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The purpose of the Minimum Advertised Price (MAP) policy in e-commerce is to protect the reputation of the brand.
In the world of retail and e-commerce, price is a fundamental aspect for e-commerce businesses to determine sales and profits
Today, as more consumers turn to online shopping, e-commerce businesses continue to grow. In fact, according to Statista, the global retail e-commerce sales are expected to reach $8 trillion by 2026.
The growth of ecommerce, suggests that challenges and illegal activities such as unauthorized sales and counterfeits will also be on the rise, which can have a negative impact on a brand’s sales and reputation. Some retailers have illegal practices such as selling products below the minimum price agreement also known as MAP policy, made by the brand owner.
This is where Minimum Advertised Price or (MAP) policy comes into play.
Minimum advertised price or (MAP) policy, is an agreement, through which brands determine a minimum price a reseller or a retailer can advertise or sell their product. These policies help brand owners protect their brand reputation and maintain profit margins, while ensuring fair competition for all retailers.
Some unethical practices can be outlined as the following:
Price by a reseller is set too low, the business may not be able to cover its costs and make a profit and customers may perceive the product or service to be of low quality and, if the price is set too high, the business may not be able to attract enough customers since they will look for cheaper alternatives.
This results in reduced margins and dwindling profits for all parties involved. Therefore, finding the right balance between pricing and sales is crucial for a business to remain competitive and profitable in the long term.
In this article, we discuss Map policy in E-commerce, the importance of having it, different challenges or violations, and how to protect your brand .
Map policy's major role is to ensure that all retailers selling a particular product maintain a level of consistency in pricing, which can protect the brand's image and reputation.
According to a study conducted by PwC in 2021, price is considered an important factor to influence customers' purchase decisions. The survey found that 44% of consumers considered price to be the most important factor, followed by quality (19%), convenience (12%), and brand reputation (10%).
Brands need to mitigate potential threats to:
-Prevent price war: Retailers can engage in price wars and undercut each other to gain competitive advantage and end up lowering prices to an extent that could damage the perceived value of the products and brand reputation.
-Profit Loss: prevent retailers from heavily discounting or selling products below a certain price point. This leads to a brand losing its profit as it can’t achieve the same profit margin.
-Take control over distribution channels: MAP policies also help to maintain control over distribution channels. By setting a minimum advertised price, brand owners and distributors can control which retailers are authorized to sell their products, they can carefully select authorized retailers who meet certain criteria and uphold the brand's image and reputation. This way, they ensure that all products are sold at a consistent price point through authorized dealers.
All retailers have an equal opportunity to sell the product and maintain a fair level of competition.
Helps protect brand value: This helps to maintain the brand's image and reputation, which is crucial for building customer loyalty and trust.
Encourages healthy competition: retailers can focus on other aspects of their business, such as improving customer service or offering unique value propositions.
Boosts customer satisfaction: By maintaining consistent pricing across all authorized retailers, customers can be assured that they are receiving a fair price for the product they are purchasing. This leads to increased retention rate.
Facilitates better retailer-manufacturer relationships: MAP policies can help to establish a clear set of guidelines and expectations for both retailers and brand owners. This can help to foster better communication and collaboration between the two parties, which can lead to more effective marketing strategies, streamlined supply chain processes, and ultimately, increased sales and profitability.
Now that we understand what MAP policy is and its importance in maintaining a level playing field for retailers and brand owners, it's important to know the best practices for businesses once they have one in place.
Keep a close eye on retailers to ensure they are complying with the MAP policy. Detect any violations and take action as needed.
Smart protection AI-powered platform integrates data collection and price trackers to offer a powerful price monitoring component, making it the best solution for brands struggling with the problem of losing control of online prices.
This solution automates price tracking, saving time and effort, and allows brands to respond quickly to pricing changes, optimize pricing strategies and detect any breaches of their established MAP policies, as well as who is behind those violations.
Our Price Identification solution works by collecting data from various sources, including websites and marketplaces. With the help of AI and machine learning, it analyzes the pricing data and exposes any price violations. Brands can access this data through a user-friendly platform, allowing them to identify pricing violations in real-time and take appropriate action to have those sales removed from the internet.
Make sure there are clear rules for retailers who violate the MAP policy. This can include warnings, fines, or termination of the retailer's contract.
Businesses should work closely with authorized retailers and educate them on the benefits of the policy. By building strong relationships with retailers and providing support such as education and training, businesses can ensure compliance, protect their brand's reputation, and improve customer satisfaction.
Author: Olivia Woods - Smart Protection