A number of pet product manufacturers have implemented new minimum advertised price policy rules or enhanced existing MRP rules in order to combat online predatory pricing practices and steep discounts in 2016-17.
Putting in place and implementing a comprehensive MAP strategy serves one purpose only. Discussed here why your firm should have a MAP policy and what best practices you should follow when developing, adopting, and enforcing one.
What is and is not a map policy?
Minimum advertised price policies are unilateral initiatives that manufacturers can employ to prevent retailers from promoting items at prices below a certain threshold.
The minimum advertised price policy, unlike resale price maintenance (RPM) agreements, does not rigidly regulate product prices. Manufacturers employ RPM rules or agreements to restrict retailers from selling items at prices below a certain threshold.
Antitrust rules in the United States make the MAP program fully permissible. A MAP policy is not deemed vertical price-fixing as long as the manufacturer or supplier works independently of its resellers.
This is because correctly crafted MAP regulations only limit a product’s advertised price, not its ultimate sales price. MAP regulations cannot often limit in-store advertising. Retailers can still opt to sell a certain product.
Best practices for establishing map solutions
If you’re ready to create a MAP policy or reinforce a current one, keep the following recommended practices in mind:
Create a MAP policy that is unique to your organization
No one policy is appropriate for every manufacturer; you must analyze your own circumstances, aims, and connections with retailers. Online cookie-cutter MAP policy templates may not effectively safeguard your brand.
Instead, before sending it to an attorney for approval, look at other current MAP policies for suggestions on what your company’s MAP policy should contain.
Make it clear what constitutes policy compliance – and what does not
A MAP policy should be simple to comprehend and straightforward to implement. It is up to you, as the manufacturer or provider, to select how you wish to create your criteria.
Your merchants must understand exactly what they must do to comply with your MAP policy. They must also be aware of and comprehend the implications of failing to follow guidelines.
Seek legal advice to prevent antitrust difficulties
MAP violators antitrust laws depending on how it is developed and executed – not just at the federal level, but also at the state level. Work with an antitrust counsel to develop a MAP policy that protects your firm, legal standing, and authorized resellers.
Maintain consistency in the application of your MAP policy
Consistency across channels is critical when implementing a minimum stated pricing strategy. It makes no difference if your resellers are small, medium-sized, huge, or massive corporations.
Tell them immediately away from that you’re creating a MAP strategy in part to safeguard your distribution networks. A manufacturer should notify all of its retailers as soon as a MAP policy is implemented, and that following it helps them to maintain healthy margins while offering high-quality, creative products.
Finally, bear in mind that if merchants see any anomalies, particularly in enforcement, your policy will lose confidence.
Your MAP policy should be monitored and enforced
Minimum stated pricing rules are only as good as their map violation monitoring and enforcement.
Regrettably, enforcement may be the most difficult and time-consuming aspect of establishing a MAP strategy. The good news is that software to automate monitoring and enforcement is available.
Creating a firm Minimum advertised price policy for the first time may be intimidating, especially when considering the legal and brand image implications.
While having a MAP policy is crucial for your brick-and-mortar merchants, having an extra IMAP (internet minimum advertised price) policy is also vital for having a level playing field with retailers or distributors that sell online. In a subsequent piece, we’ll discuss developing an alternate technique for IMAP implementation.