(Retail) Minimum Advertised Price?
suppliers pricing policy that does not permit its resellers
to advertise prices below some specified amount. It can
include the resellers' retail price as well.
Manufacturers Enforce MAP
There are many reasons why manufacturers may impose such
Manufacturers want to protect brand image, which discounting
can work against for premium brands and new, innovative
High margin is an incentive for retailers (who are the manufacturer¡¦s
extended sales force) to promote these items more than others
(although without the ability to offer price breaks, it¡¦s
harder to incentivize consumers to buy).
Maintaining MAP or MSRP maintains retail value so manufacturers
can retain wholesale pricing.
To prevent bargain basement retailers from underselling
other resellers of the product (who may discontinue selling
these brands or complain to the manufacturer).
MAP doesn¡¦t necessarily apply forever, especially for seasonal
products or categories like consumer electronics where new
models are constantly hitting the market. But under a MAP
policy, a product must be sold at a MSRP (Manufacturer¡¦s
Suggested Retail Price) until the manufacturer permits a
How MAP Affects Retailers
Some retailers will benefit from the level-playing field
(smaller retailers, those with higher operational costs
or lower efficiency and retailers with a reputation for
excellent customer service), and enjoy extra margin to boot.
Though certain industries will suffer, especially in this
economy, as sales velocity doesn¡¦t occur until the price
moves South. For example, HomeCenter.com reports certain
price-sensitive product lines sell $150,000 per month when
discounted vs. $10,000 when sold at MAP.
Another downside is inventory costs. If in this economy,
people are hanging on to their older model consumer electronics
rather than buying the latest models, that inventory is
going to back up. Without the ability to markdown, the retailer
must deal with the stale stock. The manufacturer has received
its money, but also loses as it won¡¦t be refilling inventory
And as with any rule, MAP is bound to be broken. Online
retailers are already using ¡§click to see price¡¨ in pop-up
windows, ¡§add to cart to see price¡¨ and ¡§email for quote¡¨
tactics. Retailers who take the high road and adhere to
MAP pricing often find themselves forced to lower prices
to compete, or honoring price-matches once discounters run
out of product.