Minimum Advertised Price (MAP), refers to the minimum price that manufacturers let their distributors to advertise the products. MAP policies are particularly critical to manufacturers selling their products for online resale, given the ease at which consumers can now conduct online and mobile price comparisons. MAP policies are also established to help small businesses compete and sell on service and value, rather than entering into a price war with cost-cutting big box stores.
To respect these MAP prices is very important to avoid brand devaluation. If a distributor sells a manufacturer “premium” product cheaper than the recommended MAP price, consumers will no longer see that product as “high range” in the long term, and it will conduct to a negative impact on sales for those “premium” customers.
Another important reason, is to avoid the well-known war prices, because if a MAP price is not properly set up, distributors could fall into a continuous falling prices spiral, that would only lead to losses in margins.
Controlling MAP prices can be a really tedious task, as manufacturers are usually present in dozens or even hundreds distributors, based in different regions worldwide under different commercial policies. For that reason, manufacturers are often users of price monitoring tools, to simplify these tasks, being notified when some of their distributors are not respecting MAP prices. This early alert, avoid losses in brand recognition and helps in improving manufacturer-distributor confidence, as they perceive that the former takes care of their distribution channels and their commercial margins.