Online marketplaces offer a lucrative platform for businesses. But there is a risk as well when some retailers try to violate the minimum advertised price policy by advertising lower than the permitted range set by the manufacturer. Such unscrupulous activities may result in diminished margins, ruined reputation for the manufacturer who has built a strong reputation with years of hard work. First-Violator MAP enforcement theory is based on the premise that catching and punishing the first violator of the MAP agreement might help nip any similar MAP violations in the future.

The theory here is that stopping the first violator can prevent a cascading effect on other sellers, who might be keen to lower the advertised pricing further. The first-violator MAP enforcement theory believes that this can stop all future violations and be a lesson for other sellers to comply with MAP.

What is MAP?

Well, MAP is the minimum retail price set by the manufacturer for its product that acts as the last lowest rate beyond which resellers or retailers cannot go in advertisements. But that does not mean retailers cannot use discount coupons and attractive offers to lure potential customers below the MAP. It is legal in the United States and retailers must adhere to it.

First-Violator MAP Enforcement Shortcomings

So does the first-violator MAP enforcement drive results?

Well, sometimes the strategy might work. But the greatest shortcoming of this strategy is that you may not be able to trace the source of the problem, let alone take action on the first offender.

Further, it seems unrealistic that stopping the first violator could act as a bulwark against any future MAP violations. That means there is no guarantee that there would be no MAP violations again. Does that make the first-violator MAP enforcement effective?

Additionally, you may be seen as favoring some resellers over others if you have had multiple MAP violations. Unfortunately, you cannot always point to the source of the trouble that resulted in a cascade of MAP violations. Catching one and punishing them does not mean the end to trouble, nor does it portray a clean image of you because there could be possibly many other violators that remain unfound or untraced. Rather, you could be seen as being partial to some while being strict against others. It does expose you to a series of accusations of indulging in unfair competitive practices.

Alternative Strategies for MAP Enforcement

Evaluate Your MAP Policy

Is your MAP policy good? Is it seen as unreasonable? It won’t hurt to offer some flexibility around your minimum advertised policy. Little flexibility for resellers to go a certain percentage below should not be regarded as a violation.

How about introducing MAP holidays, especially during the key shopping time? When retailers have some flexibility, there could be fewer violations.

In some cases, your MAP policy may not be strict enough for retailers to think twice before going rogue. So the idea is to introduce strict penalties that act as a deterrent for violators.

Constant monitoring

The online marketplace makes it easier for brands and manufacturers to constantly monitor resellers and retailers for any MAP violations. Regular monitoring of the product prices across all of the resellers is the best way to easily detect noncompliant resellers. When resellers know that they are being monitored closely, they are less likely to go rogue.

Equal treatment for all MAP Violations

It may not be the best policy to single out a MAP violator; instead, you should have a strong policy enforced across authorized and unauthorized resellers. This might save you from any accusations of unfair practices.

MAP enforcement is critical to the success of a brand. Take steps to prevent any violations to protect your margins and brand image and reputation, keep a check on rogue resellers, and enjoy happy relationships with legitimate sellers.