When you start distributing your products to retailers, the idea is that you will earn more from the bigger number of products that can be sold. You are also increasing your brand’s visibility and making products more accessible to loyal customers. However, you are also opening your brand up to new problems, one of which is the reduced quality and uncontrollable pricing.
Here’s what you should do:
Establish a MAP Policy
More and more businesses are coming up with a MAP pricing policy to protect their brand’s reputation and control the pricing across all channels. Without MAP pricing, online stores may have an unfair advantage if they can sell the products for as low as they are willing.
They have the means to not lose profit because they are not burdened with the operating expenses associated with keeping a brick and mortar store. This causes a bias in product sales, and customers will favor buying online rather than going to an authorized retailer in their neighborhood. If your authorized distributors are not making any profit, they might be tempted to price the products lower to stay afloat.
Because one errant retailer may cause a domino effect, it’s important that a brand enforces the MAP policy they have created. Before you even announce your pricing policy, you need to seek antitrust counsel to prevent antitrust liability. Retailers are allowed to sell the product at any price they deem fit, as long as the price does not go below the policy’s minimum advertised pricing.
Now, to enforce the policy, businesses need to track online pricing to see which retailers are not complying with it. There are subscription software options that help do this for a business. For brick and mortar stores, representatives can do a routine check of branches to see the prices they advertise.
A pricing policy is important when you have a brand to protect. The bigger the brand, the more you want it to keep a good reputation, and that will not happen if you don’t enforce your policy.