Minimum Advertised Price MAP

A Minimum Advertised Price / MAP policy is an agreement between manufacturers and retailers. Among other details, it stipulates the lowest price retailers may advertise a product for sale. For instance, if the MAP for product x is $399, retailers may not show a price for lower than that amount. 

Benefits of MAP for manufacturers

• Since prices signal product quality for many products, especially those that consumers associate with personal image, the MAP ensures that the perceived brand quality remains in tact. 

Benefits of MAP for retailers

• A MAP policy can prevent price wars. Price wars minimize profitability. Furthermore, this effect can be long term because, an offending retailer may find it difficult to raise prices for that or comparable products again.
• The MAP encourages specialist retailers to add value to the network of retailers by virtue of their expertise and services. After all, these retailers are generally small businesses that are unable to compete only on the basis of price. However, they offer expertise and closer contact with the target market. This close relationship allows for greater feedback and product improvement.
• The MAP is the same for all authorized retailers. The uniformity of the MAP policy encourages compliance among retailers. Not only can an offending retailer be disallowed from selling the product but also compliant retailers will gain more flexibility with their prices as they may more easily widen their profit margin.
• Ongoing compliance with MAP may further increase profitability because it may earn compliant retailers discounts and special purchase prices. 

How to minimize or prevent MAP Violations

Unfortunately, violations are a reality, especially among unauthorized sellers. This in turn may encourage authorized sellers to follow suit. The following are some ways in which manufacturers may limit or prevent violations.

• Recruit and select only retailers whose characteristics suggest they are less likely to violate the MAP. Examples include retailers that are high end, are unlikely to use your product as a 'loss leader', already attract the products' target market and are already sufficiently settled with a wide assortment of products.
• Have a clear agreement among all retailers regarding what constitutes a violation. There are many gray areas. For instance, manufacturers and retailers may vary in their approach to selling products below the MAP at the checkout, regardless of the ticket display. Bundling may (not) be allowed. If allowed, manufacturers may require none of the items in the bundle should have a displayed individual price.
• Monitor retailers and enforce violations as soon as possible. Unfortunately, this may involve penalizing best customers. 

CONTENT RELATED TO MINIMUM ADVERTISED PRICES / MAP.

• Product bundle pricing
• How to price in the cottage industry
• Purchase decision
• Psychological pricing strategy