A MAP policy, otherwise known as a minimum advertised price policy or a manufacture advertised price policy is a legal agreement between manufacturers and resellers. Typically, it states that resellers cannot legally advertise a certain product below a certain sales price.
So who would want to use MAP policies and why?
MAP policies are aimed at allowing businesses to advertise at value and prevent price wars, particularly given the ease at which online price comparisons between products can be made. This is especially important for smaller businesses who can’t afford to cut prices the same way that big companies can. MAP policies can also benefit resellers by reducing the risk of having to sell a product for a much lower price than planned due to the pricing of the same product on a different site. This benefits the manufacturing by lowering the chances that their products are not being sold below their desired threshold by resellers, and provides them with a better price control mechanism. In addition, manufacturers often give something to resellers who accept MAP, like money for advertising, lower wholesale prices, etc.
MAP policies help prevent price wars that can quickly spiral out of control and devalue a product or its brand. While they initially may prevent a company from gaining lots of sales due to undercutting prices, in the end they benefit both the manufacturer and the reseller by ensuring that products can continue to be sold at value and at a profit regardless of the size of the business.
The challenge facing manufacturers and resellers is enforcement. Manufacturers often lack the resources to monitor and respond to resellers violating their MAP policy agreements and/or have agreements too ambiguous or restrictive. Many resellers who play by the rules can lose potential sales to businesses not following MAP policy agreements, due to manufacturers not imposing harsh enough punishments on violators.