Unlike the long-running TV game show, "The Price is Right," where contestants have to guess what a certain product is worth, today's retailers are told exactly what a brand's wares are worth. And yet, according to Kellogg Insights, 15 percent of authorized retailers still violate these minimum-advertised price (MAP) policies. Among unauthorized retailers, the problem is even worse, with 53 percent of these vendors violating MAP policies.
As a result, brands have found themselves in a very different game of "The Price is Right." They already know what the right price is. Now, they're tasked with hunting down every instance of a MAP violation that could potentially impact how consumers – and other retailers – perceive their brand.
Here's how it works:
The stakes are high
"Deviations that risk impacting a carefully crafted brand identity must be addressed swiftly."
The purpose of verifying that the retailer list price is in fact right is about much more than profit margins. Technically, selling goods at lower prices may actually increase the per-unit sales rate, but at what cost to your brand's identity? The fact of the matter is that many brands' revenue models depend on their ability to position their products as high end – cases in point, Apple, Rolex, BMW, and so on. By undercutting those prices, retailers effectively undercut your brand's perceived value, and that is quite literally priceless.
Consider the example of one of the world's leading flip-flop brands, Havaianas. The company, which makes a very simply designed flip-flop sandal recently sold for $1 billion. BBC News calls it the flip-flop brand that "took over the world." According to reporter Vicky Baker, the company's "strong identity" – which is deeply routed in Brazilian values – helped Havaianas win out "against cheap versions of what is an easy-to-replicate design."
This type of brand identity is not easy to cultivate, but the value it can bring to even the simplest product is evidently extraordinary. Deviations that risk impacting this carefully crafted identity, price included, must be dealt with swiftly.
Because in this game of "The Price is Right," the stakes are extremely high.
Automation is the name of the game
"Manual MAP monitoring is more or less impossible; brands must automate this process."
Not working with authorized retailers isn't really an option anymore. Shoppers want to buy on their terms, and that means they expect brands, even those of luxury, to make their products available on more than one retail channel. In fact, it's actually in a brand's best interest to use its already existing web presence to help prospective customers find its products on their preferred seller sites.
That said, manually policing your retailer network isn't feasible. Any channel those retailers may be using to advertise your brand's products must be monitored to ensure that MAP compliance is maintained at all times. Equally important, in the event of a pricing violation, brand manufacturers must know where that infraction started. Often, if one authorized retailer violates a MAP policy, others will follow suit in the fear that they will be undercut by the competition, resulting in a sort of domino effect. Thus, it's critical to know where a price violation began, and how quickly other retailers jumped on the bandwagon.
Even more difficult than that, brand manufacturers must also be on the prowl for unauthorized retailers that may be violating MAP policies. This is challenging since these customer interactions happen outside the known seller network. In fact, this had become so problematic on Amazon for Nike that the sporting goods company finally caved and started selling its products on the e-commerce hub last month.
Long story short, manual MAP monitoring is more or less impossible. Brands must automate this process with a tool like MAP Guard, which crawls the web in search of pricing infractions that could hurt a brand's perceived value. The grand prize? No it's not Drew Carey telling you you've won tens of thousands of dollars. But you will establish brand uniformity across the World Wide Web, and that's worth more to your business than any price tag.