Minimum Advertised Price, or MAP, is a type of pricing strategy that aims to protect both the supplier and the consumer but also the existing competition. This is the reason it is a vital thing to monitor and to the maintain the competitiveness of the market.
The basics of MAP policy
Industry professional PriceManager explains that MAP is a regulation implemented by the government to set the minimum price that the business owners should follow. Its concept is basically based on the law of demand with respect to the price of the product. Consumers tend to buy a product or service with a lower price (assuming other factors constant). This policy is also crucial to a new trend in entrepreneurship which is the online selling. Majority of online sellers are resellers of other products and should not present its product lower than dictated in the MAP.
In economic terms, having a retailer imposing a lower price compared to the competitors causes “distortions” in the market or so-called “market imperfections.” Imagine a market that a new company advertises a product’s price lower than any other retailers in the market. The shift of the demand of consumers will tilt to the new company. The price strategy of other companies is that they will lower their price. The downfall of prices lowering to the competitiveness will have implications on the quality of the products with respect to the costs the retailers have to make up.
Other than having implications on the quality of products and the competitiveness in the market, MAP policy monitoring is important to businesses, regardless of the size. MAP serves as a benchmark of assessment to other retailers present in the market. It also serves as a reminder of how much you should only discount your product or service in compliance to MAP policies.
Paying close attention to MAP is something business owners should take seriously. After all, consumers are always on the lookout of every company’s price strategies if they want to have the best of the quality of products they want to buy or resell.