Minimum Advertised Price (MAP): What It Is and How to Automate It?

Businesses use various approaches to distribute their products, such as engaging third-party organizations like retailers or resellers. However, finding a partner that adheres to the manufacturer's pricing policy, such as Minimum Advertised Price (MAP), is not so easy.

Third-party organizations allow brands or manufacturers to increase brand awareness, boost sales, and expand their target audience. On the other hand, selling products through a third-party seller creates several issues, such as pricing inconsistency and lack of control over brand image. MAP monitoring enables brands and manufacturers to identify and resolve issues that arise with third-party sellers.

In this article, we will discuss what Minimum Advertised Price (MAP) is, how it works, its benefits, and how to automate it.

What Is Minimum Advertised Price (MAP)?

Minimum Advertised Price (MAP) is the lowest price at which manufacturers allow channel partners, such as retailers and distributors, to advertise and sell their products.

Minimum Advertised Price (MAP) is one of the vertical pricing restraints used by manufacturers to coordinate their distribution channels. MAP is set by brands or manufacturers that supply products to channel partners, such as retailers, distributors, and resellers.

What Is Minimum Advertised Price (MAP) Monitoring?

Minimum Advertised Price (MAP) monitoring is the process of tracking product prices across all distribution sources and coordinating distribution channels according to manufacturers' MAP guidelines.

MAP monitoring allows brands and manufacturers to ensure that their products are advertised and sold at the prices set by the manufacturer across all retail points.

Is Minimum Advertised Price (MAP) Legal?

MAP policy is legal under US antitrust law. MAP policy requires that all participating parties, including manufacturers and distributors, agree on a minimum advertised price for specific products. Distributors must comply with MAP policy by not selling brand products below a certain price.

How Is MAP Monitoring Done?

To identify distributors violating MAP policy, companies can conduct MAP monitoring manually or automatically.

The basic manual MAP monitoring process consists of 5 steps:

1. Identify resellers and product pages where MAP policy is violated.
2. Take a screenshot of the reseller's product page to prove the MAP policy is violated.
3. Contact the sellers and inform them that their prices must be updated in accordance with MAP policy.
4. Check if the reseller has updated the product price.
5. If resellers do not update product prices according to the MAP agreement, suppliers may terminate the reseller's services and stop selling their products.

How Can the MAP Monitoring Process Be Automated?

For businesses working with multiple distributors, manual MAP policy monitoring and identifying pricing violations will require significant time and effort. MAP monitoring software and data scraping tools allow brands and manufacturers to track retailers in real time to ensure that channel partner prices comply with manufacturer MAP agreements.

Data scraping tools extract distributor pricing information from online stores that feature your products. 

What are the benefits of MAP monitoring?

1. Preventing MAP Violations

Identifying Unauthorized and Unregistered Resellers: 
A MAP violation occurs when a reseller sells and advertises a product at a price lower than specified in the manufacturer's MAP agreement. For example, Amazon has over six million third-party sellers, some of whom may be authorized or unauthorized.

According to a study by Harvard Business Review, manufacturers using MAP policies found that unauthorized resellers violate them approximately half the time; even authorized resellers violate them in 20% of cases.

Companies must identify unauthorized sellers or 'gray market' digital intermediaries to avoid price disparities across different distribution channels. MAP monitoring allows brands to identify sellers who do not comply with MAP policy across all distribution channels, including e-commerce marketplaces and distributor websites.

Detecting Price Disparities: 
With MAP policy, brands protect their products and profits to prevent customers from being distracted by unfair pricing. Retailers are prohibited from advertising or selling products covered by MAP policy at a price lower than the manufacturer's minimum advertised price.
For example, if the minimum advertised price of a product is 10,000 rubles, retailers cannot list the product on their sites at a price lower than the brand's predetermined price. On all third-party sites, the product must be listed and advertised at a price no lower than 10,000 rubles.

2. Protecting Brand on Third-Party Sites

Presence on multiple distribution channels and online marketplaces increases the risk of inaccurate brand and product representation. Sellers may violate brand MAP policies by providing inaccurate or incomplete product descriptions and offering large discounts.

For example, when a customer searches for a specific product of yours and sees price changes that are unfair and unrelated to the brand's value proposition, they may lose trust and loyalty to the brand. Prices should remain reasonably stable across different distribution channels. Otherwise, price inconsistency can disappoint a conscientious consumer.

On the other hand, unauthorized resellers counterfeit genuine brand products to sell them below the minimum advertised price. According to Forbes, annual sales of counterfeit and pirated products amount to about 170 trillion rubles.

For example, Amazon strictly prohibits the sale of counterfeit products to identify and prevent counterfeit goods from reaching buyers. However, for other online marketplaces that do not have anti-counterfeiting policies, companies must ensure that all product information on all product pages complies with their MAP to prevent counterfeiting. MAP monitoring allows brands to track product prices and other information across different distribution channels to protect brand value and product margins.

3. Price Verification / Compliance with Advertisements Across All Distribution Channels

MAP monitoring allows advertising companies to ensure that their ads on third-party sites comply with MAP policy. However, it may be inconvenient for large advertisers to track each individual ad manually. Data scraping and monitoring tools help companies verify third-party advertising campaigns and ensure that channel partners adhere to Minimum Advertised Price (MAP) policy.