How to Track Retailers Violating Minimum Advertised Price (MAP) Agreements

Posted by Vikash Rathee on Wed, 14 Jan 2015 09:31:12 GMT
How to Track Retailers Violating Minimum Advertised Price (MAP) Agreements

Have you ever wondered the e-commerce companies violating your pricing agreement and advertising your brand on very low or high price? But now there is a way to monitor them...

before I come on that point, let me introduce you about Minimum Advertised Price or MAP first : It's an agreement between the retailer and manufacturer/brand about the price on which the sellers agree as to keep that price as constant as the show price for any product. It does not permit the resellers to advertise the product below a certain amount or higher a certain amount.

For example : I am a manufacturer that makes a cell phone(Assuming Micromax), and I have three different stores that sell it(Snapdeal, Amazon, Flipkart). I can set MAP pricing to Rs. 10000 INR, meaning none of those stores can publicly advertise the mobile phone for less than 10000, Doing so will be the MAP violation (As most of your remember the Big billion day, wasn't that MAP violation?)

Since it’s an agreement thus the violation affects the sale and the bottom line thus you should always track the retailers for violation of the MAP agreement. Staying alert about MAP should be the critical piece of a retailer’s pricing strategy. MAP Monitor gives retailers a valuable yardstick for seeing what the competition is charging for a similar product. Retailers are, by extension, the manufacturer's extended sales force, so high margin is an incentive for them to promote certain items more than others.

Manufacturers want to protect brand image by avoiding unseemly discounting, which lowers the value of the product in the customer's eyes. The consumer obviously wants to pay the least for any product thus they keep nosing till they get the least price thus at that time retailers offering fixed price are the one who face the loss for showing loyalty for the MAP agreement. MAP keeps online purveyors out of price wars with each other, which devalue the product; and also that might reduce incentive for brick-and-mortar retailers to carry the product at all. MAP levels the playing field -- those with higher operational costs or lower efficiency, and retailers with a reputation for excellent customer service -- keeps the playing field level and enjoy extra margin to boot. To prevent bargain basement retailers from underselling other resellers of the product this yardstick needs to be followed sincerely. When you check out the e-commerce sites for shopping or price comparison and get the same price everywhere you should know that it’s a good MAP being practiced. Retailers can incur sizable fines and/or penalties from their suppliers for violating MAP contracts.

Manufacturers and brands in many industries frequently use vertical price policies, such as minimum advertised price (MAP), to influence prices set by downstream firms. MAP violations are systematically related to monitoring, incentives, bonding and price obfuscation. We also show that retailers are more likely to violate MAP when the policy is expected to expire soon. When a pricing violation occurs, we show that the extent of violation (offered price relative to MAP) is less when shipping is free, retailers are authorized, and distribution is more intensive. (i.e., a retailer’s violation of the manufacturer’s MAP policy) can be managed with the use of monitoring, incentives, and/or requiring the posting of a bond from the potentially offending partner. Clearly, the manufacturer that invests in monitoring the pricing actions of its retailers is more likely to uncover MAP violations; the threat of discovery can then be a deterrent to violating behavior. Along with the mere threat of discovery, the use of an incentive for compliance – and an associated penalty for non-compliance – reduces the retailer’s incentive to violate MAP.

The manufacturer could use channel monitoring software to track retailers violating minimum advertised price. It's the most advanced and comprehensive tool available for monitoring online retail activity and enforcing Minimum Advertised Price (MAP) compliance. The tool automatically communicate and notify resellers of any MAP policy violations with screenshots to ensure smooth operations. It would make easier to track your products online, so you can send alerts and inform sales reps of any pricing compliance issues. A very important step would be providing automated emails to violators, making MAP policy enforcement easier and more streamlined.

Prictree for retailers (B2B) offers the complete channel & price monitoring solution that will help you track the MAP violation. It helps you in monitoring the price of the retailers with screenshot for any violation and gives you a quick, accurate reading on product performance with convenient summaries of customer ratings and reviews. Most importantly you gain a competitive advantage by knowing who your competitors are and the moves they make locally and globally. Apart from that it helps in comparing SKU coverage and pricing to identify areas of potential growth. Along with that it sets intelligent pricing and automates your pricing policy and keeps track of who's who in your ever-growing market, so you can identify competitive opportunities and threats.

Thus our software doesn’t only assist with MAP policy monitoring; the system also allows you to track the competition. It’s basically a technology to compare prices from other manufacturers selling similar products. With just a few clicks, you can collect pricing data on different distributors for multiple retailers.

With the help of these automated tracking solutions, you can boost your profits and improve your relationship with vendors as well. Most manufacturers don’t balk when retailers offer free shipping, gift with purchase, gift cards with purchase or a % off an additional discount, non-MAP protected item when promoting a MAP item. Offering coupon codes is another way to reduce the price without reducing the price, but in that case you need to be very careful that you don’t advertise the coupon to be applied to the MAP product (that would be advertising). It’s important to protect your brand's integrity by keeping tabs on how your channel and customers represent and perceive your products.