MAP MONITORING AND ENFORCEMENT: AN INTRODUCTION
Before we delve into the details of effective MAP monitoring and enforcement, let’s briefly review a few basic concepts.
A MAP pricing policy can actually refers either of to two different types of policies manufacturers and brand owners use to protect their products’ pricing.
There is a Minimum Advertised Price (MAP) policy — which sets minimum the amounts that a reseller is allowed to advertise a manufacturer’s products. This policy makes no attempt to influence the reseller’s actual selling price.
Then there is the more comprehensive Minimum Resale Price (MRP) policy, sometimes also called a Minimum Retail Price policy — which establishes the prices a manufacturer will allow its reseller both to advertise and actually sell its products.
Your Choices for MAP Monitoring and Enforcement
Now, let’s assume your company has already identified which of the two types of MAP pricing policies is right for you, and that you have also drafted strong policy. (Ideally, you will have done this not alone but with help from the right team of Brand Protection Experts.)
And let’s further assume that you have taken smart steps to publicize your new policy across your resale channel.
The next question is: What processes and technologies should you set up to monitor and enforce the policy?
Essentially, you have three options:
Option 1: Create and manage the program manually, in-house.
You can dedicate some of your in-house staff to monitor the web every day, reviewing your products’ presence across all retail partners’ eCommerce pages, Internet marketplaces like Amazon, and online ads.
The drawback of this approach, as you’ll quickly find out, is that it probably won’t be feasible — because it could literally mean reviewing thousands of web pages every day (or even more than once a day). And even if your team gives its all-out best effort, they could still miss many violations of your MAP pricing policy.
Option 2: Work with an antitrust law firm.
While we believe strongly in engaging the services of antitrust legal experts to help draft and develop the specific enforcement strategies for your MAP pricing policy, we wouldn’t recommend handing over all of your company’s day-to-day MAP monitoring and enforcement responsibilities to a law firm.
Obviously, such an arrangement would be costly — lawyers aren’t inexpensive. But a less obvious reason is that by outsourcing all of your MAP monitoring and enforcement responsibilities to a third party, you’ll also be giving up much of the visibility and business intelligence into your products’ presence across your resale channel that you’d otherwise be gleaning if you were managing the process yourself.
Option 3: Deploy an automated MAP monitoring platform online.
The third option, which we would argue is the best, will be to set up an automated online system for monitoring and enforcement of your MAP pricing policy.
Such a platform takes the best elements of both of the previous options to create an effective, affordable method of protecting your MAP pricing across the Internet at all times. It can also give you deep visibility — and more actionable insights than you’ve ever had — into what’s happening in your retail channel.
MAP Monitoring and Enforcement: How to Do It Right
Below we will describe some of the best practices for both MAP monitoring and MAP enforcement. As you will see, your ability to effectively use these strategies will in most cases require that you choose option 3 from the list above — setting up an automated system for MAP monitoring and enforcement, as opposed to trying to handle these functions manually, in-house.
MAP Monitoring Best Practices
- Compile all of the data — product names, SKUs, a list of authorized resellers, etc. — that you’ll want to track.
Your first step in setting up an effective reseller price monitoring program will be to make sure you have all of the products and product-related data that you’ll want to monitor.
That list could include a combination of product identifiers such as SKU numbers, ASINs (for Amazon products), ePIDs (for product sold on eBay), GTINs, UPCs, your own serial numbers, or any form of identifiers you use to label and track your products.
You might also have specific trademarked text, proprietary images or videos, or other product-related intellectual property that helps you quickly spot your products represented in an advertisement or on a reseller’s sales page.
And speaking of resellers, perhaps you also have a list of authorized dealers or retailers. Those resellers will obviously represent the first sets of websites — their own eCommerce pages and any online marketplaces where they have a presence — that you’ll want to begin regularly monitoring.
- Make sure your monitoring system covers as much Internet ground as possible.
