Minimum advertised price (MAP) is a pricing strategy used by manufacturers to protect their brand and establish the value of their products. Under MAP agreements, retailers agree to not advertise a product below a certain price, known as the minimum advertised price. These agreements are intended to prevent price competition and maintain the perceived value of the manufacturer’s products.
MAP monitoring is the process of tracking and enforcing MAP agreements to ensure that retailers are complying with the agreed upon minimum advertised price. This can be a time-consuming task for manufacturers, as they must regularly check the advertised prices of their products on various retail websites and alert retailers to any violations.
MAP monitoring is particularly important on platforms like Amazon, where there is a large number of third-party sellers offering the same products. If one seller advertises a product at a significantly lower price than the MAP, it can lead to a race to the bottom as other sellers try to match the low price in order to remain competitive. This can erode the perceived value of the product and damage the manufacturer’s brand.
In Canada, MAP monitoring is governed by competition laws, which prohibit anti-competitive agreements between manufacturers and retailers. The Competition Bureau of Canada is responsible for enforcing these laws and has the authority to investigate and take action against companies that engage in anti-competitive practices, including violating MAP agreements.
The Competition Bureau has issued guidelines for manufacturers and retailers on the use of MAP agreements, which outline the circumstances under which they are allowed and how they should be enforced. According to these guidelines, MAP agreements are generally considered to be acceptable as long as they do not restrict price competition beyond what is necessary to maintain the perceived value of the product.
Manufacturers must also ensure that they are not using MAP agreements to limit the ability of retailers to compete on other factors, such as service or convenience. If a manufacturer is found to be using MAP agreements in an anti-competitive manner, the Competition Bureau has the authority to take enforcement action, including fines and other penalties.
Despite the guidelines issued by the Competition Bureau, MAP monitoring can still be a challenge for manufacturers in Canada. One issue is the large number of third-party sellers on platforms like Amazon, which can make it difficult for manufacturers to track and enforce MAP agreements.
To address this issue, some manufacturers have turned to MAP monitoring services, which use software to track prices on retail websites and alert manufacturers to any violations. These services can save manufacturers time and resources by automating the MAP monitoring process and allowing them to focus on other aspects of their business.
There are also a number of best practices that manufacturers can follow to ensure effective MAP monitoring in Canada. One important step is to clearly communicate MAP policies to retailers and establish a process for enforcing compliance. Manufacturers should also regularly review their MAP agreements to ensure that they are still necessary and not being used in an anti-competitive manner.
Another key consideration is the use of technology to automate the MAP monitoring process. As mentioned earlier, MAP monitoring services can help manufacturers track prices and identify violations more efficiently. Additionally, manufacturers can use tools like price monitoring software to track prices in real-time and alert them to any changes.
MAP monitoring is an important aspect of pricing strategy for manufacturers in Canada. By enforcing MAP agreements and using best practices, manufacturers can protect their brand and the perceived value of their products, while also complying with competition laws.