More Manufacturers are Adopting Minimum Advertised Pricing Policies
Several pet product manufacturers adopted minimum advertised pricing (MAP) policies recently, demonstrating a commitment to supporting the independent pet specialty channel.
The Company of Animals, a U.K.-based manufacturer of pet behavioral and training gear products, announced this spring that it was establishing rigorous policy designed to create a level playing field for its North American retailer partners.
“After being asked by retailers small and large, we felt it was very important for us to draft the most comprehensive MAP policies possible,” said Larry Cobb, CEO of the company’s U.S. division in Davenport, Fla.
Minimum advertised pricing and minimum retail pricing policies are intended to establish one price as a baseline for all sellers—including brick-and-mortar stores and online retailers of all sizes—creating a fairer competitive environment for everyone. Additionally, product manufacturers are also recognizing the need to establish pricing policies to protect their brands as well as their retail partners. Oxbow Animal Health, a Murdock, Neb.-based maker of small and exotic animal feeds, treats and bedding, instituted its MAP policy in January.
“The implementation of a MAP policy helps us protect and maintain our strong brand recognition and value while also protecting all our partners’ ability to offer our products competitively,” said Jeremy Baker, Oxbow’s director of sales and distribution.
Other companies that have recently adopted such policies include Pet King Brands and West Paw Design.
If it is indeed a trend, it is one that could not have come soon enough for Brad Kriser, co-founder of Kriser’s Natural Pet, a chain of neighborhood pet stores with headquarters in Chicago.
According to Kriser, product manufacturers that supply the independent retail channel need to establish MAP policies in order to rein in online retailers threatening to upend neighborhood pet stores through underpricing and to allow brick-and-mortar independents to compete.
“We [independents] created their businesses,” Kriser said, referring to manufacturers and distributors in the natural pet category. “[The natural pet category] is something that was built 100 percent by independent pet stores.
“When you start doing things that don’t allow us to do business fairly and competitively,” he said, “anyone is going to speak up.”
Fromm Family Foods, a Mequon, Wis.-based maker of premium pet foods, was an early adopter of MAP.
As e-commerce pet sites became more prevalent and popular with consumers, “it was a bit of a wild, wild West scenario,” said Jim Glassford, a spokesperson for Fromm, adding that neighborhood retailers began complaining that their competitors were selling products at prices that were as low as the wholesale prices they were paying to manufacturers.
“We felt it was important to have price integrity so those independent mom-and-pop stores could compete on an even playing field with e-commerce, particularly as e-commerce was trying to drop pricing,” Glassford said.
Kriser commended Fromm’s position on pricing.
“They really support their independents,” he said.
Of course, MAP policies are only as good as the enforcement behind them.
Manufacturers can catch MAP cheaters by using special software such as MAPP Trap, which scours the internet and identifies prices of products being advertised and who sold them; manufacturers can also have brand reps make visual in-store price checks while making their rounds.
Cobb said enforcing the policy has been one of the “most time-consuming and difficult” challenges the U.S. division has tackled. The Company of Animals relies on a tracking firm that provides a weekly list of MAP violators. A first-time violator is referred to the company’s MAP policy and asked to abide by it, a second violation brings a warning, and third-timers end up on a “do-not-ship” list.
“We have caught a number of violators, and this includes the largest e-commerce pet retailers that today are and have been on our do-not-ship list,” Cobb said.
The challenges of enforcement aside, Kriser said that MAP policies are here to stay and manufacturers that don’t embrace them are likely to lose business—starting with his.
“If it is not there, then there is a very high probability that we won’t be working with them,” he said.