If your products are being sold by dozens of retailers, and each of those retailers has an online presence across not only its own site but also dozens or perhaps hundreds of third-party sites and marketplaces, it’s plausible that your products might at any given moment be appearing in ads and on sales pages across thousands of websites.
That’s a lot of ground to cover in your price monitoring process. And even if you could review all of those ads and sales listings, how often would you do it? When would you do it? Remember, some retailers will intentionally drop their advertised prices below your policy’s approved levels during off-hours — when they’re hoping your company won’t notice.
What all of this means is that you can’t simply instruct your team to randomly type in the names of a handful of your products or a few ASINs whenever they have a few free minutes to look for possible reseller pricing violations. That process would be neither systematic nor effective.
So you’ll need to devise a strategy that allows you to monitor as much of the Internet as possible, as often as possible, to give your company the best chance of catching pricing-policy violations.
That means you’ll need to establish a structure and a cadence for how to most efficiently and effectively search for that information. So you’ll want to consider questions like these:
- Do we want to repurpose an employee, or several, or hire new ones, to monitor the Internet at specific times of each day for violations?
- How do we want these in-house team members actually conducting their monitoring? Should they view each authorized reseller’s own eCommerce pages each day? More than once a day? And at what times of day?
- What process should we implement to make sure each time an employee spots a price-policy violation online, that employee is able to sufficiently document the violation, identify the offending company, check that company against our list of authorized resellers, and then take appropriate action?
Because these price-monitoring processes would obviously be far too time-consuming and costly to perform manually in-house, we recommend outsourcing most of these ongoing tasks to an automated price-monitoring and enforcement platform like the one available from TrackStreet.
- Make sure your price monitoring process is designed to catch every type of violation specified in your policy.
We’ve discussed some of your resellers’ strategies for selling your products that your company will have to determine whether or not you are willing to allow.
For example, will you let a reseller include an “Add to cart for best price” offer, if that in-cart price will ultimately be lower than your policy’s approved amount?
If you don’t want to allow that sort of thing, then your price monitoring program will also need to account for this. That means if your process will consist of employees manually scanning the Internet for violations, they will also have to stop on each sales page to make sure the reseller isn’t offering a policy-violating price in their shopping carts.
As you can imagine, this will slow down your already-slow manual monitoring process even further. Which is yet another reason to opt instead for an automated price monitoring and enforcement platform.
- Establish a process for documenting violations.
Whichever way you choose to set up your price-monitoring process — as an in-house manual operation or through an automated platform — you’ll need to determine how you want to document each violation.
And regardless of what your enforcement strategy will entail, you will always want to document violations. This documentation will come in handy under any circumstances — such as if you approach the offender directly and demand they remove the policy-violating page, if you approach the marketplace (such as Amazon) where the violation is occurring and ask for their help, if you plan to take legal action against the offending reseller, or if you just want a record of the violation for possible future action.
But what exactly will it mean for your company to document a violation? You’ll need to develop a system, a set of guidelines, which might include:
- A screenshot of the reseller’s page showing the violating of your price policy.
- A timestamp on the screenshot, to prove when the violation took place. (This might prove helpful if you need to prove repeated violations over time.)
- The URL of the page (whether it’s the reseller’s own eCommerce site, an online marketplace, or another third-party web page).
You’ll also need to establish a systematic process for what to do with this documentation:
- If an employee discovers a violation from a reseller, should that trigger an automatic and immediate review of all other sites and marketplaces where the reseller appears? After all, if you’ve caught a company violating your policy on one site, there’s every reason to believe they are committing the same violation elsewhere.
- Where will you store these documentation files for archiving and retrieval purposes?
- Will you establish an electronic filing convention — such as creating a new folder for each violation, with individual screenshots and supporting files saved in the folder?
- Will you have your employees generate and save multiple copies of these violation folders and files — for backup redundancy? Where will the backup files go?
- Make sure you are monitoring the Internet for all types of violations.
