveys greater value). The beautiful thing, though, is that as a policy, and not an agreement, a brand can change the scope of the policy any time it wants to.