[CarlV]

Within a different thread on here by a really good guy, A discussion on MAP Pricing entered into the conversation.

I don't want to intrude on that conversation, but Minimum Advertized Pricing has always irritated my gizzard as it's normally not really understood and a lot of uninformed opinions normally enter into conversations. Tempers flare easily.

A simple Google search should set things clearly. Although a re-seller may enter into an agreement with the manufacturer as to the cheapest price he will advertize a product for, there is no agreement whatsoever as to what he can actually charge for a product.

Here's a cut and paste from a 10 second Google search on MAP. Bold and size emphasis is mine.

So what exactly is MAP?
A minimum advertised price is just that - it’s the agreed price a reseller agrees to advertise a brand or product at. There may be some wiggle room, but generally, when a reseller accepts the agreement, they’re stuck. They can’t advertise a product for sale any less than the agreed price. This means in print, online, or any where. Or course, this doesn’t mean they can’t sell the product cheaper, they simply can’t display a cheaper price. And well, if the lower price isn’t shown, it’s hard to discover it.

MAP does not equal price fixing
While collusion to maintain a fixed price or profit margin is illegal in most circumstances MAP policies are legitimate and valid - if done correctly. First, and here’s the big differentiator - MAP pricing does not limit the actual selling price. It simply sets the minimum price a product can be advertised at - whether that’s in print or online.

One way to eliminate a lot of frustration to the retailer and confusion to the consumer is to actually sell a product at MAP, but allow for deep discounts on axillary products related to the origional product that would normally be purchaced anyways.

So there's my understanding of MAP. It really appears fairly simple to me, and to tell the truth - I don't like it. I feel it has always stifled free enterprise and IMO is an attempt to confuse consumers. If a business wants to accept a smaller profit margain then they deserve to sell more of the product. They have the option of offering better customer service and sell products to maintain a good profit margain. I can think of two of our esteemed sponsers on here that don't have the cheapest prices that can be found on the internet, but have an extreemly loyal following due to the exceptional services they offer.

 

[crappie-tom]

In my experience with higher end MAP items when you have cash in hand at a pro-shop it means: Most Absolutely P-ha-nothing.

 

[Wyvern Creations]

Its messier than that. Many MAP agreements state that you are more than able to sell below MAP but if you do you will simply not be allowed to sell the product. Quite a few dealers have found out their sources simply will not sell to them after violating MAP. The reality is that many MAP agreements (Scorpyd or Tenpoint for example) are actually MRP (minimum retail price). I myself would be happier if they just came out and said that as MAP is so confusing that even as an organization the Archery Trade Association has had numerous meetings and included lawyers to clarify it and the bottom line is that its SO grey that its one step removed from useless. However, most manfucturers do allow for some "fluffing" of the kits (free arrows or whatever) provided the selling price is held. The issue becomes one of product value and reasonable profits. If a product is so de-valued by those that simple cant compete any other way than dropping their prices to nothing then why would any dealer support the line? Ive turned down products that I cant make any money on because its a pricing free for all and there is always someone who thinks that if they make $1.00 on an item and sell a million of them they will make a million dollars. As great as it is for consumers to get products one step removed from dealer cost ultimately the dealers tend to go out of business due to too little profit and the manufacturers tend to suffer because better dealers will not sell them. The big mistake here is that in many instances MAP DOES limit the actual selling price if the dealers want to continue to sell the product. The attitude (and basically what is in the agreement)from the manufacturers is that "you can sell for whatever you want.. but I don't have to sell my product to you if you choose to do so". Consumers generally don't like it...they feel the "bottom line" should be fluid and the "race to the bottom" is how dealers have to compete. Dropping your price is the easiest and worst way to compete. To give you an example there was a dealer in the north east that's whole marketing plan was to be "the cheapest". Before he closed he only had one source of parts (a warehouse) as he bounced so many checks and burned so many manufacturers that he lost all his direct accounts and had to pay more thru a warehouse than direct dealers. Ultimately it collapsed. Offering "the best price" in most instances is not the best marketing decision in most instances. MAP is also a written agreement many times that you have to put your signature on. To say to a manufacturer that you will follow MAP then go out of your way to violate it at every turn says nothing about the integrity of the dealer. Having come from an industry that had no MAP policies and watching it completely collapse due to no ability for dealers to make a profit to stay open the "cheapest in town" tends to be the first to close. This industry is also populated with archers and hunters not businessmen. Most could not tell you what a P&L stands for or be able to read one if they did. MAP tends to give many the guidelines they need to actually be a profitable business. Like it or not MAP (and its various individual "buts" mixed into the agreements) is here and its actually expanding. There are still very good deals to be had from ethical dealers who can offer the "exceptional service" among other things while living up to the policies they agreed to. Its a lot more complex than you would think and it can seriously bite a dealer in the butt if they choose to go against it.
Wyvern

