Econsultancy explains minimum advertised price policies
Product pricing is an extremely important element in the sales process. It helps you get the sales done and win the customer.
Econsultancy’s Min-Jee Hwang has shared an useful article on minimum advertised price (MAP) for Internet marketers.
Hwang says, “Price fixing has a deservedly negative connotation, and often the term is misused in the context of minimum advertised price (MAP), and other manufacturer price policies.
Here’s the lowdown on how they differ, and why MAP is actually beneficial to all parties involved, not just brands.
What is price fixing?
According to the Federal Trade Commission (FTC), “Price fixing is an agreement among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors.”
This type of horizontal price fixing restricts competition, which often results in higher prices for consumers, and the inability for smaller competitors to compete.
Due to the larger economic implications, price fixing agreements are illegal, as determined by the U.S. Supreme Court. A business should never discuss pricing or even appear to discuss pricing with competitors”.
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