MAP, or minimum advertised price, is the lowest price at which authorized resellers are allowed to advertise a product per their agreement with the manufacturer.
For example, if a bike manufacturer sets a MAP price of $700 for one of its bike models, it means that authorized resellers, including all brick and mortar stores and all online resellers (including Amazon) must advertise this product at $700 or more, or they will be in nonacquiescence of the MAP policy.
The purpose of a minimum advertised pricing policy is to:
- Promote fair competition across all distribution channels
- Prevent underpricing
- Protect margins and allow smaller sellers to compete with larger retailers
- Help maintain brand identity and value
It’s important to note that with a MAP policy in place, the authorized reseller can still SELL the product at a lower price, but they can't ADVERTISE it. As such, MAP pricing does not equate to price “fixing”, which is usually illegal.
MAP Price vs. “List”/MSRP Price
It’s important to distinguish “MAP” price from “list” price. The list price, also known as the “manufacturer’s suggested retail price” (MSRP), or simply minimum resale price, is the price at which the manufacturer recommends the retailer sell the product. This is the primary pricing guideline for authorized resellers, but without a MAP policy in place they can undercut the list price if they want to.
Why a MAP Policy is a Good Idea
Retail price and perceived product value are closely tied. If a price war leads to a significant price reduction for your product then the perceived value of that product dips, along with your brand image. So MAP pricing guidelines aren’t only in the interest of every participant’s bottom line – they’re also in the interest of your brand’s reputation.
MAP Pricing and Online Sales
Many online retailers make MAP pricing guidelines tough to enforce for a few reasons. First, supply chain leaks often lead to resellers obtaining authentic products and selling them online for less than the agreed upon MAP price. However, large online marketplaces such as Amazon usually take a percentage of all third-party sales and are thus extremely hesitant to enforce seller agreements because doing so could mean a loss of revenue.
Secondly, online retailers can actually get away with not enforcing MAP policies via a loophole in Federal Trade Commission (FTC) pricing rules. According to the FTC, prices displayed in secure or encrypted shopping carts aren’t subject to MAP agreements because technically it’s not advertising. So instead of showing the price on the product page the online retailers use a disclaimer – “price displayed in shopping cart” – to redirect the shopper to the cart, where the actual price is shown.
What does all this mean?
Unfortunately, it means you need to take the monitoring of MAP pricing violations into your own hands.
How to Enforce a MAP Policy
As a manufacturer you have the right to pull your product from a reseller and restrict the reseller from selling it again if they have violated the MAP pricing agreement.
However, the best way to deal with a MAP violation is to prevent one from happening in the first place. One of the best ways to accomplish that is through a great MAP policy.