When you are able to effectively monitor your products’ presence across the Internet, you might find resellers inaccurately or inappropriately representing your products in ways other than simply offering them at prices below your policy’s approved levels.
You might find, for example, a grey-market retailer listing your products on a marketplace like Amazon or eBay with incorrect product specs or misleading sales copy. You might also find a member of your Authorized Dealer Program advertising your products but failing to use your trademarks appropriately — a violation of one of the terms of the program.
If your team is looking only for price violations, you might well miss these other issues — which collectively can have the effect over time of harming your brand’s reputation. So any effective reseller-policy monitoring program should also include a plan to check regularly for these other, non-price violations as well.
MAP Enforcement Best Practices
Assuming you’ve established an effective and efficient system for monitoring your products’ presence across the Internet, your next question should be: What happens when we actually catch a violation?
- Develop separate strategies for responding to authorized and unauthorized resellers.
One persistent myth in brand protection discussions is that manufacturers must respond identically to all offenders — or they risk appearing to favor certain companies over others, which could be deemed an antitrust violation.
While it is true that you cannot set up a pricing policy and then selectively enforce it —punishing certain resellers while allowing others to violate the policy — the truth is you will need to deal with different types of retailers in different ways.
For example, if you’ve set up some form of Authorized Dealer Program, that means that some resellers — the grey-market operators — will be selling your products without your permission. For these retailers, you can take aggressive action without fear of antitrust issues because by definition your issue with those companies will be a question of authorization — not price.
When you catch these unauthorized retailers selling your products, you can send cease-and-desist letters and other notices threatening legal action. You don’t have to treat these companies the same way you’d treat an authorized dealer that runs afoul of your policy — because they have no business selling your products in the first place.
With an authorized reseller, on the other hand, you’ll need to be far more careful and deliberate in how you address a policy violation. You might want to simply remove such a company from your Authorized Dealer Program after their first violation. Or you might want to set up a graduated enforcement plan, where after one violation you’ll institute certain consequences — say, suspending their inventory for 60 days — and then remove them from your authorized list only if they commit a violation a second time.
But you will need to enforce your consequences consistently for this subcategory of reseller.
The point here is that you do not — and should not — treat all reseller violations identically. Unauthorized resellers do not need the same antitrust consideration that your legitimate resale channel requires. But when it comes to your authorized resellers, you will need to enforce your policy consistently.
- Send formal enforcement notifications to violators — but do not discuss them.
Let’s say your team catches a reseller offering your products on their website for a price below your UPP-approved price.
And let’s further assume you’ve decided that your enforcement policy will be to immediately cut off such a reseller’s access to future inventory and remove them from your authorized list. How do you actually execute on that enforcement strategy?
The best practice here is to simply send a formal notification to the company giving them the bad news. This notice should restate your policy’s relevant guideline and the consequences for violating it (removal from your channel). It should also show evidence of where the reseller violated that guidelines (using the documentation you’ve compiled). And it should then state that the company is now officially removed from your authorized list and is no longer allowed to sell your products.
And that’s that.You should instruct your team not to speak with any representative of the reseller’s company by phone, exchange emails with the company (even if only to reiterate the fact that they’re being terminated from your network), or any other type of communication after the termination.
Why? If your reseller ever challenges you in court over this termination, you don’t want to give them any ammunition to demonstrate that you are willing to discuss or negotiate your policy with a reseller.
Furthermore, if your company ever decides unilaterally to reinstate the reseller, you also need to be able to demonstrate that your decision was indeed unilateral — that you had no discussions, negotiations or communication of any type with this company regarding their termination.
Keep in mind also that if another reseller you’ve terminated for similar reasons ever decided to challenge your decision legally, they could subpoena communications from other resellers — and any communication you’ve ever had about your policy with another terminated reseller that you eventually reinstated could support their claim that you are playing favorites and possibly violating antitrust law.
