If you’ve ever heard a colleague refer to his company’s MRP, or describe his reseller policy as a UPP, or an RPM, or an eMAP—and wondered what the heck he was talking about—this post is for you.
Reseller pricing policies are a vital component to the success of any brand that sells through a resale channel. But these policies can be far less effective and even counterproductive if you misunderstand how to draft and enforce them or implement the wrong one for your business.
So in this post, we want to help clear up the confusing alphabet-soup list of reseller policies, to help give you a better understanding of their similarities and differences, as well as a clearer picture of which one your company should implement.
Below we’ll define the following types of policies:
- Minimum Advertised Price (MAP)
- Minimum Resale Price, or Minimum Retail Price (MRP)
- Unilateral Price Policy (UPP)
- Resale Price Maintenance (RPM)
- Authorized Dealer Program (ADP)
- Internet Minimum Advertised Price (iMAP)
- Electronic Minimum Advertised Price (eMAP)
First, though, we should point out that there are two primary ways manufacturers can use policies to control pricing—policies with guidelines on advertised prices only, and policies with guidelines for both advertised and resale prices. Most of the terms and acronyms we’ve listed above cover variations of these policies.
The exception above is the Authorized Dealer Program (ADP), which is a policy designed not specifically to control pricing but instead to help a manufacturer control which resellers are allowed to represent the company’s brand and sell its inventory. In fact, creating a network of authorized dealers is usually part of a broader policy for brand protection and managing resellers. We’ll discuss this in more detail below.
MAP (Minimum Advertised Price) policy
MAP is probably the most commonly used term to describe reseller pricing policies—and it’s often used incorrectly as a catchall to mean all types of reseller pricing programs.
In reality, a Minimum Advertised Price, or “MAP,” policy is one in which the manufacturer or supplier sets a minimum price only for its resellers’ “offers”—meaning advertisements and promotions. MAP policies never cover the actual selling price – just the advertised price; resellers are free to actually sell the supplier’s products for whatever price they choose.
Typically, a manufacturer will opt for a MAP policy—covering advertised prices only—when the company’s main concern is preventing public pricing of its products that it worries will undermine its brand and upset key retail partners.
MRP (Minimum Resale or Retail Price) policy
A Minimum Resale (or Retail) Price, or “MRP,” policy is far broader, allowing the supplier to set minimum prices on its products for all offers and even the actual resale price.
A manufacturer or brand owner will often opt for an MRP policy, as opposed to MAP, if the company is concerned about what its products actually sell for—not just the prices that appear in their retailers’ offers.
Because it is more comprehensive, an MRP can be a more effective brand protection policy for luxury brands or companies that do not want the public to find that customers can buy their products for less than they see advertised.
Note: MRP is often used interchangeably with the term Unilateral Price Policy (UPP), which we’ll discuss below.
MSRP (Manufacturer’s Suggested Retail Price)
As its name implies, MSRP, or Manufacturer’s Suggested Retail Price, is simply the price a manufacturer suggests its retailers list its product for. When it comes to cars, for example, MSRP is known as the sticker price—which is rarely what the product actually sells for. Manufacturers expect that retailers will allow for some negotiation with customers and will sell their products a little below the MSRP.
When a manufacturer establishes an MSRP for its product, the company is typically attempting to accomplish a few key goals. First, the manufacturer is attempting to standardize a product’s retail price across the company’s resale channel. This way, the manufacturer can protect the interests of all of its retailers—particularly the brick-and-mortar store chains carrying its product line—from being unfairly undersold by competitors.
A second goal of an MSRP is to establish a price that takes into account all of the costs required for selling the product—from all costs incurred in the manufacturing and distribution processes, to the typical markups for wholesalers and retailers. This way, the manufacturer helps ensure that all businesses involved in the sale can earn a profit from it.
Finally, just as manufacturers establish MAP pricing in part to protect their brand’s perceived value—because a product constantly advertised at bargain prices can eventually harm the brand’s reputation—an MSRP also helps manufacturers protect their brand over time, keeping its retail prices at levels that suggest a quality brand.