 

[Wyvern Creations]

OH...as a quick side note Im going to be leaving soon for the weekend so this thread looks like it will probably take on a life of its own so since I will not be able to add or clarify anything I said if anyone has any questions about some of the details on MAP and the agreements I have to deal with feel free to contact me next week...happy to explain some of the ins and outs of what I have to deal with..
Wyvern

 

[tpcollins]

I have no issue with MAP pricing if that's what the manf wants. A buyer always has two choices - and probably won't like the second one!

 

[gymrat70]

MAP is a double edged sword so to speak. No bow shop that I know of that wants to stay in business sells at MAP price. Too many other shops around in my area. This will vary throughout the nation of course. Further no other shop is reporting the other shops because everybody is selling below MAP. Everybody's playing the game and if somebody rats they are immediately ostracized by both the other shops and customers. Trust me I've seen it happen. One shop owner I know actually gained business after word got out that another shop owner called him in to the company. He got a slap on the wrist from his rep and sold several bows after everyone found out. Heck the reps are in on it as well. They don't care because the more bows that get sold the more he\she gets paid. Sure they will call and fuss about it but they sure as heck ain't putting down a cash cow as long as it's producing the milk.

Now having said that MAP is also a good thing and is put in place to protect local shops. Kind of like most bow companies not honoring warranty for internet sales. It gives a set price that everybody is supposed to go by and gives the shop owner a metric. When discounting it's usually about $150 above shop owners cost, again depending on what area your in, what other shops are pricing at, and what bow we're talking about.

You can compare MAP to the sticker price on a vehicle.

 

[pinshooter]

I have no issues with MAP. Its there to protect the dealers and the brand name.

 

[Iron Duke]

I was... in Union steel erection business. Now to be an erector, you need tools for your men, and almost everything else is labor cost. Every 2 bit Ironworker who owns a pickup truck and a welding machine could jump in the business. Just as David said often happens with passionate archers who decide to make their hobby a business. They're "archers" not businessmen. What happens is they take out loans on their homes, inject their life savings into the business to capitalize it, and proceed to do work below cost until they burn up all that capital. It happens because they "think" they're making money and/or they don't have a grasp of their real costs. They bleed to death over 3 to 5 years. I know more than one person who committed suicide after losing their life saving and their home ... with their family out on the street.

That process plays out ... but in the mean time, they destroy the market for legitimate businesses. If it costs 100k to erect a gas station, you bid 120k to make 10% profit & 10% overhead, and Two Bit comes in at 85k, he gets the job. He LOSES 15k, but he put his house up and his saving up and has 300k capital to lose before he goes bankrupt. As he gets close to dead, his work gets slipshod. Unfortunately, as soon as one augers into the ground, like a phoenix, another seems to rise from the ashes.

I've employed my share of small time contractors doing renovations on my rental units too. Trust me, "you get what you pay for" at best. Bargains usually come with more headaches then they're worth... LOL

Point being ... if you want quality and you want service, you HAVE to let your supplier make a reasonable profit. Otherwise all you have left is outfits which will soon be out of business. They won't be there when you need them. You're bouncing from "fly by night" to fly by night and you're going to get screwed as often as hitting a home run. There is no free lunch in this world. Some people only THINK there is.

 

[CarlV]

You can compare MAP to the sticker price on a vehicle.

That's what I was thinking.

