As a manufacturer, one of the things that you cannot avoid is having a solid MAP policy. A MAP pricing policy limits retailers regarding the price they should see. Can two brands have a similar MAP policy? Not at all. Brand identity is a key factor that brands must consider when setting a MAP policy. Setting prices too high chases retailers while setting it too low can lead to losses and concerns about quality.
Creating an Appropriate MAP Policy
There are various factors that come up when creating a MAP policy. Below are some of them:
What are Your Competitors Doing
In a market where there are other brands offering the same product, it is important to ensure that your price does not vary much with theirs. If you are in a market where you are the only brand, factor in your production cost and profit margin when stipulating your MAP policy. Test for the elasticity of your product price until the supply-demand curve is solid. The elasticity of a product is the ratio of change in price to the change in quantity.
Potential Red Flags
In the cases of online shopping, most retailers do not indicate the price of a product until a customer adds the product to a cart. This could be a signal of violation of MAP policy agreements.
Some retailers offer discounts on products to woo their customers. While offering discounts is an important practice in boosting a brand, selling products on offer often implies that your MAP policy is not an aspect in your business. And soon this may lead to loss of business.
Building a MAP pricing policy is engaging and will need a great deal of commitment from you. Done properly, your efforts will be worthwhile in the long run, letting you build and market your brand while serving your clients.