So what is MAP? Before you start with all the obvious responses, understand that it’s an acronym and that it does apply to the automotive aftermarket. The reason I’m writing about this is because I recently sat in on an excellent session at the 2018 AASA Vision Conference on this topic. Even though this can be a legally heady subject, there was a room full of prominent manufacturers along with appropriate legal counsel.
MAP stands for Minimum Advertised Price. The Consumerist defines Minimum Advertised Price as “an agreement between suppliers and retailers stipulating the lowest price at which an item is allowed to be advertised.” If you’ve ever tried to shop around and keep nosing up against the same number, you may have just discovered that good’s MAP.
Don’t confuse this with anything illegal. It appears that adopted properly, this practice is fine. If you’ve ever been shopping for something and you can’t get the final sale price until you have it in your cart, that item is probably covered by a MAP. It needs to be clear: this is not establishing what the item is being sold for, it is stating the lowest price something can be advertised at. This is a very important distinction because there is another practice called RPM, Resale Price Maintenance, which is the lowest price an item can be sold at. These two policies are very different.
Recently, interest has been very high in MAP. This is driven largely by the pricing transparencies brought about by the internet. Margin pressures are ratcheting up and the players in the distribution part of our industry are experiencing eroding margins due to lower-cost deliveries of the same products. Manufacturers are being looked to by their distribution partners to do something to stop the erosion of margins and defend the more traditional practices of the chain.
These policies don’t directly control pricing on products. They attempt to influence pricing practices by utilizing benefits that normally go with those product lines. Such as? Ad co-op, promotional offerings and the like. So it doesn’t directly affect pricing, but it incents the behavior of more realistic trade prices.
In the end, it is a very complex issue and clearly requires much thought and legal approval. But in our changing distribution world, it is one you will hear a lot more about as manufacturers decide how to deal with our rapidly changing environment.