Disruptive technologies are enabling new ways to circumvent minimum advertised price (MAP) policies.
Retailers are constantly deploying newer and cleverer ways to evade MAP policies. These include encrypting online prices to dodge price monitoring tools, making personalized offers on social media and email, implementing coupons and instant rebates, among others. Brands that don't evolve to meet these new challenges risk brand dilution and ineffective channel relationships.
An increasing number of channel managers and legal counselors realize that what worked in 2015 will be partially effective in 2016. Here are some factors keep in mind while framing and enforcing an effective MAP policy in 2016:
While framing the policy
1. Update policy to include price obfuscation
It's not uncommon for retailers to exploit the blind spots in your MAP policy. An increasing number of retailers today ask shoppers to call, register on their website, or add products to the cart to find out the real prices of a product. These prices can often be below the agreed MAP, but there's little merchants can do to curb them if they are not defined as violations in their MAP policy. Other methods to be included in your MAP policy include personalized offers on social media and email, which in turn will obfuscate prices., such as personalized offers on social media and email, and encrypted online prices also need to be included in your MAP policy.
2. Complement MAP policy with a UPP policy for high-value products
Checkout prices are not subject to MAP, as they are displayed only when a customer shows interest in buying a product. But, steep checkout-level discounts can also dilute the perceived brand value. If you notice an increase in checkout-level discounting, consider complementing your MAP policy with a Unilateral Price Policy (UPP) to discipline over-discounting at the checkout page.
3. Modify MAP for peak shopping seasons
Internal data shows a spurt in MAP violations by 15-20 percent during and a few days after festive seasons. Some brands choose to bolster their price monitoring for these times. Alternatively, to avoid too many retailers from undercutting each other, a lot of brands vary their MAP prices for specific seasons to give retailers additional room for lowering prices.
While enforcing the policy
1. Tune the monitoring based on retailer segments
The Internet is wide and complex, and it can be too far-fetched to expect 100 percent MAP compliance at all times. Depending on parameters like volume of sales that fall below MAP, you can tune your monitoring to specific retailer segments (large online retailers, marketplaces, local retailers).
2. Include mobile apps and mobile ad networks when tracking for MAP compliance
It's no longer enough to only monitor website prices. In 2015, the usage of shopping apps grew faster than any other category of apps, according to mobile analytics firm Flurry. The surge in smartphone apps has also given way for mobile ads that you can't afford to ignore any longer.
3. Use data scorecards to encourage compliance
Agreeing to a MAP policy often means that retailers will be undercut by others who don't. There's an opportunity to use data scorecards to influence desired compliance.
While technology disrupts its also an enabler. Making effective changes to the MAP policy and effectively deploying technology can help on-going brand protection.
BIO: Mihir Kittur is a co-founder and chief innovation officer at Ugam. He oversees sales, marketing and innovation and works with leading retailers and brands, delivering insights and analytics solutions to support their category decisions and improve business performance.