Monday, January 08, 2007

Click to see price

You often see this "Price too low to display" or "call for price" crap when you shop for electronics online, and particularly with camera equipment. Apparently the reason for it is something called the "minimum advertised price" or MAP policy by manufacturers which restricts retailers from advertising prices below the manufacturers' MAP.

Read on if you want to know more:

MAP is usually enforced through marketing subsidies offered by a manufacturer to its resellers. If a retailer keeps prices at or above the minimum advertised price, then a manufacturer like Apple will give them money to help advertise. If a store's price dips too low, on the other hand, the manufacturer can withdraw these advertising subsidies.

MAP helps smaller retailers compete, since it aids in reducing the kind of cutthroat price competition from big-box stores that can put them out of business. But what's in it for a company like Apple? Stable prices are important to the company, because it's a manufacturer and a retailer (both online and through its chain of Apple Stores). If Apple resellers dropped prices on iPods and iMacs—selling at or below cost to get customers in the door, or as a way to cross-sell stuff like software or iPod skins—they could squeeze the Apple Stores out of their own markets.

There is a downside to all that stability, however. By limiting how low sellers can go, MAP keeps prices artificially high (or at least higher than they might otherwise be with unfettered price competition).

(Source: Why you can't get iPods at a discount)

5 comments:

Anonymous said...

Does this apply to all resellers or only the ones that acquired the items straight from the manufacturer through a LOI (or whatever) ?

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