A lot of brands see a minimum advertised pricing (MAP) or unilateral pricing (UP) policy as the best way to correct price discrepancies and protect their margins. But creating a pricing policy is only part of the solution. And if you execute it poorly, a pricing policy can actually do more harm than good for your brand—because it puts your integrity under scrutiny.
In this episode of Ecommerce Connected, PriceSpider’s host Anthony Capozzoli sits down with Bill Johannesen, founder of Vision Werks and one of the chief architects of Bose’s well-known unilateral pricing policy, to talk about where brands often go wrong with pricing policies and how you can get them right.
“Implementing a MAP policy’s either the best thing you ever did for your brand or the worst,” Bill says. “There’s no middle ground on this.”
It’s only the playbook
If you can follow and enforce your policy, it ensures every customer has the same perception of and experience with your brand, and your retail partners will respect and trust you. But if you expect your policy to take care of itself and you don’t enforce it, it quickly becomes meaningless—and it may cause retailers to distrust everything else you do and say”.
Your pricing policy sets expectations, tells your sellers what to do with your products, and defines how you’ll respond to violations. It lays out the plays. But you still have to execute them. If you don’t follow the playbook, your retail partners won’t be able to take you seriously.
It may require you to make big changes
Right now, you may not have the distribution channels, supply chain, infrastructure, bandwidth, or budget you need to act on your pricing policy. Before you tell your sellers you’re going to hold everyone accountable, you need to be ready to actually do that.
One of the most glaring examples of where this often falls apart for brands is the Amazon Marketplace.
“Amazon, quite frankly, is a magnifying glass on the holes in your supply chain, on the holes of your distribution strategy, on the holes of your channel strategy,” Anthony says.
When you let anyone with a pulse sell your products, you may wind up with sellers who don’t even see your pricing policy before they start selling, numerous product bundles, sellers you can’t contact, and other issues that make it difficult to enforce your policy and stay true to your word.
It needs to be someone’s responsibility
If no one is in charge of enforcing your pricing policy, it’s simply not going to happen, and your policy becomes a meaningless document.
Anthony says, “A lot of brands I talk to are like, ‘Well, we don’t have anyone at all dedicated to helping us solve this problem towards MAP.’ Or, ‘We’ll let the intern do it. They’re here for a couple of months in the summer.’”
But this isn’t a “task” someone can do once and then ignore. Price monitoring is an ongoing responsibility. “It’s a process, not a project,” Bill says.
If you’re inconsistent, your MAP policy does more harm than good
Brands often find themselves in a difficult position: numerous sellers are violating their pricing policy, but they don’t have contact information for many of them. So, they enforce their policy with the brands they can contact.
“There’s the retailer sitting there, you’re sending him violations, because he’s just trying to compete,” Bill says. “He’s just trying to look good to his customers that he’s not getting his butt kicked on your product in the visible marketplace out there. So, what’s he supposed to do?”
That seller doesn’t have much choice. Their competitors (whom you can’t contact) are going to continue violating your policy and beating them in sales. So they’re going to have a frustrating experience with you and they’re going to keep violating your policy to compete.
Inconsistently applying your policy can get you into legal trouble and ruin your credibility with your best sellers. And that means you need to be strategic about who can sell your products and always make sure you have a channel to enforce your policy.
Using a robust monitoring tool, you can identify those unknown sellers, which allows you to then determine where they’re getting supply and stop distribution to them.
Learn more on our podcast
Anthony Capozzoli lends his ecommerce expertise in our podcast, PriceSpider Ecommerce Connected. This episode features an exclusive interview with Bill Johannessen from Vision Werks. Bill and Anthony discuss common misconceptions and challenges surrounding pricing policies, and explore the solutions that have worked for brands like Bose.
Check it out!