As an online seller, you may be familiar with the term MAP (minimum advertised price). Enforcing your MAP can be a challenge, but it’s essential to do so to protect your brand and ensure fair competition. This post will outline some tips for enforcing your MAP pricing.
How Can I Enforce my MAP Pricing?
There is no one-size-fits-all answer to this question, as the best way to enforce your MAP pricing enforcement will vary depending on your specific business and industry. However, some tips on how to implement your MAP pricing include:
- Have a clear and concise policy stating that you will only sell products at the prices listed on your MAP sheet.
- Making it known that violating this policy may lead to penalties or legal action.
- Training your sales team on the importance of honouring MAP pricing.
- Regularly monitor online retailers to ensure they are not selling your products below your set price points.
- Using a price monitoring solution that can provide real-time alerts when third-party resellers advertise prices below your set points
Look for Key Distribution and Retail Buyers to Monitor
Enforcement starts with visibility into where and how your products are being sold in the market today. To accomplish this, you need to know who your key distribution partners are (and any authorised distributors they sell to) as well as any retailers that purchase significant quantities of your products (even if they are not considered key distribution partners).
Having this information before enforcing MAP pricing is important because it can help you decide on the severity of the penalty for each violation.
For example, if an unauthorised distributor violates your policies, you might consider using more severe penalties than if a small e-commerce seller does the same thing since unauthorised distributors typically sell to multiple retailers (including authorised dealers).
Luckily, you can use tools to help monitor your distribution and retail partners. These include:
- Web crawlers that monitor online marketplaces for price changes.
- Price monitoring services collect data from various channels, including online marketplaces, offline resellers, or direct sales channels.
No matter which tools you choose, it is crucial to understand that just because certain channels are being monitored does not mean they will be caught if they violate your MAP pricing policy. For instance, many websites have increased their ability to prevent price scanning by bots, so it is best to update these tools with new URLs or keywords periodically.
Finally, remember that it is up to you, the manufacturer, to decide what enforcement actions are appropriate given the circumstances.
For example, if your MAP pricing policy states that failure to follow it could lead to legal action or termination of a sales contract, then you might need to take these steps with some retailers before an issue arises, whereas with other retailers violating this policy might be met with a request for self-enforcement.
Giving a Heads Up With a Cease and Desist Letter
A cease and desist letter is typically considered most effective when sent directly by an attorney representing the brand owner. It makes clear that your client will not tolerate any further price violations of its products and lays out exactly how much each violation has cost the manufacturer in lost revenue (and possibly profits).
You can also include specifics about what will happen if this policy continues to be violated. For example, you might state that “If we continue to receive reports of unauthorised sales at illegal prices, we intend to terminate the reseller’s business relationship with our company immediately.”
Serialising The Product
Serialisation is when unique numbers are assigned to each unit produced during the manufacturing process and recorded in a database or on the product itself. This does not prevent online sellers from selling counterfeit products, but it does make it harder for them to do so unless they have an exact matching number on their counterfeit units.
A variety of technologies can help provide serialisation solutions, including:
- Data Matrix Codes: These are barcodes that consist of a series of black and white squares.
- RFID Chips: These are computer chips that contain a unique ID number that radio frequencies can read.
Give a Product Warranty
Offering a product warranty that covers MAP pricing violations is an enforcement mechanism that requires retailers to pay for the cost of replacement products in cases where they sell counterfeit or grey market goods.
This makes it more costly for them to break your MAP policy since there might be financial penalties associated with doing so. For example, you might state in your warranty agreement: “We will not honour this limited warranty if we determine at our sole discretion that the product was not sold under manufacturer’s Minimum Advertised Price (MAP) policies.”
Remember that it means very little unless the brand owner backs the warranty. For this reason, you should always limit your warranty to replacement products and reimburse distributors or retailers only for the cost of those items. This makes it easier for them to act as enforcement agents on your behalf since they are not burdened with any financial loss.
Prohibit Digital Sales in Your Contract
In many cases, authorised dealer contracts already include a clause that prohibits authorised dealers from selling products online themselves. However, some manufacturers have been caught unaware when specifically authorised dealers start their own online sales channels through retail marketplaces such as Amazon or eBay.
To protect against this possibility, brands need to prohibit sales in digital channels, including social media sites and mobile apps, in their contracts. It is also good to include restrictive covenants that prevent authorised dealers from selling on third-party websites and marketplaces.
Get a Price Monitoring Solution
Price monitoring solutions provide real-time access to your products’ MAP prices and online retailers’ prices for those same products. This allows you to quickly identify price violations and take action against the retailer before it becomes a more significant problem.
They are beneficial when you have hundreds or thousands of partners who need to be monitored at all times since this is an impossible task for even the most dedicated team members. Alternatively, these software programs can be used by distributors or retailers themselves if they want to track their adherence to manufacturer MAP rules and policies.
It is vital to identify the key distribution and retail buyers that must be tracked to enforce MAP pricing. Additionally, a cease & desist letter can be sent and product serialisation. Offering a product warranty and prohibiting digital sales are other ways to enforce MAP pricing.
Finally, using a price monitoring solution can help you stay updated on any changes in market prices.