How do MAP violations affect manufacturers?

Posted on 19 April by Simon Gomez in MAP monitoring


The competition inside the eCommerce world is a fierce one. Every day, sellers have to face different challenges to stay on top of the market. Or, even worse, sometimes to survive in the market. That leaves manufacturers in a tough spot because retailers make price variations on their products to keep up with their competitors. Many of those price changes applied by retailers go below the minimum advertised price (MAP).   

MAP is the lowest price a retailer can sell your products to customers. That retailer can sell the items for a higher price but never below the MAP agreement price. Selling below the MAP agreements hurts manufacturers in the short and long run. How does it hurt them? Well, these are the factors that affect manufacturers when retailers sell below the MAP arrangement.      

1- Margins   

Of course, if your authorized retailers are selling your products below the price you both agreed on, your profits and margins will decrease immediately and in the long run. While retailers might be selling more in quantity, sellers and manufacturers are not increasing their revenue.   

2- Brand value   

Every time a retailer sells a product under the MAP, the brand suffers damage. Customers think that low-priced products are a sign of low quality. That also affects new products that go on sale. Buyers see this as “something is wrong with this product because it is on sale, just a few days after its release.” Now, the entire brand is perceived by the customers as low quality.     

Established premium brands, and new brands that are seeking that premium status, also suffer from this. Low prices make it hard to create a loyal fanbase and will not help them increase the product value. That is why you need to have steady prices on your products and not let them fluctuate frequently. 

3- Loss of partnerships 

If retailers are selling products under MAP agreements, there is a high chance that the manufacturers will cut their partnership, and therefore they cannot sell the manufacturer’s products. Manufacturers choose their retailers wisely because that is the place where they will sell their products. They pick a store depending on various factors, such as reaching more customers, selling more, and gaining more profits.    

Conclusion

MAP violations are troublesome for manufacturers, and it hurts them. These infringements harm their profits and alliances. Also, it destroys brand value. PriceTweakers gives manufacturers the best solution for these problems because it can help them monitor these problems and much more! With PriceTweakers, you will have control and knowledge of what is happening in the market in which your company operates. Are you interested? Contact us for more information. 


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