Manufacturers and retailers use Minimum advertised pricing policy (MAP) to protect their interests. This policy is described as the lowest price retailers can use when advertising the product for sale. Manufacturers follow MAP to make sure that the pricing integrity in the market is maintained at all times and will not be abused by resellers.
With MAP, there is an agreement that the manufacturer will authorize the reseller to market, sell, and represent their brand. The resellers agree to advertise the product within the price range set by the manufacturer. However, the actual price of the product may still change after deducting discounts from the display price.
What Happens If You Violate This Policy?
Manufacturers have a system that allows them to monitor any violations. If you violate MAP, you face the risk of losing your authorization to sell the product. The manufacturers will pull out their products from your store and bar you from selling them again. Furthermore, you will also need to refund any co-op funds granted to you during the time the violation happened. You can sway manufacturers to help you if you show them that you are a trustworthy business partner.
Importance of MAP Agreements
MAP agreements are important because they level the playing field for many product resellers and small-time business operators. The main reasons for MAP are as follows:
- Smaller resellers can compete with big shot retailers.
- Allows fair competition by setting the minimum price even when products are sold online or through a physical store.
- They protect the seller’s profit margins.
- They preserve the brand’s identity and value.
- It prevents the product from being devalued because of under-pricing.
Manufacturers may decide to change the MAP prices without prior notice at any time, so it’s a good idea to stay abreast and always check the current prices. After all, you don’t want to lose your authority to represent the brand or product because you missed checking the current MAP policy of a manufacturer.