Issue link: https://www.e-digitaleditions.com/i/679551
30 FEDA News & Views slap on the wrist for a similar infraction, their policy can be illegal. This happens all too often in our industry. People know that I'm not in favor of MAP but not because I dislike MAP/ MRP policies. I'd be completely supportive of them if they were evenhandedly applied and enforced by the manufacturer. "To use a silly example, let's say you've got a stop sign. Some types of cars get pulled over when they run through it, yet others get to go through at full speed without repercussions. If there's a certain person (company) driving one of those cars, they'll still get pulled over for running the stop sign but will never get a ticket. The integrity of the enforcement system is broken, which diminishes the expectations and respect for the system for everyone. Again, in an ideal world, I'd support pricing policies but it needs to be fixed first." Jameel Burkett of Burkett Restaurant Equipment also chimed in. "From my perspective," he says, "all that MAP has done is level the playing field in ad networks like Google, Bing, Yahoo, Shopping.com, etc. Since all published prices are the same, garnering a customer's clicks has become about placement, reviews/ reputation. Once the customer gets to the page, yes, the margins fall out again. "That said, I am not a fan of MRP but I am a fan of MAP if managed consistently by all vendors. I wish we could see some sort of universally accepted MAP policy that a manufacturer could decide to adopt and support. "My other prob- lem is that MAP only works on loyal deal- ers. Dealers who have nothing to lose can violate MAP—bait and switch—and since they do not sell the brand they are violat- ing, the MAP enforce- ment becomes null and void. An autho- rized reseller program like you see in the electronics industry would go a long way in solving this problem. In this model, only authorized dealers can advertise a brand on their website, Google, etc. All others could get sued for overstepping. This type of program would protect loyal dealers from un-loyal dealers." Jameel and Brad are just two of many with pricing policy concerns. So, to summarize, while MAP has become more widely accepted, it has fallen short of really doing anything to stem the margin drop or lost sales experienced by dealers that run up against it. It simply lacks teeth for the reasons Brad mentions above. At best, it's a speed bump or a yield sign, better-than-nothing kind of thing. Implementing MAP Industry Insights continued Then there is MRP, or Minimum Resale Price, which when com- pared to MAP is a much more secure and tightly controlled way to establish a manufacturer's desired end-user pricing and to protect its ability to service the customer. However, to my knowl- edge, only one manufacturer in our industry has had the where- withal and fortitude to actually pull it off. That is HATCO. Hatco is truly an industry household name and it has succeeded in maintaining its dealer following and growing its market share without having to resort to the bizarre behaviors created by MAP policies. Again, the key to this method is in its implementation and enforcement. It must be legal, clearly-stated, well-known, and evenhandedly applied. And I can tell you from everything I hear, Hatco has mastered it. None of my salespeople have complained that any other dealer, Internet or otherwise, is undercutting the MRP policy that Hatco has established. So if this has been so successful for Hatco, why have none of the other major manufacturers jumped into this format? I think that the answer lies in two conflicting realities. For starters, most manufacturers have the same problem that we dealers do. They don't know how to say "NO" to an order. There are so many products on the market that the perceived differentiation in them is almost zero. Secondly, MRP requires an extremely strict and disciplined policy, which most manufacturers can't pull themselves up to the table to commit to. Why can Hatco do it? I'm not sure but if I were to guess, I would say that while their base products are not totally unique, they have some unique and desirable features: Their base product line is extremely well known and specified. Quality and value are hallmarks within their lines. Their equipment is very reliable (a lot of it is proven designs that work). Customers request it by name, (dealers practically know the Hatco model numbers off the tops of their heads.) In other words, HATCO fills a nice niche in the market, and with that base they have expanded beyond it and have been able to maintain the pricing policy structure as well. Could other manufacturers do MRP? I believe that there are several others in our industry that could benefit greatly by following HATCO's MRP lead. Those who struggle with building a loyal dealer following would be surprised by the support they would receive. By assuring that their distribution network could operate in the black, their dealers would be more willing to specify and stick with the specifications instead of "trading off to other brands." I know, isn't that what the rebate is supposed to do? YES, this just takes it to another level. For a manufacturer to get where it wants to go, a MAP may not always be the best answer. "My other problem is that MAP only works on loyal dealers. Dealers who have nothing to lose can violate MAP—bait and switch—and since they do not sell the brand they are violating, the MAP enforcement becomes null and void. --Jameel Burkett, Burkett Restaurant Equipment Most manufacturers have the same problem that we dealers do. They don't know how to say "NO" to an order. There are so many products on the market that the perceived differentiation in them is almost zero. --Jim Hanson, Best Restaurant Equipment