Imagine this: after countless hours perfecting your product, building a strong brand image, and crafting an ideal pricing strategy, your hard work is undermined by retailers who blatantly disregard your established pricing policy.
Sadly, this frustrating scenario is all too common for manufacturers and brands experiencing Minimum Advertised Price (MAP) violations.
To help you better understand this troublesome issue, below, we’ll explore the ins and outs of MAP violations, why they matter, and how to prevent them from sabotaging your brand’s success.
Keep reading to learn more about these critical breaches and arm yourself with the knowledge required to combat them effectively!
- MAP violation occurs when retailers advertise or sell products below the minimum price threshold set by manufacturers.
- Violations of MAP policies can lead to unfair competition, strained relationships with distributors, decreased profit margins, and reputational damage.
- Detecting MAP violations can be challenging, but utilizing advanced software tools can help monitor retailers’ pricing strategies effectively.
- To prevent MAP violations, it’s essential to educate retailers about your policy and include it in sales contracts.
- Regular monitoring of retailers and saving evidence of any violations is crucial for dealing with breaches promptly.
- Taking action, such as issuing cease-and-desist letters, terminating business relationships, or even filing lawsuits, can protect your brand’s reputation and interests.
What Are MAP Violations?
MAP, or Minimum Advertised Price, refers to the lowest price at which a manufacturer permits its retailers to advertise their products for sale.
In other words, while businesses have a lot of freedom in their pricing policies, they can’t go below a certain number specified by the provider.
This policy is designed to protect a brand’s image and maintain a consistent cost range across various retail channels.
MAP violation occurs when a retailer advertises or sells a product below the minimum advertised price set by the manufacturer. These breaches can be observed in traditional brick-and-mortar stores or online marketplaces, such as Amazon and eBay.
To help you better visualize this particular problem, in 2020, Costco decided to drastically reduce the price of Birkenstock sandals, selling them for a fraction of their original $135 retail value.
Although Birkenstock’s CEO publicly denounced Costco’s actions, the retailer continued to sell the sandals at a reduced price, violating Birkenstock’s MAP policy.
Why Are MAP Violations Problematic?
MAP violations are a fairly common occurrence in the business world, particularly among e-commerce retailers. Even more worryingly, these incidents can have long-lasting consequences for manufacturers and brands that are victims of such breaches.
When a retailer violates a MAP policy, they create an uneven playing field within the market. Other sellers may struggle to compete with the reduced prices, leading them to either ignore your MAP policy as well or lose customers to the price-cutting competitor.
Businesses can’t depend on clients in this scenario. After all, online shoppers compare prices all the time, so it’s only natural that they would take advantage of amazing deals and prioritize retailers who offer them.
This scenario ultimately creates a race-to-the-bottom price war that can hurt all parties involved – potentially even leading to bankruptcies of struggling businesses.
Disrupted Relationship With Distributors
The relationship with your brand’s partner network is vital for the success of your business, as these distributors are responsible for getting your products into the hands of consumers.
Minimum Advertised Price violations can strain this relationship – some distributors may feel it’s unfair that certain retailers are allowed to bypass the agreed-upon pricing policies.
Over time, this discord may cause some distributors to reduce their support for your brand or even sever ties altogether.
One of the biggest issues with MAP violation is that it can lead to a decline in revenue for manufacturers. After all, when products are advertised or sold at a lower price than your MAP policies require, you’re making less money per unit.
This decline in revenue can have serious consequences for your business, as any MAP policy takes into account all of the associated costs – from research and development of your product to the manufacturing process to even shipping and marketing costs.
If retailers are allowed to advertise and sell your goods at a lower price than what you need to cover all of these costs, it would be very difficult for your brand to stay afloat in the long term.
Your brand’s reputation is a critical aspect of its success. A MAP violation can tarnish your image by associating your products with lowered standards and making them appear less valuable to consumers.
