Brand Management

Can You Price Below MAP Prices?

If you work in the retail industry, you’ve likely heard of or encountered a MAP policy.

Online shopping has exponentially increased the ease with which consumers can find products and compare prices between different retailers, so MAP has become a crucial aspect of product selling for many manufacturers.

MAP policies can also help set an expectation for the price of certain products across the market, which is helpful for smaller businesses that are looking to sell products based on value without the fear of a price war looming in the distance.

But what exactly do MAP policies cover, and how enforceable are they?

What Is a MAP Policy

A minimum advertised price (MAP) policy is a mutually agreed upon set of guidelines from the manufacturer for the retailer that details what prices their products are allowed to be displayed at.

For example, if a TV manufacturer sets the minimum price of their product at $450, then the retailer cannot advertise that product for any amount less than $450 without receiving a penalty from the manufacturer.

How Is MAP Different From MSRP?

MSRP, or manufacturers’ suggested retail price, is when a brand suggests a price for their product to the retailer, based on what they perceive the product is worth.

MSRP is not legally binding and is only a suggestion and is meant to be a starting point for retailers who are trying to price their products. Often, MAP works to help keep MSRP prices stable by providing a minimum threshold.

The Legality of MAP Policies

MAP policies, when executed correctly, are perfectly legal in the U.S. due to antitrust laws.

This is because a properly written MAP policy only recommends the advertised price of a product, rather than the final sale price. So, retailers can still sell products at a lower point than the policy states, they simply can’t promote them that way based on their agreements with the brands.

To lower the price, a reseller might offer coupons or discounted rates internally, among other options.

Ultimately, it’s in the best interest of the retailer to adhere to the MAP policy guidelines in order to continue doing business with the brand.

How MAP Prices Can Help Brands and Retailers

One of the biggest benefits of a MAP policy is its ability to prevent price wars. Rock-bottom prices only truly help the buyer, and often lead to a continuous cycle of undercutting costs in order to stay competitive with no regard for the profitability of it all.

For some retailers, this can lead to lost brand deals and cut contracts, leaving them with no merchandise.

With MAP pricing, brands can stay in control of their products and make sure they’re being represented at their true value, preventing the lasting impact that price wars can have. This system can help create a relationship built on mutual trust between manufacturers and retailers.

Retailers maintain prices that satisfy the brand, and brands make sure to consistently update their MAP policies to reflect current demand and product relevance. As long as both sides maintain the agreement, everyone benefits.

The Penalty for Pricing Below MAP

Violating a MAP policy can lead to some serious repercussions for retailers.

For one, the brand could completely remove their products from the retailers’ stores and prevent them from being able to sell that product ever again. In some cases, the brand may even require the retailer to pay back any money lost or funds that the brand had previously provided the retailer with in order to promote the product.

Often, these consequences are a last resort because brands don’t actually want to lose any of their retail partners.

Initially, a brand might just issue a warning that restates the MAP policy and emphasizes how it should be followed. If the violation continues, then they might pause their relationship with the retailer for a short amount of time. If the offense carries on, then brands have the option to issue a cease-and-desist letter to the offending retailer and will likely stop working with them altogether.

Ultimately, it’s in the best interest of the retailer to adhere to the MAP policy guidelines in order to continue doing business with the brand.

In the instance that an illegal, or grey-market, reseller is the one violating MAP, brands will often streamline the process and move toward legal action. This is usually done on the basis of copyright, counterfeit, or brand infringement laws.

How Retailers Can Work Around Minimum Advertised Price

To answer the original question, can retailers price below MAP? The answer is yes, kind of.

A MAP policy dictates the price you are allowed to advertise products at, but this doesn’t mean that the final sale price of the product can’t be lower than what’s stated. As a retailer, it might be smart to look for different ways you can discount products that don’t involve violating MAP.

Some options include:

  • Free shipping
  • Coupon codes
  • Cart discounts
  • BOGO deals (provided the other item isn’t violating a MAP policy either)

Any of these can be implemented by either in-store or online retailers in order to gain a competitive advantage without violating MAP policy guidelines.

However, it’s extremely important for retailers to be careful and precise when using any of these strategies. Pay close attention to the exact language being used and how it can be interpreted.

For example, if you want to advertise a coupon code, be sure that you are advertising only the code itself and not the item that the code could be used for. Doing so could imply that you are offering the product for the lower price, therefore violating MAP agreements. Instead, state clearly which items are excluded from the coupon and shoppers will know what to apply the code to.

If you are a retailer and you’re unsure if your advertised prices and marketing efforts are violating MAP, consider checking in with the brand or speaking with a legal consultant.

Most manufacturers are constantly monitoring their products’ pricing to ensure there are no MAP violations, so it’s better to make sure you are in the clear than to potentially cause long-lasting damage to your brand relationships or your profits.

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