The high competitiveness of the online market prompts brands and manufacturers to establish a policy of MAP prices or advertised minimum prices. The MAP are agreed prices between the manufacturers and the external sellers with the objective of preventing possible price wars between retailers that try to sell their products at prices lower than market average. Given the present context, where online windows don’t stop growing because of the impact of the Covid-19 Pandemic, it is more convenient than ever for brands to provide a MAP policy and monitor the established prices for e-commerce to check if they comply with it.
Even though the legal protection of the policy of MAP prices varies in different countries, for example, in the United States, the sellers are obliged to comply with it, it is about a document that protects the manufacturing businesses from possible problems or altercations with direct sales to stores. This is because brands can include, along with their minimum prices, a series of agreement and binding conditions with their sale. As well, the measures to adopt if the retailer does not comply with the fixed prices, like a stock withdrawal or the cancelation of the commercial relationship. In the countries where the legislation permits it, they can take legal action.
How are the MAP prices set?
The fixing of minimum advertised prices should go in accordance with the objectives of the manufacturing business or provider. In this sense, they should keep in mind the many associated costs of the production of each item and its market value, the price that users are ready to pay.
On the other hand, we should also keep in mind the image of the brand of the business. If it is a brand associated with products of prestige or luxury, the fixing of low minimum prices can propel its devaluation for its main target audience. And the same applied vice versa, with the linked brands with offers and low prices. This receives special importance when the manufacturing business provides its own method of sale to the public, in addition to counting on sellers or external distributors.
Benefits of the policy of MAP prices for brands
1.- Coherence in the different methods of sale
Through a policy of MAP prices we will achieve prices that maintain themselves more or less as homogenous, or within the same range, in all the e-commerce or marketplaces. This betters the experience of user purchase, as one does not have to navigate through different websites to buy the price of the same item.
2.- Image of a solid brand
The image of a brand to move clients will be more solid and strengthened. Some stable and coherent prices demonstrate that the business is conscious of the value of its products and it has experience in the sector. At the same time, these prices should be competitive and adapt themselves to the demand of the market to maintain the leadership of the company.
3.- Increase in margin of benefits.
The policy of MAP prices allows for the protection of the margin of benefits for sellers to prevent the sale of its products for lower prices of production and distribution.
Additionally, if it arises in the correct form, the policy of MAP prices will also benefit retailers whose predisposition to sell products with prices attractive to the public will be the best. For this, brands should carry out a profound study of the supply and demand, monitoring the prices of other manufacturers and assuring themselves that their pricing strategy agrees with the characteristics of the market. In his manner, there will be exponential growth of providers and e-commerce.