Dave's post is most insiteful

 

[gymrat70]

Its messier than that. Many MAP agreements state that you are more than able to sell below MAP but if you do you will simply not be allowed to sell the product. Quite a few dealers have found out their sources simply will not sell to them after violating MAP. The reality is that many MAP agreements (Scorpyd or Tenpoint for example) are actually MRP (minimum retail price). I myself would be happier if they just came out and said that as MAP is so confusing that even as an organization the Archery Trade Association has had numerous meetings and included lawyers to clarify it and the bottom line is that its SO grey that its one step removed from useless. However, most manfucturers do allow for some "fluffing" of the kits (free arrows or whatever) provided the selling price is held. The issue becomes one of product value and reasonable profits. If a product is so de-valued by those that simple cant compete any other way than dropping their prices to nothing then why would any dealer support the line? Ive turned down products that I cant make any money on because its a pricing free for all and there is always someone who thinks that if they make $1.00 on an item and sell a million of them they will make a million dollars. As great as it is for consumers to get products one step removed from dealer cost ultimately the dealers tend to go out of business due to too little profit and the manufacturers tend to suffer because better dealers will not sell them. The big mistake here is that in many instances MAP DOES limit the actual selling price if the dealers want to continue to sell the product. The attitude (and basically what is in the agreement)from the manufacturers is that "you can sell for whatever you want.. but I don't have to sell my product to you if you choose to do so". Consumers generally don't like it...they feel the "bottom line" should be fluid and the "race to the bottom" is how dealers have to compete. Dropping your price is the easiest and worst way to compete. To give you an example there was a dealer in the north east that's whole marketing plan was to be "the cheapest". Before he closed he only had one source of parts (a warehouse) as he bounced so many checks and burned so many manufacturers that he lost all his direct accounts and had to pay more thru a warehouse than direct dealers. Ultimately it collapsed. Offering "the best price" in most instances is not the best marketing decision in most instances. MAP is also a written agreement many times that you have to put your signature on. To say to a manufacturer that you will follow MAP then go out of your way to violate it at every turn says nothing about the integrity of the dealer. Having come from an industry that had no MAP policies and watching it completely collapse due to no ability for dealers to make a profit to stay open the "cheapest in town" tends to be the first to close. This industry is also populated with archers and hunters not businessmen. Most could not tell you what a P&L stands for or be able to read one if they did. MAP tends to give many the guidelines they need to actually be a profitable business. Like it or not MAP (and its various individual "buts" mixed into the agreements) is here and its actually expanding. There are still very good deals to be had from ethical dealers who can offer the "exceptional service" among other things while living up to the policies they agreed to. Its a lot more complex than you would think and it can seriously bite a dealer in the butt if they choose to go against it.
Wyvern

Integrity has nothing to do with it, the shop owner is forced to go below MAP by the consumer. Most customers view MAP the same way they view MSRP and that's the world archery shops have to live in. Again try to run a shop with MAP pricing and I bet you don't last a year.

 

[Bluenoser56]

Integrity has nothing to do with it, the shop owner is forced to go below MAP by the consumer. Most customers view MAP the same way they view MSRP and that's the world archery shops have to live in. Again try to run a shop with MAP pricing and I bet you don't last a year.

It levels the playing field as discussed. Nobody says you have to buy bow X at Y prices. The bottom line, consumers have forced overseas products. How did that work out for the economy in North America?

I had an online business, and although I have only heard MAP on here, we had to respect MSRP and, although it may appear that the vendors are hadcuffed, they are not. MAP (minimum advertised price) means exactly that "advertised" price, so there is wiggle room. MSRP, minimum suggested retail price, once again there is wiggle room. We were permitted 5% below MSRP but not more. We were also allowed periodic yearly sales of no longer than 2 week duration.

That being said, the consumers are expecting sales every time we turn around??? As a vendor, I had a rewards program for my faithful customers (they are your bread and butter), not the dude that bargain shops, as he is more likely to go to the cheapest price next time around. Folks complain their is no longer any loyalty, that is a double edge sword as well.

