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Pond World Concerns About Minimum Advertised Pricing

By Mike Garcia

The topic of MAP (Minimum Advertised Pricing) has sparked debate in the pond and water garden world and raised some good questions. For example, Why is it that when a pond and water garden product manufacturer announces a MAP program, it's only off of MSRP? You don't see pond and water garden manufacturers correspondingly dropping distributor or dealer pricing.

Pond and water garden product manufacturers feel free to drop these margins while maintaining their profits. MAP should be MSRP, and MSRP should be MAP. There are plenty of legitimate ways for pond and water garden companies to offer discounts without compromising advertised pricing.

What about pond and water garden contractors who also serve as distributors?

Contractors generally get a raw deal. Most pond and water garden contractor discounts from manufacturers is 25 percent. If MAP is 20 percent of MSRP, that leaves only a 5 percent profit. MAP effectively weeds out pond and water garden contractors who have no other income sources outside of the pond world.

Distributors also get a rotten deal. While most pond and water garden distributors get a better discount, if MAP is 20 percent of the manufacturer's price, the distributor's profit is cut by 20 percent.  This makes it harder for pond and water garden distributors to stay in business.

The Sherman Anti Trust Act was partially overturned by a June 28, 2007, ruling by the Supreme Court. In Dr. Miles Medical Co. v. John D. Park & Sons Co., the Supreme Court overruled Dr. Miles and held that vertical price restraints such as Minimum Advertised Pricing are not per se unlawful but must be judged under the "rule of reason."

This decision dramatically shifted how attorneys and enforcement agencies address the legality of contractual minimum prices and essentially allowed the reestablishment of resale price maintenance in the United States in most commercial situations. Some states are enacting or trying to enact their own legislation to stop MAP pricing in their states.

MSRP emerged from this line of thinking: Manufacturer's Suggested Retail Price.

The pond and water garden world must come together and decide on universally acceptable standards before big brother does it for us. If the pond and water garden World does come together and create pricing standards, it might cost some distributors. In the long run, however, we must do what is best for this industry niche.

Should pond and water garden manufacturers sell direct to the public? What problems arise from such practices? Is a cheap price worth sacrificing quality?

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Pond World Concerns About Minimum Advertised Pricing

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"The pond and water garden world must come together and decide on universally acceptable standards before big brother does it for us. If the pond and water garden World does come together and create pricing standards, it might cost some distributors. In the long run, however, we must do what is best for this industry niche." I completely agree with this assessment, but is should be expanded to include other aspects of our niche industry, such as the elimination of disinformation, misinformation and partial information as relates to product performance by manufacturers. Meyer, Pensacola, FL Posted: 8/30/2011 10:38:36 AM