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MRP & MAP continued with us in selling our products." For Michelin, one of Zelek's clients, the problem was intense competition between independent distributors and big-box stores. "Michelin actually did an elasticity study that showed independ- ents weren't charging enough for the product and that was one of the reasons why they were not as profitable as they wanted to be in the face of discounting pressure from big boxes," says the attor- ney. "Dealers didn't buy it, so Michelin implemented a MRP policy and it turned out to be very successful. Sales actually went up and after being in place for three years, the company dropped it." It's a scenario that Consultant John Henderson has seen played out in a number of industries during his years as the president of Frank Lynn & Associates Inc., an Itasca, Ill.-based, consulting firm that specializes in helping manufactur- ers, and occasionally distributors, with their go-to-market strategies, channel management and marketing initiatives. "In the last two years, we've really seen an explosion in pricing policies," says Henderson. "Of course, companies like Apple or Bose have always had them in place but now B2B companies have realized it's the tool they can use to help manage pricing conflict. "Manufacturers that have them and get compliance tend to have a strong brand. If you don't have a strong brand and you make it a hassle for the distrib- utor, they're going to switch to another brand. They tend not to apply it to all products; it's those products that are in highest demand and need to be pro- tected. They are strictly enforced and simply articulated. It's usually a one- page explanation as to the desire to make sure the brand is supported; in order for the brand to be supported, the dealer has to make enough margin to cover its costs. MRP policies are designed to help do that. Prior to five or six years ago, there weren't many. But now, because of the Internet pricing conflict, it's becoming more and more necessary." To determine which is best to suit its needs, any business considering MAP or MRP should first pinpoint what it would like to accomplish by adopting a pricing policy and then it has to understand the difference between the two. 1 6 FEDA News & Views The Case for MAP Some manufacturers, however, believe there's another alternative— MAP, which strictly covers a product's advertised price, while its counterpart, MRP, covers the advertised price as well as the actual selling price. "I don't think it's a question of either or when it comes to MAP or MRP," says Dean Landeche, the senior vice presi- dent of Market ing for Mani towoc Foodservice. "It depends on a manufac- turer's individual challenges, its brand and the breadth of its lines. Both are strong tools to help the channel provide end users with a strong network of channel partners that can answer tech- nical questions, provide delivery sup- port locally and follow up after installa- tion with personal support. If our chan- nel is not as profitable as it needs to be, then distributors can't invest in sales training, product knowledge, customer service systems, etc. To benefit the end user, as an industry, we need all those things." To determine which is best to suit its needs, any business considering MAP or MRP should first pinpoint what it would like to accomplish by adopting a pricing policy and then "it has to understand the difference between the two," says Zelek, who believes there's often a blurring of the lines when it comes to the mechan- ics. "It's also important to note that MAP and MRP are not necessarily the only options [e.g., selective distribution and rewarding differential value]," he adds. "Suppliers need to research other alter- natives and understand both the legal and trade relations risks. For example, a manufacturer creates trade relations problems with a policy it doesn't enforce. Then the policy becomes inef- fective because credibility goes out the window." More to the point, any supplier con- sidering a resale-pricing program must ask itself if it's prepared to defend its policy to its biggest customer. Clear on the answer, Manitowoc offi- cially began preparing its distributors for change—with a preannouncement letter in August of 2010 followed by a continued on page 31