Retailers are constantly deploying newer and cleverer ways to circumvent minimum advertised price (MAP) policies.
These disruptive technologies include encrypting online prices to dodge price monitoring tools; making personalized offers on social media and email; and implementing coupons and instant rebates, among others. Brands that don’t evolve to meet these new challenges risk brand dilution and ineffective channel relationships.
An increasing number of channel managers and legal counselors realize that what worked last year will only be partially effective in 2016. Here are some factors keep in mind while framing and enforcing an effective MAP policy this year:
While framing the policy…
- Update your policy to include price obfuscation. It’s not uncommon for retailers to exploit the blind spots in your MAP policy. An increasing number of retailers today ask shoppers to call, register on their website, or add products to the cart to find the real price of a product. These prices can often be below the agreed MAP, but there’s little merchants can do to curb them if they are not defined as violations in their MAP policy. Other methods that should be cited in your MAP policy include personalized offers on social media and email, which in turn will obfuscate prices, and encrypted online prices.
- Complement your MAP policy with a UPP policy for high-value products. Checkout prices are not subject to MAP, as they are displayed only when a customer shows interest in buying a product. But steep checkout-level discounts can also dilute the perceived brand value. If you notice an increase in checkout-level discounting, consider complementing your MAP policy with a unilateral price policy (UPP) to discipline over-discounting at the checkout page.
- Modify your MAP for peak shopping seasons. We’ve seen spurts in MAP violations by as much as 15-20 percent during and a few days after holiday periods. Some brands choose to bolster their price monitoring for these times. Alternatively, to keep too many retailers from undercutting one another, many brands vary their MAP prices for specific seasons to give retailers additional room for lowering prices.
While enforcing the policy…
- Fine-tune the monitoring based on retailer segments. The Internet is wide and complex, and it can be too far-fetched to expect 100-percent MAP compliance at all times. Depending on parameters like volume of sales that fall below MAP, you can tune your monitoring to specific retailer segments, such as large online retailers, marketplaces and/or local retailers.
- Include mobile apps and mobile ad networks when tracking for MAP compliance. It’s no longer enough to monitor website prices alone. In 2015, the use of shopping apps grew faster than any other category of apps, according to mobile analytics firm Flurry. The surge in smartphone apps has also given way for mobile ads that you can’t afford to ignore any longer.
- Use data scorecards to encourage compliance. Agreeing to a MAP policy often means that retailers will be undercut by others who don’t. There’s an opportunity to use data scorecards to influence desired compliance.
While technology is a disruptor, it’s also an enabler. Making effective changes to your MAP policy and effectively deploying technology can help on-going brand protection.
Mihir Kittur is co-founder and CIO of managed analytics firm Ugam, which helps transform big data into valuable insights for some of the world’s largest brands, retailers and online marketplaces.
