Brand Enforcement / 04.11.2019

Insights from High Point: Using MAP Policies to Expand and Increase Sales

By David Posteraro

Welcome to Market!

Twice each year, more than 75,000 people from around the globe descend on High Point, North Carolina for the High Point Market: the world’s largest furniture, lighting, and design industry trade show. Buyers and sellers, designers and reps, architects, builders, design innovators, manufacturers, publicists, editors, trend setters and trend spotters — all part of this multi-billion dollar industry — meet at High Point in the Spring and Fall of each year. To appreciate the economics, in 2017, the global furniture market size was valued at USD $480.7 billion and is expected to grow at a CAGR of 5.1% from 2018 to 2025.

As a lawyer specializing in brand development, protection and enforcement and as an owner of retail and design businesses, High Point offers an opportunity not only to buy and spot trends in the furniture business but to see how law impacts an entire industry. This year was no exception. I was particularly impressed by how often MAP (Minimum Advertised Pricing) policy and enforcement was a part not only of the discussion but also of the pitch.

A MAP policy dictates the absolute cheapest price a retailer can advertise a product outside of the store.  MAP pricing helps secure the manufacturer’s brand value across regions and distribution channels. Often coupled with negative repercussions for a violation (e.g., contract termination, withholding orders), the best MAP policies include incentives (e.g., limited exclusivity for new products, access to early information and additional product promotion) for companies to comply with their terms.

Like all other industries, the home furnishing and design businesses continue to be rocked by the expansion of commerce in the already competitive consumer goods market. The trend toward online shopping over physical stores is also disrupting the brick and mortar retailers and designers who come to High Point to buy. The more sophisticated sellers at High Point had trained their reps to make MAP a part of their sales pitch. They know that retailers and designers regularly deal with shoppers and customers who will take advantage of the retailer’s or designer’s expertise and then attempt to find cheaper pricing online. A good MAP policy may not prevent the consumer from trying to undercut the professional but it limits their opportunity to find cheaper pricing.

At High Point, sellers were quick to mention not only the fact that they have MAP pricing but that they regularly and strictly enforce it. Rather than being a warning to the buyer, the MAP policy was used as a selling point to encourage the sale.

Knowing that a brand has adopted and enforces its MAP policy becomes a positive; buyers are assured that the retail price they charge will not be undercut. They also know that the brand they sell will continue to retain its value – a critical component to the lifestyle industry. Rewarding resellers and distributors who adhere to MAP policies, training sales reps to make MAP part of a positive sales presentation, and strictly enforcing MAP policies particularly when violations occur on-line and by unauthorized resellers, should be a part of an overall MAP strategy.

In the past, and all too often, lawyers charged with drafting MAP policies have been tone-deaf and blind to the added value that a good MAP policy can bring to their clients’ distribution channels. Important as it is that a MAP policy does not encroach on the distributor’s ability to set sales prices, it is equally important that the retail and designer buyers understand that MAP is not just a stick but also a carrot.

As both a professional drafting MAP policies and a business owner, High Point demonstrated the inherent business rewards that a MAP policy can bring.

For more information, contact David Posteraro at drp@kjk.com or 216.736.7218, or reach out to any of our Intellectual Property or Brand Enforcement professionals.

 

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