Is there a significant distinction between MAP pricing and MSRP? Are these two concepts essentially the same? Can we implement both MAP pricing and MSRP for our products? Let’s delve into the details.
Understanding UMAP (IMAP, MAP, EMAP)
Unilateral Minimum Advertised Price (UMAP), also known as Internet Minimum Advertised Price (IMAP), Minimum Advertised Price (MAP), or Electronic Minimum Advertised Price (EMAP), refers to the minimum price at which sellers can advertise products. Implementing a UMAP policy allows manufacturers to exercise control over the lowest price at which their products can be advertised. This policy is enforceable when a manufacturer holds a Reseller Agreement with the seller.
The Significance of UMAP
Manufacturers typically establish a UMAP policy to standardize the value of their products across their resale channels. By enforcing a UMAP policy, manufacturers can impose consequences on distributors and sellers who advertise their products below the UMAP, including terminating their business relationship.
UMAP offers several benefits:
Promoting Fair Competition: UMAP not only benefits manufacturers but also sellers. By strictly enforcing UMAP, price wars among sellers can be eliminated, as it defines the minimum price at which a product should be sold. This is particularly advantageous for brick-and-mortar sellers who often face challenges competing with online retailers that have lower overhead costs. UMAP policies enable both physical stores and online retailers to offer competitive prices.
Protecting Seller Margins: With UMAP in place, sellers don’t have to lower their prices and profit margins to compete with other merchants selling the same product. UMAP creates a level playing field for sellers, where factors like availability, proximity to the consumer, customer service, and shopping experience differentiate them.
Maintaining Brand Identity and Value: Enforcing UMAP ensures that sellers do not undermine the value of products by advertising them below their worth. TrackStreet, with its leading brand protection Software as a Service (SaaS) platform, simplifies the MSRP enforcement process for brands.
However, UMAP policies may not be effective against unauthorized sellers who lack agreements with the manufacturer. In such cases, legal actions may be limited unless an attorney gets involved. However, if an authorized distributor is found supplying unauthorized sellers, a UMAP policy can help terminate the partnership with the problematic distributor and cut off the supply to unauthorized sellers.
UMAP and its Impact on Amazon
Brands often desire to sell their products on Amazon, the world’s largest online retailer. However, Amazon’s pricing model aims to keep prices as low as possible for consumers. Enforcing a UMAP policy can help control pricing in the ecommerce marketplace, thereby influencing Amazon’s pricing. While there is no quick fix for the situation with Amazon, having a UMAP policy in place forms the foundation for brand protection initiatives.
Before discussing MSRP, it is essential to understand Unilateral Pricing Policy (UPP).
Unilateral Pricing Policy (UPP) shares similar objectives with UMAP, except that UPP does not involve any form of agreement. UPP is often referred to as a “one-way policy” as it allows manufacturers and resellers to maintain their independence. A company implementing UPP unilaterally enforces the conditions of the policy without requiring agreements with sellers, although Reseller Agreements may still be in place.
Is UPP Legal?
Yes, a Unilateral Pricing Policy is legal. The term “Colgate” policy is sometimes used to describe UPP because when the United States sued Colgate in 1919 (United States v. Colgate & Co., 250 U.S. 300, 307), the Supreme Court acknowledged that a company has the