Manufacturers don’t have many opportunities to win awards or trophies. But getting your product line carried by a large brick-and-mortar retail chain — a Walmart, a Target, a Best Buy, or a major department store — can feel pretty close to winning the big prize.
One reason you often hear that a minimum advertised price (MAP) policy is such a vital tool for manufacturers is that, by insisting all of your resellers advertise your products at or above a certain price, you protect your brick-and-mortar retail partners from a two-fold pricing challenge: being undersold by their online-only competitors, and showrooming by customers who will use their stores to see, touch and learn about your product but then buy it online for less.
In fact, if you establish and effectively enforce a MAP price for your products, this can even increase your chances of being carried by the large brick-and-mortar retail chains in the first place.
But that’s far from the whole story. Yes, having your product line carried in big retail stores can represent a major victory for your brand. But do you want those big stores simply “carrying” your inventory? Of course not. Ideally, you want them taking a much more active role in representing your product line.
And this is where aggressively enforcing a MAP price across your entire resale channel can lead to another often-overlooked benefit for both your brick-and-mortar retailers and your company.
YOU WANT BRICK-AND-MORTAR STORES NOT ONLY “STOCKING” YOUR PRODUCTS, BUT ENTHUSIASTICALLY SELLING THEM
When they know you are actively enforcing a MAP price for your product line — minimizing their chances of being unfairly undersold after they’ve invested in purchasing your inventory for their stores — your big retail partners are also likely to make even deeper investments in representing your products. For example…
- Prominently displaying your products in their stores.
There’s a lot of shelf space in a Target store.
Even if you’re fortunate enough to have the retail chain stock your product line, your success in those stores will depend a great deal on how and where those items are stocked, and whether the stores put any effort into displaying them to catch shoppers’ attention.
If a manufacturer goes out of its way to demonstrate that it will always protect that retailer’s margins — with a well-publicized and aggressively enforced MAP policy, for example — that company’s products are more likely to earn prominent placement in the store.
- Ordering demo or display units of your products.
Another indirect but major benefit of establishing and effectively enforcing a MAP price is that it will give your brick-and-mortar retailers far more comfort in ordering demo and display units of your products for their stores.
This is precisely the type of upfront investment of capital (purchasing the units) and resources (taking employees’ time to set up the units in the store) that retail stores worry about making if they believe there’s a strong likelihood that some of their shoppers will take advantage of these demo units for showrooming purposes only.
But your MAP price sends a clear signal to these retailers that their customers won’t be able to use their stores to see, touch or try your products only to go buy them for less from an online seller. That means these retailers will be more comfortable investing in demo or display units — which will both boost sales and even introduce your brand to new customers.
- Training in-store sales reps on your products’ features and benefits.
Another investment your brick-and-mortar retail partners will worry about making is training in-store sales reps on the features and benefits of your products, so they can speak about them intelligently and persuasively to shoppers.
Without a MAP price in place binding all resellers to advertise your products at or above a specified amount, your retail partners with physical stores will justifiably worry that a savvy shopper will visit their store with the intention of wasting a salesperson’s time getting educated about one of your products — while planning all along to leave the store and buy the item for less from an e-commerce site where they saw it advertised for less.
Now think about the flipside. If you establish and aggressively enforce a MAP price across your entire resale channel — demanding the same minimum advertised price from your online-only retailers as you do from your brick-and-mortar partners — those large retail chains will be far more confident that their margins will be safe.
This means their interests will be nicely aligned with yours — to bring more shoppers into their stores to see your products, to educate their salesforce on how best to articulate the advantages of those products, and of course to sell more units.
In other words, establishing and enforcing a MAP price for your products can lead to more than just a major retailer like Target being comfortable “stocking” your inventory in their stores. It can also give them the confidence to make these additional investments — and become a true sales advocate for your products.