The Amazon marketplace is fiercely competitive; and that competition can oftentimes be a great asset. It can be beneficial for consumers to get better pricing and it also promotes product innovation and advancement from retailers.
Unfortunately, when competition is based solely on price, the consumer benefits; however, you, the brand, does not.
When a consumer sees your product on Amazon at one price and the same product at a lower price somewhere else, whether it be online or in a brick and mortar retail store, it will ultimately affect your brand integrity and hurt your sales.
If only there was a way you can make sure that the prices of your products stay consistent throughout all shopping markets and protect your brand integrity… Well, guess what, there is!
It’s called MAP, or Minimum Advertised Price. MAP is the lowest price that resellers agree to advertise or sell your products.
MAP pricing is a critical step in protecting your brand from being commoditized. Commoditization often removes the individual, unique characteristics, and brand identity of a product so that it becomes interchangeable with other products of the same type – and that can be terribly detrimental to your brand.
Imagine an overly saturated market such as razors for shaving.
You have two brands: Razor Brand A and Razor Brand B.
Razor Brand A has a slightly higher-end product than Razor Brand B. Now, both do the exact same thing; however, being the slightly higher-quality brand, Razor Brand A products should be priced higher than the lesser-quality competitor – Razor Brand B.
Razor Brand B is a lower price brand whose main objective is to sell as many units as possible and probably does not have a minimum advertised price. They just want their products sold and often as possible – at the lowest price.
If Razor Brand A doesn’t establish a Minimum Advertised Price (MAP), their resellers can potentially advertise and sell these products for the same price as Razor Brand B products. Obviously, this can reduce the perceived value of the quality of Razor Brand A products as well as their brand integrity.
A brand who values the design of its products, the quality of its products and the experience that its products delivers, MUST maintain price integrity in the marketplace. And that’s why establishing and maintaining a Minimum Advertised Price (MAP) program is critical.
At the end of the day, Razor Brand A is ultimately a more premium-quality brand with a very different product, even though it serves the same function as Razor Brand B. So, establishing a MAP policy sets a price barrier allowing you to protect your brand and protect your product against commoditization and confusion in the marketplace.
Another benefit to using MAP is it creates consistency in the marketplace. It protects the base price, and disincentivizes customers from choosing one retail establishment over another. This policy serves as a measure to protect the long-term interests of your brick-and-mortar stores by preserving their margins.
At Spotlight Brand Services, we believe that all products should have a MAP policy to create that consistency, whether they are commoditized or not, because ultimately, there’s a price at which a product shouldn’t be sold. If you allow a retailer to sell it below that price, you’re allowing retailers to damage the long-term perceived value of your brand, as well as incentivize customers to purchase from them, rather than other retailers. This leads to disinterested retailers and fewer buying options for consumers, which can result in reduced long-term sales.
Now that you understand what MAP is and why it is so important let’s discuss how you can ensure that your sellers are following your MAP Policy.
A MAP Policy should outline the following:
- How your products can be sold
- Where they can be sold
- Who is allowed to sell them
- The lowest price they can sell them for.
These elements are the foundation to a well-constructed MAP policy. In order to create a successful MAP Policy, you need to build the structure that specifically lists out what is allowed and what is not allowed. This will also give you the ability for recourse for people who break those rules. It’s important to remember that anyone who doesn’t want to follow the guidelines you put in place with your MAP policy likely doesn’t have your best interest in mind, and may not be the right retail partner for your company.
In many cases, brands struggle with MAP enforcement. Once you have your MAP price set and your MAP Policy created, what do you think is the best way to limit the amount of time that you’re spending making sure that sellers are following your MAP?
The answer: have less sellers!
It’s an often-overlooked thing, but your sellers are representing your brand. You should always be very cautious about who you allow to have this very important role. You must be very discerning about who is going to be interacting with your customers. This is particularly true on Amazon because once somebody violates your MAP, the only thing you can actually do is ask them to raise their price, as Amazon will not help you enforce your MAP policy. That makes it increasingly important to have either the right, trusted sellers in place or sell your product yourself and never have to worry about it.
Amazon will not remove a seller for not following your MAP Policy. That’s why it is so important to have the rules that allow for removal built into your MAP Policy itself. This gives you the ability to enforce your policy through legal channels – outside of Amazon. Of course, that requires time and money to resolve; therefore, the fastest and best way to protect your brand is to limit the number of sellers carrying your product in the first place.
If you’d like more information about Minimum Advertised Pricing (MAP) and creating an effective MAP Policy, click the button below to schedule a FREE Amazon Product Listing Audit and one of our Spotlight Brand Services Brand Optimization Specialists will meet with you to help you start growing your business on Amazon.