 

[robertyb]

Integrity has nothing to do with it, the shop owner is forced to go below MAP by the consumer. Most customers view MAP the same way they view MSRP and that's the world archery shops have to live in. Again try to run a shop with MAP pricing and I bet you don't last a year.

You are willing to bet that David (who does use MAP pricing) will not last a year in business.
You got to be joking.....he is way way over a year and growing the business fast. Same for Jerry at SSA who uses MAP also.

 

[gymrat70]

Don't know about them but nobody I know of gives MAP price for a new bow when they can get it cheaper down the road. Read my first post, I said it depends on your area. Let me rephrase my statement, you wouldn't be in business long in the area I live iin.

 

[gymrat70]

It levels the playing field as discussed. Nobody says you have to buy bow X at Y prices. The bottom line, consumers have forced overseas products. How did that work out for the economy in North America?

I had an online business, and although I have only heard MAP on here, we had to respect MSRP and, although it may appear that the vendors are hadcuffed, they are not. MAP (minimum advertised price) means exactly that "advertised" price, so there is wiggle room. MSRP, minimum suggested retail price, once again there is wiggle room. We were permitted 5% below MSRP but not more. We were also allowed periodic yearly sales of no longer than 2 week duration.

That being said, the consumers are expecting sales every time we turn around??? As a vendor, I had a rewards program for my faithful customers (they are your bread and butter), not the dude that bargain shops, as he is more likely to go to the cheapest price next time around. Folks complain their is no longer any loyalty, that is a double edge sword as well.

Agree, loyality goes a long way but that too has a price my friend. Example if my local guy is $50 over the guy 30 miles away sure I'll buy. If he's $150, I'm driving 30 miles.

 

[sitruc]

This is from the FTC's web site, regarding MAP & MSRP.

Manufacturer-imposed Requirements








Reasonable price, territory, and customer restrictions on dealers are legal. Manufacturer-imposed requirements can benefit consumers by increasing competition among different brands (interbrand competition) even while reducing competition among dealers in the same brand (intrabrand competition). For instance, an agreement between a manufacturer and dealer to set maximum (or "ceiling") prices prevents dealers from charging a non-competitive price. Or an agreement to set minimum (or "floor") prices or to limit territories may encourage dealers to provide a level of service that the manufacturer wants to offer to consumers when they buy the product. These benefits must be weighed against any reduction in competition from the restrictions.

Until recently, courts treated minimum resale price policies differently from those setting maximum resale prices. But in 2007, the Supreme Court determined that all manufacturer-imposed vertical price programs should be evaluated using a rule of reason approach. According to the Court, "Absent vertical price restraints, the retail services that enhance interbrand competition might be underprovided. This is because discounting retailers can free ride on retailers who furnish services and then capture some of the increased demand those services generate." Note that this change is in federal standards; some state antitrust laws and international authorities view minimum price rules as illegal, per se.

If a manufacturer, on its own, adopts a policy regarding a desired level of prices, the law allows the manufacturer to deal only with retailers who agree to that policy. A manufacturer also may stop dealing with a retailer that does not follow its resale price policy. That is, a manufacturer can implement a dealer policy on a "take it or leave it" basis.

Limitations on how or where a dealer may sell a product (that is, customer or territory restrictions) are generally legal — if they are imposed by a manufacturer acting on its own. These agreements may result in better sales efforts and service in the dealer's assigned area, and, as a result, more competition with other brands.

Antitrust issues may arise if a manufacturer agrees with competing manufacturers to impose price or non-price restraints up or down the supply chain (that is, in dealings with suppliers or dealers), or if suppliers or dealers act together to induce a manufacturer to implement such restraints. Again, the critical distinction is between a unilateral decision to impose a restraint (lawful) and a collective agreement among competitors to do the same (unlawful). For example, a group of car dealers threatened not to sell one make of cars unless the manufacturer allocated new cars on the basis of sales made to customers in each dealer's territory. The FTC found the dealers' actions unreasonable and designed primarily to stop one dealer from selling at low "no haggle" prices and via the Internet to customers all over the country.

