Why Do Vendors Use MAP Pricing?
-
@biggen said in Why Do Vendors Use MAP Pricing?:
Disclaimer: I own a retail gift shop in a major tourist destination in Florida. Our local economy is 100% tourism based. I’m brick and mortar only. No online sales.
I carry a few lines of brand name apparel that have MAP policies. I also can’t sell these items online via eBay, Amazon, Aliexpress, etc... Essentially no online marketplace is allowed for these brands. I can sell them at my own business website if I choose.
I’m actually ok with their MAP policy. It levels the playing field with other retailers around me that may also carry the same brand. Everyone has to abide by the policy for external advertising. Some retailers who have larger purchasing power than me might get those goods at discounted prices from what I can buy them for (i.e. they are buying 2x or more than what im buying in a given year). It’s nice that they can’t advertise a retail price less than the MAP even since their wholesale costs are lower.
It also prevents “loss leader” sale that is very common with larger box store retailers. I don’t have to worry about a store down the street advertising the same brand for $15 less than wholesale on an item just to get people in the door.
The third reason I like it is the psychological effect of “perceived value”. I’ve done non-scientific tests in my store where I’ll price two very similar items at two very different prices. People seem to be drawn first to the higher priced items most of the time. It’s quite the thing to witness to be honest. Keeping the MAP price higher keeps its perceived value higher.
So anyway that’s my two cents working in retail for 25+ years now. I, as a retailer and business owner, don’t mind MAP at all. Take it with a grain of salt. I understand this all doesn’t translate to IT which is what Scott was referring to in the OP. But I wanted to give a side of MAP that perhaps wasn’t considered.
So you don’t believe in real capitalistic environment.
-
@Dashrender said in Why Do Vendors Use MAP Pricing?:
So you don’t believe in real capitalistic environment.
You are mixing concepts. Like or dislike MAP, the issue here is the reselling, not the selling. The "capitalist" effect is the ability of a different product maker to step into the space. See the stuff that they sell, make something like it for less, make more money.
-
@pmoncho said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
But, that's what MSRP is for. High MSRP is absolutely fine and creates the discount effect without having the problems of MAP.
-
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@pmoncho said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
But, that's what MSRP is for. High MSRP is absolutely fine and creates the discount effect without having the problems of MAP.
I wonder if that's true because people have moved themselves into bargain shopping? i.e. they don't buy jeans when they need them, they wait beyond the needed period waiting for a sale - I'm not sure what really drove that practice in the first place.
-
@Dashrender said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@pmoncho said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
But, that's what MSRP is for. High MSRP is absolutely fine and creates the discount effect without having the problems of MAP.
I wonder if that's true because people have moved themselves into bargain shopping? i.e. they don't buy jeans when they need them, they wait beyond the needed period waiting for a sale - I'm not sure what really drove that practice in the first place.
Once you do predictable sales, and everyone knows that they do now, then people naturally wait. The Internet has made that more obvious because everyone talks about when sales are and were, and you can easily look up historic pricing patterns, so we all know exactly what the top and bottom prices are for things and can see on a calendar what the pattern of sales is. Think about Steam sales!
So once you have all the info and it's insanely obvious, and everyone else knows it and will mock you for being an idiot if you shop outside of the sales, it becomes natural to wait for the reasonable prices.
-
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Dashrender said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@pmoncho said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
But, that's what MSRP is for. High MSRP is absolutely fine and creates the discount effect without having the problems of MAP.
I wonder if that's true because people have moved themselves into bargain shopping? i.e. they don't buy jeans when they need them, they wait beyond the needed period waiting for a sale - I'm not sure what really drove that practice in the first place.
Once you do predictable sales, and everyone knows that they do now, then people naturally wait. The Internet has made that more obvious because everyone talks about when sales are and were, and you can easily look up historic pricing patterns, so we all know exactly what the top and bottom prices are for things and can see on a calendar what the pattern of sales is. Think about Steam sales!
So once you have all the info and it's insanely obvious, and everyone else knows it and will mock you for being an idiot if you shop outside of the sales, it becomes natural to wait for the reasonable prices.
Doesn't that ultimately defeat the whole "sale" aspect then? I mean sure, you might get 5% of people who can't wait, don't give a shit about sale and just buy now, so you get a bit more money,
But if the price is just low on the time - after you get people away from the stupid sale idea, then you just shop when it's good for you to shop and get a good price...
Is the belief (as implied by your earlier comment) that people won't change, and they will always shop for the sale?
-
@Dashrender said in Why Do Vendors Use MAP Pricing?:
Doesn't that ultimately defeat the whole "sale" aspect then?
Not quite, but heavily mitigates it. But it still creates an "urgency" which is non-zero. You know we all talk about it with Steam. We all wait, then when the sale comes, we buy way more than we would when the deals are "good" so that we are stocked up "just in case." I think it still makes us buy more, but nothing like it used to.
-
@Dashrender said in Why Do Vendors Use MAP Pricing?:
Is the belief (as implied by your earlier comment) that people won't change, and they will always shop for the sale?
People are irrational and emotional, and consumers on average are so much worse than "people in business", so for the most part, people are impulse buyers and don't actually handle sale cycles in a solid, rational way.
-
@Dashrender it also depends on the product.
I buy most things on the sale price, because it is not urgent. I buy clothes though, as needed, because I hate buying clothes and only buy when shit is worn through.
On the other hand, my wife buys clothes on the sales, planning ahead for seasons and when thing wear out. -
@JaredBusch yeah Im the same, hate buying clothes so wait until I can wait no more. Theres always holes before I buy lol.
-
@JaredBusch said in Why Do Vendors Use MAP Pricing?:
@Dashrender it also depends on the product.
I buy most things on the sale price, because it is not urgent. I buy clothes though, as needed, because I hate buying clothes and only buy when shit is worn through.
On the other hand, my wife buys clothes on the sales, planning ahead for seasons and when thing wear out.And I only buy in thrift shops, where there aren't sales.
