For new manufacturers, it is important to collaborate with distributors and retailers to extend their reach. This means cutting down on their profits per item, although you cannot ignore the results. This is because distributors who are really good at selling products could guarantee them an increase in revenue.
Setting a MAP policy
To counter the loss of profits that come with a growing number of distributors, manufacturers set what’s called minimum advertized price or MAP policies. The system sets the lowest price that a manufacturer or brand’s reseller can sell their products through various sales channels.
However, not everyone fully understands the policy. To make sure that your brand is not abusing this type of policy, read about the things that people confuse about it below.
It does not set the price
A MAP policy doesn’t set the pricing. Establishing a MAP policy doesn’t mean that you have control over your reseller’s pricing strategy. If you want to discuss the pricing of your products with your resellers, you can do this by giving them a soft reminder.
There is a fine line between implementing a MAP policy legally and illegally. People can violate antitrust laws so easily by entering resale agreements with resellers, and the same is true on their side. If you impose stricter policies on your resellers, you could be crossing over illegal territory.
Be sure to seek always the advice of an attorney or a service provider that specializes in MAP policies.
Keeping an eye on resellers
Brands and manufacturers with a MAP policy in place should keep an eye on their resellers. Your products are the lifeblood of your business. Just because you’ve implemented a MAP policy doesn’t necessarily mean that they’re following it.
See to it that they are by monitoring their activities from time to time.
A MAP policy allows manufacturers to set limits on the price of their items to maintain a steady stream of profit and get ahead of their competition. Taking advantage of a MAP policy properly can ensure that you are remaining profitable in the long term.