What Small Businesses Need to Know About MAP Agreements
September 16, 2016
What You Need to Know About MAP Agreements
One crucial aspect of any agreement between a retail business and a supplier are the minimum advertised pricing policies, also known as MAP agreements.There are various pros and cons to MAP agreements, however, it is important for a small business to know there are legally enforceable restrictions against advertising a manufacturer’s products or services below a certain price.
Why are MAP Agreements relevant?
Regardless of size, retailers need to be aware of the stipulations and flexibility of a MAP agreement because they may restrict a company’s ability to compete on price.
“MAP agreements make it difficult for retailers to compete on price.”
This can pose a challenge due to the fact that consumers now conduct price comparisons in real-time through their mobile devices – even while in a brick and mortar store. This can have a significant impact on a small business. The purpose of MAP agreements is to prevent a customer from finding a lower advertised price and effectively stop them from being lured away to another brick and mortar store or make the purchase online.
What exactly are MAP agreements?
MAP agreements set the lowest price that a retailer can advertise for a product. This is very different than setting a minimum selling price, which is illegal. This may not be as simple as it sounds.
MAP agreements set the lowest price that a retailer can advertise for a product.
Obviously, for an online purchase, the consumer needs to be told the price at some point before the purchase. Further, MAP agreements may put restrictions on advertising rebates, coupons, discounts and other methods that reduce the cost.
Bottom line on MAP agreements
MAP agreements can be either detrimental or positive for both retailers and suppliers. Retailers need to know what is acceptable under the MAP agreement before deciding on marketing efforts.
MAP agreements can be either detrimental or positive for both retailers and suppliers.
Suppliers and manufacturers need to be sure their MAP policies do not run fowl in terms of price fixing and do not put too many restrictions on the retailers as to make selling the product more trouble than it is worth.When done correctly, MAP agreements level the playing field for all retailers of a product and protect the supplier or manufacturer from advertising that is detrimental to the reputation of their products.
If you’re unsure how MAP agreements can affect your competitive pricing or marketing strategies, or if you have any questions regarding the matter, please contact me, Giles, at 201-806-3364.