You can find more detail about MSRP and how it differs from MAP pricing here.
UPP (Unilateral Price Policy)
A Unilateral Price Policy (UPP), sometimes referred to as a Unilateral Policy (UP), is similar to an MRP in that a manufacturer uses it to dictate its minimum acceptable prices for their resale partners both to advertise and actually sell their products.
But the term UPP is used specifically to describe policies that are unilateral—meaning one-way statements from the manufacturer to its resale partners, as opposed to agreements that those resellers must sign.
In reality, though, most MRP policies are also structured as unilateral statements and not agreements. This is true both for legal reasons (such an agreement could be challenged as an antitrust violation) and for business reasons (it’s a time-draining headache to get every one of your resellers to sign an agreement and then sign it again every time you make an update.)
So the term UPP is really an outdated term—when you hear it, you should think of Minimum Resale Policy (MRP).
RPM (Resale Price Maintenance)
RPM is another term used as a catchall to mean a policy controlling reseller pricing.
In our view at TrackStreet, resale price maintenance should actually refer to a broader, comprehensive program to combat price erosion and damage to your brand.
For example, you should think of your Resale Price Maintenance strategy as involving several tactics, such as:
- Continuously monitoring your resale channel and aggressively pursuing gray-market sellers.
- Drafting, publishing and enforcing your reseller pricing policy (whether it’s a MAP, an MRP, an iMAP, an eMAP, etc.).
- Establishing an Authorized Dealer Program, which we’ll discuss next.
ADP (Authorized Dealer Program)
Of all the policies we’ve described so far, an Authorized Dealer Program is the outlier. Unlike the other policies here, an ADP is not primarily about controlling how resellers price your products but rather about which resellers you allow to represent your brand and carry your inventory in the first place.
When you create an ADP, you are telling your distributors and wholesalers which retail companies they may sell your products to—and that they may not sell to anyone not on that list. This gives you more control over (and more visibility into) which companies are able to buy your products for resale and it can also help you limit rogue resellers and pricing policy violations.
As we pointed out earlier, an ADP is usually an element of a broader program the manufacturer has in place for controlling its pricing and safeguarding its brand. For most online listings, a reseller would need to submit a detailed application to the marketplace to be allowed to sell the brand’s products, and that application process would require the seller to demonstrate they have manufacturer authorization to retail those products.
In other words, regardless of the specific type of reseller pricing policy a brand owner has in place, in most cases some form of Authorized Dealer Program will be a necessary component to enabling that manufacturer to sell online through a retail channel.
Note: When you create an ADP, we highly recommend you give your authorized resellers a way of distinguishing themselves for their customers as official representatives of your brand.
One great way to do this is with a trust icon these resellers can place prominently on their websites and in their online ads. Ideally, your trust icon will be a clickable link that will open a live window onto your site verifying that the seller, indeed, has your endorsement to sell your products.
iMAP (Internet Minimum Advertised Price) policy
An iMAP policy covers Internet-based offers only, meaning this policy sets the guidelines only for the prices your retailers may advertise your products (they are free to actually sell them for any amount they choose) and only for their online ads and sales pages. It does not include other forms of electronic communications, such as emails; that is a separate type of policy, which we will describe below.
Note: A manufacturer can choose to have more than one of these policies, so publishing an iMAP policy does not preclude you from also dictating offline advertised pricing minimums for your retail partners.
eMAP (Electronic Minimum Advertised Price) policy
An eMAP policy covers all electronic channels a reseller might use to advertise a manufacturer’s products—not only through online ads and sales listings but also using methods such as email and text messages to customers.
Note: Again, you can have both an eMAP policy and a standard MAP. This might be a smart strategy if, for example, you have resellers that do not sell your products online or using any electronic means, and you don’t want to clutter your standard MAP policy for them with lots of guidelines about marketing channels they don’t use.
Confused? We can help.
That’s is a lot of information to take in! Add to this the fact that many in the manufacturing industry often use these policy terms incorrectly, and you can see why it makes sense not to try deploying your own reseller pricing policy without the help of brand protection experts.
So let us give you a free demo of how the right reseller policy can work for you.