Determining whether a restraint is "vertical" or "horizontal" can be confusing in some markets, particularly where some manufacturers operate at many different levels and may even supply important inputs to their competitors. The label is not as important as the effect: Does the restraint unreasonably reduce competition among competitors at any level? Is the vertical restraint the product of an agreement among competitors? And labeling an agreement a vertical arrangement will not save it from antitrust scrutiny when there is evidence of anticompetitive horizontal effects. For instance, the FTC has stopped exclusive distribution agreements that operated as market allocation schemes between worldwide competitors. In this situation, the competitors agree not to compete by designating one another as an exclusive distributor for different geographic areas.

Q: One of my suppliers marks its products with a Manufacturer Suggested Retail Price (MSRP). Do I have to charge this price?

A: The key word is "suggested." A dealer is free to set the retail price of the products it sells. A dealer can set the price at the MSRP or at a different price, as long as the dealer comes to that decision on its own. However, the manufacturer can decide not to use distributors that do not adhere to its MSRP.

Q: I am a manufacturer and I occasionally get complaints from dealers about the retail prices that other dealers are charging for my products. What should I tell them?

A: Competitors at each level of the supply chain must set prices independently. That means manufacturers cannot agree on wholesale prices, and dealers cannot agree on retail prices. However, a manufacturer can listen to its dealers and take action on its own in response to what it learns from them.

Many private antitrust cases have involved a manufacturer cutting off a discounting dealer. Often there is evidence that the manufacturer received complaints from competing dealers before terminating the discounter. This evidence alone is not enough to show a violation; the manufacturer is entitled to try to keep its dealers happy with their affiliation. Legal issues may arise if it appears that the dealers have agreed to threaten a boycott or collectively pressure the manufacturer to take action.

Q: I would like to carry the products of a certain manufacturer, but the company already has a franchised dealer in my area. Isn't this a restriction on competition?

A: Under federal antitrust law, a manufacturer may decide how many distributors it will have and who they will be. From a competition viewpoint, a manufacturer may decide that it will use only franchised dealers with exclusive territories to compete more successfully with other manufacturers. Or it may decide that it will use different dealers to target specific customer groups.

There are pros and cons to being a franchised dealer. By agreeing to be a franchised dealer, you likely would have to comply with the manufacturer's requirements for selling the product, such as operating hours, cleanliness standards, and the like. These restrictions are seen as reasonable limits on how you run your business in exchange for dealing in an established brand that consumers associate with a certain level of quality or service. For instance, a brewer may require all retail stores to store its beer at a certain temperature to preserve its quality, because consumers are likely to blame poor quality on the manufacturer — thus reducing sales at all outlets — rather than blaming the retailer's inadequate storage method.

Here is the link.

https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-supply-chain/manufacturer-imposed

 

[rt2bowhunter]

They want to keep me as a customer. They better be loyal to me you got that backwards. They want my money they need to earn it.

 

[magic arrow]

What I don't understand is if say scorpyd gets what they want for the bow why would they care what there dealer makes? That should be up to the dealer?

 

[tpcollins]

What I don't understand is if say scorpyd gets what they want for the bow why would they care what there dealer makes? That should be up to the dealer?

Could be for "status" . . .

 

[rt2bowhunter]

Scorpyed sales bows them selfs. So i can understand then having MAP.

But i see what your saying. Im no business man by any stretch. IMO its dealer based or at least started out that way. likely because of the internet and dealers that dont carry product. And phone your order in after you pay. Making $50 for just making a phone call.

 

[SouthShoreRat]

What I don't understand is if say scorpyd gets what they want for the bow why would they care what there dealer makes? That should be up to the dealer?

There is a long explanation here but to shorten it, you reduce the value of the product. Lets say you buy a new car and it cost 30k then the second year all dealers get into an extended price war until the car regularly sells for 20k. This action by the dealers and reset the value of the car 10K below the original value, this is not a good thing. It really is a dollars argument and a valid one. Now you buy a scorpyd for $1499 and a year later the dealers get into a price war and the bow is now selling for $1200 and you decide you want to sell yours, grab your butt it is now worth much less because of the devaluing of the bow by dealers fighting.

I sell at MAP for two reasons, one is because I said I would, second is I want to bows value to remain at its current rate until the economy forces it to go up not down in price.