Solving the Problem of Inconsistent Support for All Partners
As a manufacturer, it might seem as if producing your products and profiting appropriately are your major concerns. But in fact, the ecosystem of supporting and promoting your brand is much bigger than that. If both brick and mortar and online retailers sell your product, you can run into problems with pricing in which physical stores must charge more than Internet sellers for the same item to recoup their overhead costs.
Why Is This a Problem?
Both brick and mortar retailers and Internet dealers play an important role in getting your brand in front of the public. When you don’t provide consistent support in terms of a MAP policy, competition over price gets ugly. Online sellers want to be featured in Amazon’s buy box, and in order to do so, they’re often willing to drop their prices significantly.
Traditional retailers, of course, are unable to match these drastically reduced prices and still pay their salespeople, rent, and utilities, none of which the vast majority of Internet dealers have to worry about. What often happens, then, is that a consumer enters a store, discusses a product with a salesperson, and then compares prices on his phone – a classic case of showrooming.
When the customer sees the price is lower online, he abandons the store, having received answers to all of his questions, and purchases instead from the Internet seller. This matters to you because after enough similar incidents, the brick and mortar store is not able to make enough margin, stops promoting your product, and may eventually stop carrying it altogether. At this point, with Internet dealers’ only competition being other online sellers, the most effective way to entice customers to purchase is to continue dropping the price to become the lowest-priced seller, which erodes the value of your product.
How to Prevent This Phenomenon
Instead of this debilitating situation, what you want is for all of your retailers to be playing on a level field. The solution in this case is actually simple: creating, maintaining, and enforcing a minimum advertised price policy for your products. With a MAP policy, your brick and mortar stores make the margin they need and don’t get priced out of offering your products. They know you’re going to bat for them and they’ll feel secure in investing time to train their teams to become experts at promoting your brand.
You’ll have some work upfront when you create your policy and when you first begin monitoring and have to weed out sellers who are noncompliant. But once you get your initial policy set up, an automated MAP monitoring tool makes it simple to stay on top of violators and increases the margin for your trusted partners so they can successfully market and sell your product.