Mike Tyson famously said, “Everybody has a plan until they get punched in the mouth.” In much the same way you could say, “Everyone agrees to respect MAP until they need to boost their revenue.”
Minimum Advertised Price, or MAP, is the lowest allowable advertised price a brand sets to maintain the integrity of its brand image, and the margins of its resellers. While MAP is fixed, it often includes scheduled periods on the promotional calendar where a lower than normal MAP is declared, and may (but not always) include sell-through credits for that period to help resellers maintain their margins even when selling for less during the promotion.
It’s not a perfect system — although then again, nothing is. Enforcing MAP only works if the reseller is small enough that sanctions from the brand, such has losing its status as an authorized reseller would cause it harm. If a reseller is big enough, like a big-box retail brand, or, say, a really large global e-commerce site (that shall remain nameless) it’s more difficult for a brand’s sanctions to have any teeth. Really large resellers can and do go rogue on pricing if and when they feel like it. When they do, often sanctions for violating MAP amount to little more than “well, don’t do it again, alright?”
Every so often, maybe a couple of times per quarter I get a directive to reach out to one of my resellers, tell them that their marketing is in violation of the MAP policies they agreed to, and to knock it off. It’s not a phone call I enjoy making; I’d much rather deliver good news than bad. But it’s necessary.
I get it, it’s been a tough year, and everyone is looking around at the situation they’ve found themselves in and are thinking “how can I make some more money?” The answer lots of people land on is to take their wares to e-comm and try to compete on price, which is something I’ve written on before.
When I have to challenge a reseller I’m responsible for, whataboutism is a common defense. “Well, THOSE guys are doing it!” When it comes to having to rein in the big players, that’s a valid point, and I’m not unsympathetic. That said, I do point out they (the person I’m talking to) are not being singled out unfairly.
Brand protection is a full-time job, and major brands dedicate resources to trawling the internet looking for violations of both their MAP and their authorized reseller policies. It’s a tough job, and probably some days feels like playing “Whac-A-Mole”: shut one down, and two more pop up.
But it’s necessary. I just had one of those you-need-to-stop conversations with one of my resellers recently. Where it differed from others was when I made the point that these brand protection efforts to enforce MAP and online selling are for the benefit of them, the authorized dealer. As an established brick-and-mortar dealer, the MAP enforcement efforts of the brands sold in-store are there to keep someone from working out of their basement and pounding out those products on the internet at five points gross margin.
It was like a light bulb went on. “You know what,” they admitted “I get it. And I appreciate that.” So that went well. I always prefer ending discussions on a positive note.