MAP and MSRP monitoring on the Internet. MAP and MSRP control in online stores and marketplaces

MAP control, price control on the Internet, price control in online stores and marketplaces - why and to whom it is important, we will consider in this article

What is it MAP?

For a buyer, price is a critical factor in making a purchasing decision, and dynamic pricing helps a business gain a competitive edge. But, in the race for the consumer, retailers sometimes set too low prices, thus violating the rules of fair competition.

Recent years have seen a boom in online sales, forcing brands to implement Minimum Promotional Price policies to protect their reputation.

MAP is the minimum advertised price for a product below which sellers cannot sell or advertise it. The MAP is approved by the manufacturers of these products. For example, if a manufacturer of household appliances has set a minimum advertising price of $200 for a specific model of a washing machine, then the price in advertisement for this product cannot be lower. Regardless of whether it will be a print publication or the Internet.

The manufacturer's suggested retail price also will be abbreviated as MSRP (Manufacturer's Suggested Retail Price).

An industry such as the automotive industry depends on the MSRP. Manufacturers recommend that dealers set this price for car sales and display it on a sticker on the window. The formation of MSRP is influenced by production costs, the make and model of the car, the region of sale, and the trim material. In different regions of the country, the price recommended by the manufacturer may differ.
In any case, the MSRP is only a manufacturer's setting for the dealer.
Retail items such as electronics and home appliances have an MSRP. By setting the MSRP, the manufacturer expects that this price of the product will be the same for all sales channels and will allow all market participants to receive the expected profit.

To form the recommended retail price, manufacturers analyze their business and the businesses of their partners, assessing their costs, and analyze competitors' prices. Some retailers sell the product below the advertised price, but the MAP is shown in the store or on the pages of online stores.

MAP policy provides a level playing field for retailers. They have the option to increase margins or volumes. In addition, MAP is a guarantee that brand depreciation will not occur due to constant price wars between competitors.

What is MSRP?

MSRP is the manufacturer's suggested retail price. MSRP is sometimes referred to as the "sticker price". In essence, this is the price at which, in the opinion of the manufacturer, his product should be sold.

The need to adhere to the manufacturer's recommended retail price is not mandatory. According to the law, the manufacturer has no  grounds to force retailers to adhere to the recommended retail price.

MSRP is a guide for the retailer and the buyer about the true value of the goods.

The recommended retail price allows you to unify the cost of goods from all sellers on the market and is set for each individual unit of goods. MSRP is formed taking into account all costs for the sale of goods.

• Production costs,
• Logistic costs;
• Product promotions,
• Trade margins,
• Taxes, etc.

This approach to the formation of the recommended price takes into account the interests of all market participants - the manufacturer, distributors, retailers.

MAP and MSRP - what is the difference?

MSRP is only advisory in nature - this is its main feature.

The recommended retail price is aimed at regulating offline and online sales.

MAP is, first of all, the minimum advertising price, but legally approved.

We can say that MSRP is an upper unofficial price threshold for a product, and MAP is an officially approved lower price threshold. The MSRP is the benchmark for the consumer, while the MAP is for the retailer.

Example:

The MSRP policy is often used in the automotive industry.

Manufacturers recommend that dealers set this price for car sales and put it on a sticker on the window. The formation of MSRP is influenced by production costs, the make and model of the car, the region of sale, and the trim material. In different regions of the country, the price recommended by the manufacturer may differ.

In any case, the MSRP is only the manufacturer's setting for the dealer for the initial asking price of the vehicle. But, according to the law, all new cars must have a sticker on the glass with the manufacturer's recommended price.

For those retailers looking to price their product above the MSRP, they first need to understand the market thoroughly and understand the dynamics of demand. Otherwise, they will face the problem of falling sales volumes, which will not benefit either the seller or the manufacturer.

On the contrary, the urge to lower the price below the MAP leads to an increase in the sales of one player and hurts the sales of others. As a result, chaos sets in, as a result of which the market can “collapse”. With the collapse of prices, the reputation of the manufacturer's trademark also suffers. In this case, the seller faces a ban on selling the product or stopping cooperation with this brand.

MAP and MSRP strategies intersect and pursue the same goal - brand protection and prevention of price wars. Therefore, the most advantageous option is their ratio.

The most significant difference between MAP and MSRP prices is their legality. An MAP-based pricing structure is perfectly legal in the US, but in the European Union, minimum promotional price controls are not legal. However, offering goods at MSRP prices is a universal practice for both regions.