- Prepare as much of your enforcement material as possible beforehand — first warnings, cease-and-desist notices, termination letters, etc.
When your team catches a violation, you don’t want them to have to guess about what their next move should be. You don’t want an employee drafting and sending off ad-hoc warning notices to every violator, either.
You need to systematize as much of your enforcement process as possible. This means, for example:
- Drafting legally sound boilerplate language for your first warning notice (which you can lightly customize for the specific company, as long as the customization doesn’t materially change the warning’s language)
- Drafting legally sound boilerplate language for a cease-and-desist letter for unauthorized retailers (which you can lightly customize for the specific company, as long as the customization doesn’t materially change the warning’s language)
- Drafting legally sound boilerplate language for a removal-from-network letter to an authorized reseller you are terminating (which you can lightly customize for the specific company, as long as the customization doesn’t materially change the warning’s language)
- Drafting legally sound boilerplate language for a response to inquiries about your reseller policy — which should not discuss or offer additional information about the policy but should instead direct the inquirer to either an FAQ page about your policy or to your company’s primary Reseller Price Policy contact person.
You will of course need to prepare more documents than this, and you will need to decide in advance who at your company will be responsible for reviewing each violation to determine which enforcement action to take.
But this should give you an idea of why it’s so important to automate the process to whatever extent possible — the business and legal implications of incorrectly enforcing your pricing policy are too risky to leave these decisions to a case-by-case basis or to let your company’s actions be dictated in part by which employee happens to catch the violation.
3 Common Mistakes Brands Make in MAP Monitoring and Enforcement
We’ve discussed many of the must-have items for reseller pricing policies as well as some best practices for each aspect of a comprehensive brand protection strategy — from drafting to publicizing to monitoring and enforcing your policy.
Now let’s look at where many brands step incorrectly and fall into traps when developing and managing their reseller policies.
- Failing to adequately take enforcement action against violations.
Even if a manufacturer develops and publishes a rock-solid, legally sound reseller policy, it will mean nothing if the manufacturer doesn’t also continually monitor the entire resale landscape for violations.
As we noted earlier, publishing a price policy and then failing to catch and take action against violations is actually worse than not having such a policy at all. That’s because when your honorable resellers discover that shady retailers are violating your policy — and getting away with it — they will question whether it makes sense to continue representing your product line.
After all, if your above-board resellers can be undersold anytime by a grey-market retailer, how can those legitimate sellers compete?
- Treating all violators as equal. (They aren’t.)
Yes, there are legal risks to inconsistently enforcing your policy against authorized resellers — inflicting strict punishments on some while giving others a free pass. But violations of your policy aren’t necessarily all equal, because your products’ resellers don’t all have equal standing with your company.
When one of your longtime retail partners violates your minimum price policy or a clause in your Authorized Dealer Program — publishing sales copy for one of your products without proper trademark attribution, for example — that is not the same as discovering a grey-market retailer selling your products on eBay without your authorization.
Many manufacturers incorrectly treat all of these violations the same —issuing a sternly worded cease-and-desist letter without first checking to see whether the retailer is actually a part of their official network and might have made an innocent mistake.
These one-size-fits-all approaches to MAP enforcement can damage your reputation with honorable resellers and ultimately cost your company long-term revenue.
- Failing to establish a comprehensive and effective process for monitoring and enforcement (which typically requires automation).
Perhaps the biggest mistake we’ve seen is implementing a monitoring and enforcement process that, given the company’s limited internal resources, simply can’t catch all or even the majority of violations.
When a manufacturer tries to police its brand using an in-house team scanning the Internet as often as they can, they are almost certain to catch and be able to deal with far fewer violations than if they were to automate at least part of the process.
The eCommerce landscape is just too vast. Your resellers are offering your products on too many sites simultaneously — from their own online storefronts, to marketplaces like Amazon, to other third-party sites, to pay-per-click and display ads — for your team to be able to effectively cover all of that ground at all times.