How do price violation (MAP) policies affect your pricing strategy?

We know that your pricing strategy has a significant impact on your company's success.

The prices of your products are one of the factors that determine whether your customers will buy from you. 40 thousand consumers participated in the survey, it was determined that the price of a product is one of the three most important factors in purchasing. For 20 percent of the population, the most important thing is the pricing of the product. There are many things to consider in determining the best price for a product. You will need to calculate how much profit you want to make from a product, you cannot always sell more by lowering the price. Selling your product at a price below expectations can also make your product appear poor quality. It also has a negative effect on your brand.

You should also consider the price policies requested by the manufacturer or supplier of the products you sell in your store. You must not violate the price. In this blog post, we will be explaining the issue of price violation (MAP).

MAP, Minimum Advertised Price.

A price violation (MAP) policy is an agreement between supplier and seller. The supplier specifies the minimum price at which you can sell a product. It asks you not to sell under it.

Price violation (MAP) policies are determined by suppliers. If a supplier sets the price of their product at $ 10, sellers should not sell for less than $ 10. There are several reasons for suppliers to set a price violation (MAP) policy.

The supplier will always want to consider their own interest. As we mentioned before, price is a matter of great importance to a customer, and if you sell below the price requested by the supplier, customers may think that a product is too cheap or poor quality.

In addition, if the price violation (MAP) policy is not followed, potential stores may also consider the product to be of poor quality. For example, if competitors of a product that sells for $ 50 are sold for at least $ 75, a store may not want to sell that product because it is poor quality.

Another reason why suppliers want these policies is that they always want to keep control of their products. Sometimes just downgrading the price may not produce the desired result for the product, the supplier may want to offer support or another option for this product. Lowering the price also prevents these options from being given.

At first glance, even if the implementations of these policies are legal, it may seem a bit dark. But price violation (MAP) policies are absolutely legal.

These policies should not be confused with illegal price fixing. We would like to explain the difference between price violation (MAP) policies and price fixing with a few examples,

Let X, Y and Z companies be competitors. Company X and company Y come to an agreement and decide to lower the price of the product. In this scenario, company Z falls at a disadvantage due to the agreement between companies X and Y. This is called horizontal price fixing.

Suppose companies X, Y and Z are selling toys. They agree to increase the price of a toy and sell it. Every company other than X, Y and Z falls at a disadvantage. If X, Y and Z are the only ones selling this toy, consumers who want to buy the toy pay the increased price and buy it.

The manufacturer sells G products to X, Y and Z. The manufacturer contacts X to allow it to sell at a lower price than he agreed with Y and Z. This is called vertical price fixing.

From this point of view, it may make sense for a producer or supplier to set their own prices. When a seller does not comply with a price violation (MAP) policy, the supplier can take the following actions.

In the first violation, the supplier may send a written warning to the seller. If the seller does not comply with the first warning, the supplier may stop working with the seller. If the seller does not leave the sale and still has its products in its inventory, the supplier can give a closing order. If the seller still continues to sell, the supplier may decide to take legal action. If there are certain conditions in the sales contract, the supplier can prevent the seller's sale by trying legal ways.

Although MAP and MSRP are linked, they are not the same. MAP is the minimum amount a supplier wants the product to sell. MSRP is the manufacturer's suggested selling price.

A manufacturer may want the price to be $ 10, but the seller may sell this product for $ 13 due to changing conditions. There is no binding on MSRP. The manufacturer only recommends prices.

* You can make campaigns like this, if you buy x product, y product is 20 percent cheaper.

* You can sell the product through other companies or individuals.

Some of the suppliers attach great importance to price violation (MAP) policies, if you are a supplier, you can use our MAP monitoring software.