One of the uncertainties that a manufacturer has when creating a minimum advertised pricing policy or MAP is that their policy may scare away retailers. Nevertheless, in a measure to make the MAP policy less harsh, manufacturers make a bigger mistake of not being too keen with their policy.
Few manufacturers are willing to stand firm in protecting their brand, and their MAP policy speaks of the lack of seriousness in executing a company’s policies to the retailers. Therefore, some retailers will take advantage of the insecurity of the brand and violate the policy. But, what does the deficiency of resolve in your MAP policy look like?
Minimal or Lack of Monitoring
Creating your policy is not the end of the road for your company; you should monitor the reselling network for the best results. You are likely to spot any cases of violation and should be aggressive in the measures you take against the violators. Failing to reinforce your policy gives the retailers an opportunity to relax in following your guidelines. Once you start monitoring your retailers, develop a consistent monitoring routine for the best results.
When creating your MAP policy, you need to be clear about the terms and guidelines of your policy. Remember to include the consequences of failing to abide by the terms and conditions. Using vague terms in your statements indicates that you are not serious with your policy and creates a possibility for policy violations.
A common approach to enforcing a MAP policy is using a rule that offers three strikes. The rule states that the first instance of violation leads to the issuance of caution and a consequence. The second instance of violation causes a greater consequence, and the final instance leads to the termination of the contract from the manufacturer. Some companies have more strikes and send out a sign that they do not take the violation of the policy seriously.
Creating and enforcing a MAP policy is a responsibility of a manufacturer in regulating the sale of their products through the retailers. However, you could end up making some mistakes in creating and executing your minimum advertising pricing policy and encourage retailers to violate your policy. Make sure this doesn’t happen.