Why would premium clothes designed by famous fashion houses and manufactured from high-quality textiles be sold at bargain prices, for example? Doesn’t it sound suspicious?
This loss of reputation can be difficult to recover from and may even irreparably damage your brand’s image, ultimately making it harder to sell your products in the future.
How to Detect MAP Violations?
MAP policy breaches can be difficult to detect, as they often occur online and don’t leave an obvious paper trail to follow. Trying to delegate MAP violation tracking in-house is unrealistic – you’d need a full team of dedicated professionals checking prices 24/7 to have any chance of success.
Fortunately, technology-based tracking solutions like Brandly360 make it possible to keep an eye on the pricing strategies of all your retailers without breaking the bank.
Brandly360 is a comprehensive and fully automated system capable of tracking price changes with an unrivaled speed – the gathered information is updated every 10 minutes!
If any retailer violates your MAP policy, you’ll be immediately alerted so that you can take action and protect your brand and your customers.
Subscribe to Brandly360 today and make tracking MAP violations a breeze!
How to Prevent MAP Violations?
As we explained above, any MAP violation can have significant consequences for all parties involved, so it’s essential to deal with them quickly and effectively.
Preventing MAP policies from violations involves proactively addressing the issue through strategic measures and consistent enforcement of your policies.
Educate Your Retailers
Before establishing a business relationship with retailers, ensure they understand the importance of adhering to your MAP policy. Provide clear guidelines that outline your expectations and the consequences of violating the agreement.
By incorporating your MAP policy into sales contracts, you create a legally binding document that holds retailers accountable for any breaches. This inclusion can serve as a deterrent against potential violations and makes any legal disputes much easier to win.
Monitor Your Retailers Regularly and Save Evidence
Regular monitoring of your retailers’ advertised prices is crucial for identifying and addressing MAP violations promptly. Establish a consistent schedule for reviewing product pricing across all channels so that you can catch any violations early on.
Remember to save any evidence you collect – this material will be essential when you need to file a complaint or sue an offending retailer.
Issue Statements and Take Action
When a retailer violates your MAP policy, you need to take action to protect your brand’s reputation and interests. The first step is usually issuing a cease-and-desist letter that outlines the violation and the consequences of future breaches.
If the warning is ignored or if the retailer in question is a repeat offender, you might consider terminating your business relationship.
In some cases, it may even be necessary to file a lawsuit to protect your brand’s image and interests. However, this step should only be taken as a last resort, as legal action can be costly and time-consuming.
Other popular solutions to the MAP violation problem include approaches such as:
|Compliance-based reward system||Rewarding retailers who follow MAP policies helps prevent future violations.|
Rewards can come in the form of relaxed MAP thresholds during key commercial events (e.g., Super Saturday or Black Friday sales).
|Incremental suspensions||Repeated violations of MAP policies result in increasingly more punishing actions from the brand.|
Responses may include longer suspension periods or even product line exclusions.
|Three-strike approach||Retailers can’t commit MAP violations more than 2 times.|
1st strike – warning2nd strike – time-limited suspension3rd strike – immediate termination of the business relationship
|Rollout period||Retailers are informed about a MAP policy well in advance, giving them time to sell off slower-moving inventory.|
MAP policy violations are a serious issue that can jeopardize your brand’s reputation, disrupt relationships with distributors, and impact your bottom line. As a manufacturer or brand owner, it’s crucial to stay vigilant and proactive in addressing these breaches.
Use advanced software solutions to track MAP violations, educate the retailers on the importance of adhering to your pricing policies, and take decisive action when necessary. By doing so, you safeguard your brand’s integrity, maintain a fair competitive landscape, and keep your hard-earned profits intact.
And don’t forget to check out our Brandly360 solution. With automated monitoring and real-time alerts, finding and addressing MAP policy violations has never been easier! Contact us now and make your brand’s success a priority!
Manager with experience in leading team of software developers and testers during implementation of internal and external IT projects. Ceo of Brandly360.com.