How Brands Manage MAP Violations To Sustain Brand Value?

Retailers who follow the brand’s MAP policy build a trustworthy relationship with the brands. 

Enticing price-sensitive customers with a low price is a common strategy third-party sellers use to stand out and compete in the online marketplace. However, product price directly impacts the overall perception of a brand.

In a Harvard Business Review study, a brand that conducted MAP monitoring found:

  • Unauthorized retailers violated 50%
  • Authorized retailers had a 20% violation rate

The study restates the importance of brands regulating pricing and monitoring MAP. With industry examples, this article intends to understand MAP violations from a brand’s point of view.

MAP vs. iMAP: What is the Difference?

Minimum advertised price (MAP) is a policy devised in the interest of brands and manufacturers to regulate the price of both print and online advertisements.

Internet Minimum Advertised Price (iMAP) on the other hand is a policy drafted by brands specifically to control the prices advertised by third-party sellers on various online marketplaces.

The objective of both these policies is:

  • To protect against price erosion
  • To reduce potential destructive price wars
  • To help brands maintain consistent perceived value
  • To ensure compliance with the minimum price displayed during the promotion of a brand’s product across the distribution channel

Read a detailed article on Minimum Advertised Pricing

How MAP Violation Occurs?

When any retailer advertises a product below the minimum advertised price set by a manufacturer or a brand, it is considered a MAP violation. MAP is a legal agreement between the brand/manufacturer and the retailer.

Why Third-Party (3P) Sellers Sell Below MAP?

3P sellers who price below the minimum advertised price sell by sacrificing their profit margin. Some of the probable reasons for taking this step include:

  • To boost sales volume
  • To sell excess inventory
  • To gain positive reviews and ratings for their shop
  • To win a buy box or seller badge sooner from the online marketplaces

To offer the best prices to its shoppers, online marketplaces often urge sellers to run various promotional offers throughout the year. This results in third-party sellers pricing the products below MAP.

Also read: What is the impact of price erosion on brand resilience?

How Brands Are Dealing with MAP Policy Violation?

Every brand has a different approach to dealing with an alleged seller involved in MAP violation.

what retailers do when they spot map violation

Examples of Brands Handling MAP Violations

CPG companies such as Colgate-Palmolive have introduced minimum advertised price policies on a specific range of products such as the premium line, including Optic White Pro Series toothpaste.

Further, the following brands have stringent MAPs in place across their product range as part of the company policy.

GoPro Updates Its MAP Guidelines a Few Times per Quarter

GoPro, an action camera and tech company, actively updates its MAP bundling guidelines a few times per quarter.

According to GoPro’s MAP bundling guideline, the effective price cannot be greater than 15% off of the highest-priced item in the bundle. The same pricing rule applies in the case of incentives like coupons, gift cards, or points.example of map violation policy

Assume the maximum resale price (MRP) of product A is $499.99 and for product B is $89.99. The advertisement states the original price of the bundle of Product A + Product B was $589.98 and now is $419.99.

To be MAP compliant, the total effective discount cannot be above $75. In this case, by reducing $89.99, the 3P seller has advertised an 18% discount which accounts for a MAP violation.

Apple Proactively Monitors MAP Violators in Real-time

Apple maintains consistent pricing across all distribution channels and vigilantly watches out for any MAP violators. In case of a violation, Apple terminates partnerships or reduces stock allocations to repeated violators.

Moreover, Apple offers low margins to its channel distributors like Walmart and Best Buy to discourage third-party sellers from pricing the products below the agreed-upon MAP. However, the brand gives monetary incentives to retailers to sell products at the minimum advertised price.

When retailers earn less profit margin, they usually sell the products at MSRP (Manufacturer’s Suggested Retail Price). During Cyber Week, retailers could give up this small profit margin and offer products at a discount to attract more customers. Many of the Apple products aspirants anxiously wait for such occasions.

2023 black friday iphone ad on walmartAs offering huge discounts is unfeasible, retailers often offer attractive schemes as seen in the 2023 Walmart Black Friday deal.

Hasbro Offers Exception in MAP Policy During Black Friday Sale

In its annual calendar, Hasbro, the toy brand, changes its MAP three times a year:

  • Jan to mid-May
  • Mid-May to November
  • December during the Christmas season.

Here is the company’s MAP list. Habro Map Policy

If the brand identifies any MAP violation, Hasbro suspends all promotional funding and stops shipping products further to the seller for the duration the seller violates the MAP policy. However, as seen in the above pricing list, during the Black Friday sale, the brand temporarily waives the rules around MAP on selective products.

Dahua Technology Shows No Mercy To Its MAP Violators

Dahua Technology is one of the biggest manufacturers of intelligent video surveillance cameras. It sells security cameras under the brand names – Dahua, Lorex, and IMOU.

Besides, Dahua is the original equipment manufacturer (OEM) of the hardware for Amcrest, Anyday Security, Honeywell, Panasonic, and Speco to name a few.

The brand strongly advises customers not to purchase products from unauthorized sellers on its site. The company’s MAP policy clearly states that if a distributor, third-party seller, or dealer is listed as unauthorized, Dahua will not provide any support for products sold by them. Dahua MAP Violators

At first, Dahua gives violators a warning. Repeated failures to Dahua’s MAP may result in the automatic termination of the distributor relationship and be listed as an unauthorized seller of Dahua products.

MAP Compliance in Nutshell

  • 3 P sellers cannot display a price below the MAP in promotions or online listings. Instead of displaying prices lower than MAP, retailers can use advertising phrases to attract the attention of customers.how to escape map violation
  • 3P sellers can sell products below the MAP policy, but the price should be displayed only when the buyer adds the product to the cart.

In the above image, three sellers are selling MB2236i Lexmark printers at different price points on Amazon. The retail price of this printer on the company’s website is $309.99. Say, for example, the lowest product price of $255.99 is below the company’s MAP price.

However, the seller is not violating MAP policy if the shopper sees the selling price only after adding it to the cart and not in the product listing.

Read the article to understand Retail Price Related Terminologies 

Role of Digital Shelf Analytics in Detecting MAP Violations

To be omnipresent, brands are available at various digital touchpoints in the customer journey map, including indirect sales through distributors and retailers. However, it is challenging for brands to ensure all sellers adhere to the MAP policy.monitoring map violation

To manually monitor a brand’s product listing and SKUs across online marketplaces is difficult. Instead, brands can rely on digital shelf service providers to spot MAP-violating 3P sellers.

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