Protect Your Brand from MAP Policy Violations
Once a brand creates and implements a Minimum Advertised Price (MAP) policy, there is plenty more work that must be done. It starts by understanding exactly what this pricing policy is designed to protect against and creating a plan to follow through with actions that activate those safeguards.
As a reminder, MAP is the minimum price an authorized retailer can advertise for a product they sell. The MAP is set and enforced by the brand on its authorized retailers to prevent price wars among distributors. This helps to provide brand protection against devaluation and create additional incentives for resellers to carry and promote particular products.
Types of MAP violations
Vigilance in MAP enforcement requires a focus on two different types of violations: unauthorized sellers and underpriced products from authorized sellers. While the inappropriate actions are essentially the same, they can mandate a drastically different approach depending on the entity behind the violation.
Underpriced products from authorized sellers
A traditional MAP violation occurs when an authorized reseller advertises a product for sale at a price below the minimum price set in the MAP agreement by the manufacturer. In some cases, this can be an intentional decision by the retailer as they try to compete against other sellers. These retailers may believe that the benefits of breaking the rules will outweigh the consequences. For brands with weak monitoring of their MAP policies, sellers may not think they will even be caught.
In other instances, violations can frequently result when a seller relies on an automated pricing system. If one retailer undermines the MAP pricing, these automated systems may quickly follow suit. The result can be an escalating number of violations, all triggered by a single bad actor, and possibly even a price war that does long-term damage to brand identity.
Unfortunately, not all MAP violations are created equally. Unauthorized retailers won't be influenced by the incentives a MAP pricing policy offers authorized retailers and probably won't be aware of the consequences a brand has defined for violations. As a result, they are more likely to disregard any MAP policy a brand may have.
For brands that are active on Amazon, participating in the Amazon Brand Registry is a necessary first step to preventing any unauthorized seller. Doing so opens up access to Amazon resources for a manufacturer that can protect trademarks and products. Regardless, companies also need to have a well-designed process to ensure products are only available to approved sellers and stay wary of those attempting to profit off of counterfeit or expired products.
Enforcing your MAP policy
The success of any MAP policy will ultimately be determined by how well it's enforced. Therefore, monitoring for violations, documenting them and responding effectively may be the most crucial aspects of building a MAP policy that achieves its primary goal of protecting a brand.
Monitor for compliance
MAP monitoring is typically performed in one of two ways. Companies planning to oversee compliance themselves can opt to identify violations via a manual process or through an automated software solution from a third-party company. While the latter can lighten the load of MAP enforcement, it still requires diligence on behalf of the brand to execute correctly.
Manual monitoring of multiple websites requires the creation of a multi-step procedure that will regularly review the advertised prices of authorized sellers, regardless of the e-commerce platforms they are selling on. This continuous monitoring of marketplaces and the communication required to monitor and enforce a MAP policy demands a significant time commitment from the person or team taking on the responsibility. Brands with a high number of authorized resellers can easily be overwhelmed by the task.
In recent years, the technologies available to automate some of these actions have become more accessible to many companies. These price monitoring tools can provide a report of sellers and their product pricing and flag instances of MAP violations. Some services may also support contacting violators and resolving issues, though some steps may be accomplished through a live team rather than via automation.
Regardless of how it's done, the monitoring process should be as thorough as possible to protect your brand value and product prices. A manufacturer intent on enforcing their MAP policy should have a complete list of product names, SKUs, resellers and platforms ready. The monitoring database should also include other relevant data such as Amazon ASINs or proprietary identifiers. Trademarked text, images and similar intellectual property may also be helpful to include in the monitoring process.
When it comes to unauthorized resellers, you may have to do some additional detective work to track down the culprit behind a MAP policy violation. First and foremost, you'll need to determine how they get a hold of the products they sell. This may require placing an order with the unauthorized reseller and using your internal identifiers to trace the product back through your distribution channels.
In any event, once you find a violation, be sure to document it before contacting the violator to resolve it. Screenshots of the underpriced advertisement, the URL where it was found, and a timestamp are all details worth saving. They will become more important if the initial mistake becomes a repeat violation. Without an exhaustive list of places to look and the staffing to do so consistently, it is nearly impossible to monitor for MAP violations successfully. Of course, it also gets exponentially more complicated as a company grows and its number of resellers increases.
A solid monitoring system for your MAP guidelines will likely reveal a pricing violation at some point. Once this occurs and you have adequately documented the breach, you can move on to your enforcement protocols. As we mentioned, the process may vary depending on the reseller's status. Unauthorized resellers may warrant an immediate cease and desist letter or require filing a claim via the platform they use to sell your product illegitimately. The response to a misdeed by an authorized seller should be more nuanced and follow the process defined in your MAP compliance policy.
In most cases, the first step will often be a notification that the advertised price is below the minimum set by your seller pricing agreements. This warning may allow the retailer to correct the problem without further consequence. Other early-stage penalties could include removal from an Authorized Dealer Program or a temporary suspension of inventory allocations. If violations continue to be an issue, your MAP policy should allow for eventual termination of business from your seller program.
It's best to communicate with violators in writing only and avoid creating the appearance of any negotiation regarding penalties for MAP policy violations. To prevent any running afoul of antitrust law, it's critical that all resellers governed by your MAP policy be treated equally regardless of your relationship with them.
You don't have to navigate MAP enforcement alone
Protecting your brand image from a failed pricing policy requires a substantial investment of your resources. But doing so will help a brand owner avoid price erosion, minimize the risks of legal action and contribute to the success of a comprehensive pricing strategy.
The impact that advertised pricing can have on your profit margin means turning to a proven partner for your MAP policy creation, monitoring and enforcement can be a wise decision. At Amify, we take MAP very seriously and have steps in place to keep our accounts informed. Our account managers are reviewing reports daily to identify MAP violations. More importantly, as Amazon's selling strategies change, so do we.
Contact us today to learn more about how we can strengthen your MAP policies, reduce the burden on your business and help your company grow.