If you’re like most brand owners, you intend your Minimum Advertised Price (MAP) policy to give you complete control of the lower bound of your products’ pricing at market. You want to retain control of your pricing in order to preserve margin for yourself, make your profitability forecasts more predictable, and communicate a consistent picture of the value of your products and brand. And if you set up and enforce your MAP program correctly, this is how you can expect things to work. Right?

Well, not always. Even a properly constructed MAP policy may still allow your retail partners a few ways to sell your products at a price below the MAP you’ve set—without breaking your policy.

Shocked and indignant, shaking your fist at the sky, you might ask, “How can they do that?”. Simply put, they can do that because MAP can’t give you control of retail price in every situation. Rather, it can give you control specifically of advertised price. Beyond advertised price, there is final price. Below, we’ll explain this distinction and how retailers can make use of it to sell your products below their MAPs.

Tag prices vs. money paid

The advertised price is the price at which a retailer shows your product as being available for purchase. The final price is what the customer actually pays. Think of advertised price as the price posted on a tag, sticker, or sign. In a physical store, when we select an item and bring it to the register, we usually expect the cashier to ring us up for that visible price. But the store has no legal obligation to the supplier or brand to sell at that level. The cashier could say, “Actually, mangoes are buy-one-get-one-free today” and take a deduction from the stickered price. A similar situation is common in clothing retail: we might shop knowing that the price on the tag will be adjusted down by a percentage-off figure shown on a rack sign, or somewhere else in the shopping area.

Brands can’t control final price because doing so may constitute illegal vertical price fixing—an “anticompetitive” restraint of trade. MAP as a practice is designed specifically to the purpose of avoiding the hard lines of antitrust law. It does this by allowing brands to dictate the price on the tag, but leaving the retailer freedom regarding the price paid at the register.

Tactics retailers use to get under MAP

When we shop on the internet, we may be less accustomed to discounting strategies that take final price downward from advertised price. But you’ll probably be familiar with a few such practices.

Maybe the most obvious tactic retailers use in ecommerce to exploit the difference between advertised price and final price is to ask shoppers to “See price in cart” rather than showing them a price on an item’s detail page or search-results page.

You, the brand owner, might say, “but you’re still showing them a below-MAP price on a screen before they commit to pay—isn’t that ‘advertising’ it?” And you may be right. But this treatment does accomplish something that should mollify a brand’s concern about MAP-breaking. When a price is available only in a shopping cart and not on a product detail page, it’s usually not discoverable through simple web searches or by web-crawling programs. This means not just that shoppers can’t discover it easily, but that rival retailers can’t discover it by automated methods. Major online stores regularly crawl or “scrape” the web to discover competitors’ prices on shared SKUs. They then will often automatically price-match lower offers. If they can’t discover a lower offer, then they can’t price-match, and so at worst, “See price in cart” should mean you’ll have one retailer breaking your MAP and not many.

Other tactics to evade MAP also depend on the distinction between pricing on the product page and in the shopping cart.

For instance, coupons. A retailer can partner with a coupon site or browser plug-in, and even promote on-site the availability of a coupon for your item. With a coupon applied, your item will be cheaper at checkout, but as long as no specific price reduction is mentioned on the product page, the lower price likely won’t be caught by web-crawling programs, so other retailers won’t match their prices to the after-coupon price. And, by pushing the discount to the checkout process, the retailer might understand that they’re not violating your MAP policy.

A site-wide or category-wide sale can have the same effect. If retailers can advertise a percentage discount available on every purchase, then they don’t have to advertise it in relation to your price on your product page. For instance, the Midwestern hardware retailer Menards often offers an 11% rebate on all purchased products. This is presumably an effective way for the store to beat rival retailers for sales, and it can be carried out without formally interfering with any brand’s MAP policy.

A membership or loyalty program can also accomplish this. For instance, Bed Bath and Beyond is well known for offering a 20% discount on all purchases to members in its rewards program (for which it charges a yearly fee).

Strategies to maintain your MAPs

Because you likely can’t influence your selling partners’ site-wide promotional plans, you may have limited leverage if you’d like them not to apply global discounts or rebates that take your products’ final, net prices below your MAPs.

One hopes that you do have mutually beneficial business relationships with them, though—relationships that each party wants to maintain and strengthen. It could be appropriate to express to your selling partner what makes you happy and what doesn’t in their discounting or promotional practice around your products. Concern for the relationship might lead a retailer to exclude your brand from these kinds of programs.

In the case of “See price in cart”, it could also be valuable to make the case to your selling partner that any price shown before a checkout is completed is an advertised price and so should be subject to the rules of your MAP policy. It is after all a price shown to the shopper before that shopper has made a purchase decision, and it has the goal of making her more likely to buy. As such it’s not unreasonable for you to include “cart-price” as one of the digital settings where you believe your MAP prices should apply. Here’s some sample text you could include in your policy: “Any price shown on a checkout page, before completion of the sales transaction, will be considered to be an advertised price and must conform to our schedule of minimum advertised prices.” Remember, your MAP policy is a unilaterally-given document, not an agreement between you and a retailer. To that end, you can set terms—as long as you understand that your terms are legal, and as long as you’re willing to enforce them.

As a backup strategy, it may be valuable to make clear to your retail partners that any loss of margin they incur from discounting your products below MAP will not be your concern—that you won’t be responsible for the financial results of their working outside the pricing structure that you’ve made available. Taking a clear position here might dissuade your retailers from going it alone on any below-MAP promotional endeavor.

Is it really so bad, though?

Despite your initial shock and indignation, you might discover that you stand to benefit a bit from retailers finding subtle ways to discount your products below MAP. We at MAP Policy Partners are strong advocates for MAP policies and their enforcement—but hear us out.

If post-product-page discounts—coming from coupons, rewards programs, or “see price in cart”—let a retailer capture more business for your product, but keep your margins intact and avoid price-matching actions from other channels, then you as the brand owner might count them as successful promotions.

In this scenario, you might find that—looking across your brand as a whole at market—you still have an adequate level of control over pricing, profitability, brand image, and your retail relationships. You might find that your MAP policy is still doing the job you intended for it to do. If a retailer is interested in finding more sales for your product through creative discounts, and can do so without capsizing your MAP program, you might count that as a win.

Of course, the details for how discounts like this are carried out can be critical, and you’ll be well served by a practice of robust communication with your sales partners regarding your expectations and level of comfort with any particular action to sell your products below their MAPs.

Whatever your feelings about retailers’ actions to sell your products below MAP, your ambitions for pricing control of your brand at retail are strongly served by your drafting and enforcing a comprehensive, smart MAP policy. We can help.