Around the world, there are a number of pricing policies for manufacturers to opt for. These policies differ on the basis of technicalities, but the main motive is to have a regularized system of pricing avoiding any conflicts. Minimum Advertised Pricing or MAP Pricing is a specific type of pricing policy that is widely used by manufacturers to avoid conflicts with retailers.
Minimum Advertised Pricing
MAP Pricing is a definitive price for the advertisement of its products. It is a notable fact that MAP pricing remains constant for all types of advertisement mediums. The actual selling prices of products can vary from retailer-to-retailer. However, the minimum advertised pricing has to remain the same. It is up to the retailer to provide any kind of exclusive discount.
An appropriate example of MAP can be of an electronics market. If you visit an electronics market to get your hands on the latest Samsung S20 Ultra, you must have seen the official advertisement of $1000. Even in the market, many retailers are advertising the latest Samsung model for the same price. But when you visit a specific retailer in the market, you come across an exclusive offer of $100 off on the latest Samsung. Now, although the $1000 was the Minimum Advertised Price, the retailer is allowed to provide some sort of discount. Hence, you managed to get a $1000 phone for $900.
Steps of MAP Pricing
- The manufacturer is responsible for setting the Minimum Advertised Pricing (MAP).
- When a retailer approaches the manufacturer or vice versa, the manufacturer presents the pricing policies and expects the retailer to accept it. Upon acceptance of the pricing policies, the retailer becomes eligible to stock the manufacturer’s product and sell them.
- After agreeing to the pricing policies, the retailer is bound to advertise the product only with the mutually agreed MAP. The retailer is not allowed to advertise any discount on the product, directly. The manufacturer has the right to sue a retailer if it advertises the product below the MAP.
Usage of MAP Pricing
To ensure a systematic arrangement of pricing for its products, manufacturers define these pricing policies. It is a medium of control for the manufacturer to regulate the advertisements of its products. According to different manufacturers, they do this to keep the company’s reputation and identity intact. A company’s worth depends upon the value of its products, and value comes from a consistent production of high-quality products.
Coming towards the customers’ perspective, it gives the customers a special feeling when purchasing products from a reputable brand. According to majority customers, they are willing to pay a tad bit extra if the overall experience of the products satisfies them. They prefer their satisfaction over cheaper but low-quality products.
It is quite a debatable topic that discount offers can be both hurting and beneficial for a particular brand. To some customers, aggressive marketing deals advertised all-around might seem like the brand has compromised on the quality. Whereas, some customers might regard the company as becoming accessible to a wider radius of customers.
However, the majority of manufacturers believe that excessive discount deals can hurt the brand identity and value. As a result, they try to restrict retailers as much as they can.
Advantages of MAP Pricing
Manufacturers have numerous valid reasons for setting regularized pricing policies. Some of the reasons are as follows:
- Minimum advertised pricing upholds the brand identity and brand experience. It ensures that the customer is receiving the best quality at the best price.
- This is satisfactory for customers to know that the company does not compromise its quality by selling cheaper products. It helps cement the brand’s consistent attitude in the customers’ minds.
- According to majority manufacturers, the use of MAP allows them to be in control of their products and retailers are not able to abuse their names.
- It helps the retailers to gain the confidence of different customers and attract them to an in-store experience where they can shower them with multiple kinds of discounts.
- Intelligent customers do not find any shadiness in the retailers due to their alignment with MAP pricing.
So, to sum it up, it is quite evident that the MAP pricing is mutually beneficial for both the manufacturer and retailer. As far as the manufacturer is concerned, it is in complete control of its products. While the retailers can set themselves apart by providing different discounts. Let us know how helpful was this article for you to find an answer to What is MAP pricing? in the comment section.
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