Why should we implement a Minimum Advertised Price (MAP) policy?

1. What is the Minimum Advertised Price policy?

Minimum Advertised Price (hereafter MAP) is a policy set by manufacturers or brand owners that prevents resellers (distributors, retailers) from advertising a specific product below a certain price. In other words, the core of the policy is to ensure that the price visible to consumers when a retailer sells a product does not fall below a certain level.

2. Why is the Minimum Advertised Price policy necessary?

The Minimum Advertised Price policy plays an important role in protecting brand image, maintaining fair competition among retailers, and ensuring long-term price stability. Without MAP, excessive discount competition among some resellers could damage brand value, and furthermore, small-scale resellers could be pushed out of the market.

Some resellers believe they can only make a profit by securing the lowest price at all costs, but reckless price competition ultimately lowers the fair price accepted by the market and reduces overall net profits. Brand owners and sellers must work together to ensure that good products can be sold at good prices.

Core Objectives of MAP

1. Protection of Brand Value: Prevents brand image from deteriorating due to excessive price competition.

2. Maintenance of Fair Competition: Prevents large retailers from unreasonably lowering prices to exclude small and medium-sized retailers from the market.

3. Margin Protection: Ensures that resellers can maintain a certain level of profit margin.

4. Maintaining Consumer Trust: If the price is set too low, consumers may doubt the quality of the product.

3. Limitations and Problems of MAP Policy

The MAP policy does not only have 100% positive effects. The well-known problems and limitations are as follows:

1. Difference from Actual Selling Price: MAP only limits the advertised price; it does not control the actual selling price. Therefore, consumers can purchase products at lower prices through discount codes, member-only pricing, bundle promotions, etc. Authorized sellers are also frequently observed bypassing MAP policies using coupons, shipping costs, etc., to increase sales volume.

2. Legal Issues: Implementing a MAP policy incorrectly carries the risk of violating antitrust regulations. In particular, the European Union (EU) strictly regulates the application of MAP. Recently, voices in Germany and elsewhere have called for easing MAP regulations to protect manufacturers, but this has not yet been applied.

3. Diverse Sellers: On online marketplaces like Naver and Coupang, resellers who do not comply with MAP frequently appear. Since they are not official sellers contracted with the brand owner, the reality is that there is virtually no means to demand price adjustments.

   
   

4. How to Operate the MAP Policy Effectively

Documenting MAP Guidelines

The MAP policy must be documented and shared with authorized sellers. Clear clauses must be included in the contract to specify the sanctions that may occur if MAP is violated.

Strengthening Monitoring and Enforcement

Brand owners can utilize AI-based price monitoring tools to detect cases of MAP violations in real time. In particular, they must monitor price fluctuations on online marketplaces and send immediate warnings to violating companies. A regulation that is not enforced is as good as none. One of the representative companies that manages MAP best is Apple. Implementing the MAP policy well is ultimately a way to increase value so that our brand products can be loved for a long time.

Applying Consistent Response Principles

Actions against companies that violate MAP must be applied consistently. If violations continue even after warnings, it is necessary to take strong measures, such as suspending supply. For this, tasks such as consistent monitoring, notification of results, and verification of compliance are essential.

Strengthening Cooperation with Retailers

In order to maintain the MAP policy effectively, collaboration with retailers is essential. Brand owners should provide incentives for retailers to comply with MAP and build mutual trust.

The Minimum Advertised Price (MAP) policy plays a crucial role in maintaining brand value and protecting market order. However, as the online market expands and competition intensifies, an effective management strategy is essential. Brand owners can successfully operate MAP by establishing clear policies, continuous monitoring, and consistent responses.

Meet Re-trix, the easiest and most effective solution to implement MAP monitoring.