The Domino Effect of MAP Violations…A Race to the Bottom

It’s tempting for brands to simply ignore MAP violations. Without automated MAP monitoring software and a clear MAP enforcement plan, it takes a lot of time and effort to respond to every violation and enforce your pricing policy.

But the problem is that MAP violations don’t happen in isolation. And if you let them slide, they can cause lasting damage to your brand, your products, and your bottom line.

Typically, when one seller violates your MAP policy, it sets off a chain reaction: everyone else violates your policy, too. We often refer to this as “race to the bottom” pricing, where every seller lowers your price a little bit more to stay competitive—and before you know it, no one is making a profit on your products, including you.

But another helpful way to think about it is the domino effect. Here’s how it works.

The danger of repricing software

One of the ways sellers stay competitive is with repricing software. Similar to how our MAP monitoring software crawls your product pages to identify MAP violations, repricing software crawls product pages to identify price drops—so that sellers can automatically match the lowest price on any products they sell.

That means when one seller violates your MAP policy, other sellers automatically do the same. They’re not violating your policy on purpose. But that’s not the point. It doesn’t matter if it’s malicious. When one domino falls, it knocks down all the others. A single MAP violation can lead to hundreds more in a few days—or even a few hours.

The worst part is that even after you correct the violations and get your pricing back to normal, the damage lingers. The domino effect of MAP violations inevitably leads to price erosion.

The long-term damage of MAP violations

Over time, MAP violations cause price erosion, which is when the value of your products (or the perceived value) steadily decreases over time. A constant stream of MAP violations will normalize a lower price point. After you’ve stamped out the fires and corrected the pricing, that lower price point may still be what consumers expect to see your products priced as.

In other words, the final domino in the domino effect of MAP violations is that consumers think your products are worth less than they actually are. And that makes every sale harder to earn. Anyone who saw the lower price point everywhere but decided not to buy will feel like they’re overpaying if they get your product for the regular price. So they won’t buy it.

The problem with pricing policies you don’t enforce

Pricing policies only work if you enforce them. If there are no consequences for violations, there’s little motivation for sellers to comply. Your best retail partners care about your brand and their relationship with you, so they’ll play by the rules. But when some unknown seller starts violating your price, it’s often out of your retail partners’ hands. The domino effect takes over, and even if your other sellers don’t have repricing software, they have to violate your price to keep competing with the other violators.

How to stop the domino effect

The only way to stop the domino effect is to provide consequences when that first domino falls. As you enforce your pricing policy, sellers will start to take it more seriously, and they’ll be less comfortable risking a violation.

But how do you enforce your price when you have thousands of SKUs scattered across hundreds of sellers? You can’t possibly keep up with a manual process. But with price monitoring software like PROWL, you can automatically detect MAP violations the moment they occur, and you can even automate enforcement.
See it for yourself.

Schedule a demo of PROWL today.

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