June 2, 2014

Online Advertising: Exploring IMAP Policies and the IDW

As more distributors move online and begin to use web storefronts, new rules and regulations regarding the way they can advertise and price manufacturers’ products are coming into place.  Minimum Advertised Price (MAP) policies have been on the scene for a while, restricting distributors in brick-and-mortar establishments from advertising their products below a price set by manufacturers. Items can be sold in the store for any value, but cannot be advertised below the MAP. Manufacturers maintain the right to no longer sell their product to distributors who do not abide by these guidelines.  Over the past few years, minimum advertised pricing has moved to the Internet, and a new concept of MAP policies is being applied to online vendors through Internet Minimum Advertised Price (IMAP) policies.

What are IMAP Policies?

IMAP policies, which restrict distributors from advertising manufacturers’ products online below a price set by the manufacturer, have become more widespread.  Manufacturers wishing to protect the price of their products have set IMAP policies for their distributors to follow.  Not all manufacturers currently have IMAP policies, though use of IMAP is growing.

A common reason that manufacturers implement IMAP policies is to help prevent “free riding.”  Free riding is when an end-user visits a distributor’s brick-and-mortar store for its services (e.g. knowledgeable sales staff and tangible product comparison) in order to inform their purchasing decision. Then, because brick-and-mortar stores have higher overhead costs than online vendors, the end-user makes the final purchase online at a cheaper price. Manufacturers want to combat free riding and encourage their products to be sold online at a comparable price to in stores, so that brick-and-mortar stores, which provide a better customer experience, can compete. 

Restricting the price at which distributors can advertise products also prevents the price from getting too low due to distributors competing for the lowest price point.  Manufacturers wish to protect their brand and maintain the value of their product.

With more of the consumer market moving to the web, the line between advertising and pricing becomes blurred with online vendors.  Currently, in order for online distributors to sell a product below IMAP, some sort of consumer interaction is necessary.  Often this is done through a promotion code, or by asking a customer to put an item in their virtual shopping cart before being able to view its price.

How the IDW supports IMAP pricing

The Industry Data Warehouse (IDW) does have a location where manufacturers can load their IMAP prices for their authorized distributors to view and extract that information.  It is easy to use and simple to load along with the rest of a manufacturer’s data. 

Above is an example of a price sheet with IMAP pricing in the IDW.  Regardless of how you load your data, the following codes are used to load IMAP pricing into the IDW:

  • For Type of Price (NEMA #8.300.32 in the Product Descriptor Database), use the code NETPP4 for Alternate Resale;
  • For Class of Trade (NEMA #8.300.34), use NECTUSR for End Suggested Resale Price; and
  • For Price Column (NEMA #8.300.34), use P4 for Alternate Resale Cost Four. 

Distributors: Keep an eye out for the P4 price columns.  Not all manufacturers have IMAP policies, so many price sheets currently do not contain this information.  You may have to add that price column to your extract formats.  Please contact your IDW Distributor Specialist at IDWSupport@idea4industry.com for assistance.

Manufacturers: We encourage you to load your IMAP prices to the IDW and notify your distributors via the IDW Messaging service that the data is available.  If you have trouble loading your IMAP data into the IDW, please contact your Data Management Specialist.