In this day and age, competition is stiff in almost every industry. While it is healthy as it breeds innovation and seeks to protect the consumer, the price steadily bobs down, proving it difficult for companies and retailers to sell the products.
However, when it comes to the price of the product, there is the issue of MAP pricing, Minimum Advertised Price. The manufacturers of goods often set and bind a retailer to advertise and sell the products.
The team from Brand Alignment, a leading service provider in the industry, provides vital information on the subject matter. In this article, we will be breaking down what MAP pricing (see the Brand Alignment MAP Pricing) is, how it benefits or hinders, who makes use of it, and its importance to retailers.
What Exactly Is MAP Pricing?
MAP Pricing is the lowest price that a retailer advertises a good to be sold in its most basic form. The price at which a good has been advertised doesn’t relate to the price it would be sold.
Any reputable company looking to sell its products and make a profit has a MAP policy. Manufacturers conduct considerable research to identify and create the ideal MAP guidelines for their products. Companies keep an eye on the market for violators of their MAP policies and pricing models to protect their interests, branding, and final price.
The Benefits Of Having A MAP Policy
The current market has taught us the importance of branding and messaging. Your brand identity determines your share of the market, level of exclusivity, and the profit earned. Companies building their brand or already knowing its value will have a MAP pricing in place.
Here are some of the benefits of MAP:
- Protection of the market’s perception. A company has considerable control over how the market perceives the brand.
- It doesn’t affect sales. In the end, MAP solely affects the advertised price. Retailers have the leeway of selling the product at whatever price they choose.
- Standardization. Consumers shopping for the product statewide or nationwide can ‘expect’ a similar price.
- Protect profit margins. While some retailers may argue about the issue of competition, they cannot complain of the minimum profits guaranteed thanks to the use of MAP Pricing.
The Cons Of Having A MAP Policy
As stated earlier, the MAP hands over control to the manufacturers. By following the policy, retailers have their hands tied. If the retailer uses unique marketing strategies, they might have to customize them again to avoid violating the terms of the policy.
The Legality Of It
If you are a manufacturer or retailer operating in the US, you should know that the use of MAP is legal and binding. However, you might encounter some minor variations if you are operating across States. To be an authorized seller of a company’s products, you will be required to sign a contract to the same effect.
However, the use of MAP pricing policies does not apply in Europe. Retailers are allowed to determine the prices of the product they sell.
MSRP, A Closely Related Term
While we are on the matter of retail price, we should mention another closely related term, MSRP. The abbreviation stands for Manufacturer’s Suggested Retail Price. The MSRP represents the price that the manufacturer believes the good/ product should be sold.
The difference is in the interpretation. For MAP, the manufacturer addresses the issue of advertising/ marketing of the product while MSRP guides retailers on the price of the product.
In addition, the MSRP is shielded by the MAP pricing plan. For a company looking to sell a premium product, significant discounts hurt the branding and ultimate message to the consumer. The consumer opines that the product doesn’t match the MSRP.