Magazine Article


Industry Charts Course on Controversial MAPs

Industry Charts Course on Controversial MAPs

Manufacturers & Retailers Divided Over
Minimum Advertised Pricing

by Dan Havlik

Robert Nunn of Hasselblad (l.) and Jerry Harmen discuss MAPs at a recent PMA NY/NJ Metro meeting. Love them or hate them, one thing's for certain about MAPs—they're a pervasive part of the photo retail industry and they don't appear to be going away any time soon. At a recent meeting of the PMA New York/New Jersey Metro Division which tackled the often tricky topic of MAPs, it was clear that debate over the issue isn't likely to go away any time soon either.
"MAP policy, eh? I'm not supposed to talk about MAP policy," joked John Rizzi, senior national sales manager for Olympus, who, along with Robert Nunn of Hasselblad and Paul Kirk of Paul Kirk Photo Marketing, took part in a special panel on MAPs at the meeting.
Rizzi's remark, though made in jest, touched on one of the frequent misconceptions about MAPs among consumers and some retailers-that the policy is a form of price fixing.
MAPs, or Minimum Advertised Prices, were instituted by manufacturers as a way to prevent their brands from being "cheapened" by discouraging wild price wars among retailers in print, television and radio advertising. By setting a standard minimum advertised price which retailers had to adhere to, advertised pricing on products would be stabilized, manufacturers argued, thus preventing shady retailers from offering outrageously low and misleading advertised prices. Retailers who agree to take part in a manufacturer's MAP policy benefit by having some of their advertising subsidized by the manufacturers in what is called a "co-operative advertising agreement." If the MAP policy is violated, however, that subsidization is cut off. Manufacturers have also been known to stop supplying products to a store that violates a MAP.
While MAPs deal with advertised prices, they in no way control what price a retailer can offer a customer in a store, differentiating the policy from illegal price fixing practices. Furthermore, although current anti-trust laws outlaw price fixing, MAPs have been judged legal according to a "rule of reason."
"(Our MAP policy) does not have control over the actual selling price. That is between the buyer and the seller," said Robert Nunn, vice president of Sales for Hasselblad USA. "The seller can sell the product at whatever price they want, they can quote whatever price they want. This is an interaction we have nothing to do with."
Nunn added that this includes any exchanges a dealer has with a customer over the phone, via email or in writing. He noted that Hasselblad's MAP policy does not include discontinued products, used products or rental products either, only new products.
In discussing how a MAP is created for a particular product, Nunn explained that Hasselblad's "net to MAP spread" on major items, such as cameras, is 6 percent. For smaller accessories, the "net to MAP spread is 50 percent," he added, and for larger accessories with a net price of over $66, "it's a 15 percent markup."
While Hasselblad has been using MAPs since 1992, Rizzi noted that Olympus's MAP policy was instituted only recently as part of a new branding campaign, which includes a new logo, new packaging and a new slogan: "Nothing's Impossible."
He added that since the branding campaign was launched a year ago, Olympus has captured the number one market share in 35mm point and shoot cameras and the number two position in digital cameras. "A lot of that has to do with the branding campaign we've rolled out, which MAP is a part of," Rizzi said.
Like Nunn, Rizzi stressed that his company's MAP policy did not include in-store pricing. However, if a product is advertised outside the store on TV, in print, on the radio, in catalogues or on the Internet below a MAP, the dealer "will no longer get that product."
To make sure dealers are complying with MAPs, manufacturers will do periodic checks, Nunn said. Dealers also frequently report MAP violations by their competitors, he noted.
One of the reasons Hasselblad instituted a MAP policy is that some dealers had been known to break up Hasselblad's pricey camera kits and advertise the products separately. "We believe it provides a consistent image for our products in the marketplace for consumers by minimizing dealers who have misleading or deceptive advertising," he noted.
While Nunn and Rizzi represented the manufacturers at the meeting, Kirk, who has owned a photo store in the past and is currently an independent representative for several camera companies, sought to offer a range of perspectives at the meeting.
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