Without the ability to crack the whip on rogue sellers, your brand image and sales can suffer. Haphazard lowering of prices can send the wrong message about the value of your product line. After spending a lot of time and resources on creating a trustworthy and reliable brand image for your company, you want to protect that image. A positive brand perception makes it easy to recruit new and returning customers. Rogue elements looking to turn a quick profit can pose a threat to your business, and you need to get ahead of it. Luckily, having a minimum advertised price (MAP) policy in place lets you do that effortlessly.
Keep high margins
Depending on the size of their operation, resellers have a different level of operational costs. They need to keep the profit margins on any product they carry come with healthy margins. If your product is subject to price undercutting, it’s only natural that people will buy from sellers with lower prices. When that happens, the reseller on your network will experience slow sales and dwindling profits, which is bad for business.
In a regulated market, you can protect all your resellers and keep their profit margins healthy. Retailers will readily join your network, which increases your business reach and boosts your sales. In a market environment where price undercutting doesn’t exist, both small and large retailers can thrive. A MAP policy helps you create such an environment and grow your business reach.
Avoid pricing wars
Online resellers are quite notorious in using price lowering as a means to gain an advantage over the competition. They will mark down the prices on just about any product to get them flying off the shelves. Given that they have lower overhead costs than brick and mortar stores, they still get to turn a profit. Such a move hurt the popularity of your products with the other players on the market.
When resellers resort to undercutting prices to sell a product, what follows is a race to the bottom. Other resellers will follow suit, setting off a series of unfortunate events that can leave your brand image badly tarnished. With the right technology, you can wise up to this issue quickly. You can then instigate corrective measures and keep them from ruining your brand image.
Avoid brand erosion
It takes a considerable amount of effort to convince the market that your brand is credible and that you carry a reliable range of products. Rogue sellers can undo all your hard work and efforts in an instance in the absence of a MAP policy. For example, your products fall on the higher end of the pricing scale and carry a manufacturer’s suggested price of about $999. It’s in your best interest to ensure that all the outlets adhere to the set price.
If some outlets advertise the same items for $699, two things are bound to happen. Most of your customers will troop to the retailers with these low prices, denying your legit resellers sales, which makes the product unprofitable to them. Again, the huge price difference will ruin your brand image and reputation. If some sellers can afford to carry a price that is $300 lower and still turn a profit, your product must be highly overpriced. If consumers think that your prices are inflated, they will never pay the full manufacturer’s suggested retail price (MSRP).
It might not seem obvious, but having a MAP policy in place is an incredible way to grow your business and preserve your brand image. It means that you can keep rogue sellers from ruining your brand and range of products in the eyes of your target market. It lets your market perceive your products and service as both valuable and worth the price you set.