Defining the price of a product isn’t just a matter of ensuring each sale results in a profit for the business.
A new company might sell a product at a lower price at first to attract customers (rather than to make a profit). Equally, an established company might sell a product at a higher price than needed to make a profit because they want to market themselves as a premium brand.
The pricing of a product is a study of its own, which is influenced by a variety of internal business and external market factors. One part of this pricing puzzle is the so-called MAP of a product.
Below, we’ll explain what MAP is, why it should be monitored, and how this monitoring works in practice.
What is MAP?
Minimum advertised pricing (MAP) is the minimum price a retailer is allowed to advertise a product for. This price is determined by the manufacturer of the product.
For example, a manufacturer (let’s call the brand “Banana”) produces mobile phones. The brand sets the MAP for their latest model, the Banana X, at $1,000.
Now phone shops and other retailers that sell this model are allowed to decide themselves whether they sell the model for $1,000, $2,000, or any other price they like, as long as the price stays above the agreed minimum advertised price of $1,000.
Why do manufacturers set MAP?
A brand manufacturer may have several reasons as to why they want to keep the price of their product above a certain minimum. The most common reason is that the brand has a certain image to uphold, which is reinforced by the price of the product.
Say a retailer decides to advertise the Banana X for just $500 instead of $1,000. The message this sends to the customer is that the Banana X is only worth half of its price. This makes the product lose a lot of its premium allure, which in turn will hurt the brand’s image and reputation.
Another common reason MAP agreements are put in place is to ensure fair competition across different distribution channels and retailers. It levels the playing field.
Why does MAP need to be monitored?
Unfortunately, once the MAP is in place, it doesn’t automatically mean everyone will simply comply. The more retailers involved, the more likely someone will end up breaching the MAP policy.
There are several reasons why this may happen. Most importantly, a retailer might be tempted to (temporarily) advertise the product at a much lower price to draw more customers to their business. By running a flash sale, for example, by selling the Banana X for $500 this Friday only, the retailer can generate many more sales than normal as they sell the phone for a much lower price than all the other retailers sticking to the MAP policy.
The retailer doesn’t care about the brand’s long-term reputation like the manufacturer does. Instead, the retailer just wants to gain the upper hand in the competitive retail landscape.
Similarly, unauthorized resellers (and scammers) may offer a product below MAP to try and make a profit. They may buy the product in bulk for a lower price before reselling it per piece just below MAP to outsmart other retailers.
How does MAP monitoring work?
The manufacturer has two options when it comes to MAP monitoring. They can either monitor retail prices manually or use automated tools to do the work for them.
Manual MAP monitoring
This option works for small manufacturers that maybe only have a few retailers they work with.
In this case, MAP monitoring is simply a matter of visiting the retailers’ selling points (whether offline or online) and checking the price they advertise the product for.
If the manufacturer spots a violation of MAP policy, they can contact the retailer directly to inform them they should change the price or they will be banned from reselling the product.
The downside of manual MAP monitoring is that it’s incredibly time-consuming. Even if a company has only five resellers, they would still need to manually check the advertised prices regularly.
Automated MAP monitoring
Rather than manually price monitoring in Google Shopping every week, a manufacturer can use automated methods to make the process a lot easier.
Through the use of a web scraper (self-built or as a third-party tool), a company can automatically gather pricing data on all the online resellers of their product. For example, SERPMaster is a great solution for price monitoring in Google. Using SERPMaster, you can scrape data from Google Shopping based on your location, device, or browser preferences.
SERPMaster (or any other scraping tool) can monitor the prices of the sellers in real-time and send automated messages to the manufacturer as soon as a reseller advertises the product below MAP. This way, retailers won’t be able to resell the product below MAP for long without it being detected.