Some people believe that lower prices are good for the buyers, but the fact of the matter is that offering the lowest prices is never good for anyone. The tiny profit margins can destroy businesses that are already dealing with economic challenges.

However, before they shut down, they try to deal with the liquidity issues by reducing the services they offer, lowering the quality of their products, and making other bad decisions that ultimately impact the consumers.

While it’s plain to see that no business can really compete in price wars, they still indulge because it seems like the only way to enhance sales in the age of e-commerce. Online retailers can easily monitor competitors’ prices using various online tools and aggressively price their products to entice buyers.

The online retail landscape enables hundreds of unchecked resellers to promote their products on online platforms. However, these resellers sell their products at a price much lower than the agreed MAP (Minimum Advertised Price) policy for the product, putting a price ceiling to the brand’s sales potential.

Manipulation of prices is a pressing matter because it not only impacts big brands but affects online retailers on a global scale. Online giants like Amazon and Walmart have also raised concerns regarding counterfeit products sold on their platform. But regardless of prevention initiatives taken against inauthentic resellers, the problem persists, and fake products remain largely predominant on such platforms. 

The only reliable way to deal with this issue is setting Minimum Advertised Price or MAP for products sold online.

This article will see what a Minimum Advertised Price is, how brands can protect their price margins without reaching the bottom of online prices, and the urgent need for enforcing a MAP policy.

A Quick Intro To Minimum Advertised Price (MAP)

A Minimum Advertised Pricing is the lowest price that a product can be advertised at. Anything below this price cannot be advertised. So, for instance, if a business sets a MAP of $50 for a product, all resellers of the product, including competitors, brick-&-mortar stores, and e-commerce retailers, are obligated to abide by this MAP and advertise it for no less than $50.

Any reseller that advertises the product at a price lower than $50 is directly violating the company’s MAP agreement.

How Can Brands Protect Their Products From Reaching The Bottom Of Online Prices?

The following are some ways brands can protect their profit margins from reaching the bottom of online prices.

Monitor The Pricing Of Your Products On Major E-Commerce Platforms

Online retail is just a click away, putting brands under increased pressure to maintain their prices and keep resellers from manipulating the prices to the bottom of the barrel.

To deal with this issue, create a database of all your product listings on various websites and regularly monitor your products’ pricing. In addition, make a list of all the sellers advertising your products and ensure that they comply with your MAP policy. Some manufacturers may even make a list of authorized sellers, allowing only a handful of these to resell their products.

This enables a more regulated, controlled distribution network, ensuring that everyone understands the MAP policy.

Check The Product’s Price Elasticity

Determining your products’ price elasticity is also a good strategy for competing with prices the right way.

Price elasticity refers to the impact of a price change on the sales of a product. An elastic product is susceptible to a price change, while an inelastic product can remain relatively stable despite a price change.

This is important to know before determining your prices. For example, suppose your competitors are selling at lower prices and have an inelastic product. In that case, price changes may have a very minute impact on the demand of the product, signaling you not to engage with pricing wars.

The Importance Of MAP Enforcement

MAP agreements promote fair market competition across all distribution channels and allow smaller sellers to compete with larger retailers at a reasonable price. It also prevents underpricing, which protects seller margins and keeps brand integrity in check.

Here are a few more reasons MAP policy enforcement makes good business sense:

Creates A Consistent Field For Retailers

The problem intensifies when platforms like Amazon do not have a prevention plan to penalize retailers who violate MAP policies. A lack of regulations would result in a domino effect as sales drop across the board, even if one reseller violates the MAP enforcement policy since all pricing algorithms shift across the market.

Having a MAP Enforcement Policy would mean that local resellers wouldn’t get priced out by more prominent brands and can secure their sales margins by adding a safety net to the sales process.

Brand Integrity

Going lower than the product’s price margins can hurt the integrity of both the brand and the product. It discourages customers from paying the full price. If they can get the same product at a reduced price, why would they pay more for the same product?

Additionally, failure to enforce MAP leads to inconsistent pricing across the board for your product, which may raise questions about the legitimacy of your company. Finally, varied pricing structures can make customers assign a lower value to your products.

Stay Up-To-Date With Price Wars With MAP Policy Partners

Setting a MAP policy ensures that your products aren’t priced too low in the market anywhere.

To stay up-to-date with pricing wars and structures, you must take proactive steps to secure your brand policies and boost your products’ market value. Our MAP Pricing Strategy monitors, regulates, and preserves your sales’ margins in various ways. Using automated detection, we make MAP monitoring easy by identifying and eliminating sellers competing for the best prices. Our database also provides accurate market oversight and shows how a brand’s products are doing on e-commerce platforms.

Moreover, if a MAP violation occurs, our automated system creates detailed, custom reports of all unauthorized sellers trying to manipulate your pricing. These reports can then be sent to sellers via email or phone, notifying them of their practices. This is called spot-checking, and it is valuable to identify whether these price manipulations by a seller are common or infrequent. It can be a major deciding factor whether a seller is authorized or not.

Ready to learn how we can help you build and enforce your very own MAP policy? Get in touch with us today!