The 2 sides of the mattress: Examining MAP pricing for retailers and customers

Minimum Advertised Price policies are a common tool used by mattress brands to control the advertised prices of their products by retailers. While MAP policies offer potential benefits for both brands and retailers, they also come with drawbacks, especially for consumers. Let’s delve into the world of MAP pricing to understand its impact on all parties involved.

The case for MAP policies

• Brand protection. Uncontrolled price slashing can damage a brand’s image, particularly for luxury mattresses. MAP ensures a minimum advertised price, preventing retailers from using deep discounts to attract customers and potentially devaluing the brand in the eyes of consumers. This can be especially important for high-quality mattresses where a lower price tag might suggest a lower quality product.
• Fair playing field. MAP protects retailers from predatory pricing by competitors. With a set minimum price, smaller stores can compete effectively with larger chains, fostering a healthy retail landscape. This can benefit consumers by giving them access to a wider range of stores offering a variety of service levels.
• Profitable margins. Retailers can maintain healthy profit margins by avoiding price wars. This allows them to invest in better customer service, such as trained staff who can provide personalized recommendations and in-home consultations. Additionally, these margins can be used to stock a wider range of mattress options, catering to diverse customer needs and preferences.
• Performance analysis. Consistent pricing across retailers allows brands to gain a clearer picture of product performance based on factors other than price. This valuable data can guide future product development and marketing strategies, ultimately leading to the creation of mattresses that better meet consumer needs.
• Improved customer experience. When price is taken out of the equation, retailers can focus on providing exceptional customer service, leading to a more positive brand experience for the customer. This can include offering educational resources, helping customers navigate complex features, and ensuring a comfortable and pressure-free buying experience.

The other side of the coin

• Limited price flexibility. Retailers lose some control over pricing strategies. This can make it difficult to run targeted promotions or clear out old stock. For budget-conscious consumers, this can be a major drawback, as they may miss out on potential deals and have a smaller pool of price options to choose from.
• Reduced consumer choice. Customers who prioritize price may have fewer options to find deals, potentially limiting their purchasing power. This can be particularly concerning for those looking for a good quality mattress at a lower price point.
• Potential for price fixing. If not carefully implemented, MAP policies can raise antitrust concerns. Brands must ensure they are not colluding with retailers to set prices, which would ultimately limit consumer choice and potentially inflate prices.
• Limited price transparency. While MAP dictates a minimum advertised price, it doesn’t dictate the final sale price. This can create confusion for consumers who may see a mattress advertised for one price but then find it selling for a different price in-store.

Who benefits most?

The impact of MAP pricing depends on the specific market and business model. Ideally, a well-crafted MAP policy should create a win-win situation for both brands and retailers. However, it’s crucial to strike a balance. Here are some points to consider:

• Brands with a strong brand identity benefit more from MAP pricing, as it protects their brand image.
• Smaller retailers appreciate the protection from price wars offered by MAP policies.
• Customers who value service over price may not be significantly impacted by MAP. However, for those focused on getting the best deal, MAP can be a barrier.

MAP pricing is a complex issue with arguments on both sides. For mattress store retailers, understanding the potential benefits and drawbacks is essential when deciding whether to support a brand’s MAP policy.

Ultimately, a successful MAP policy should promote a healthy retail environment that benefits both retailers and brands, while ensuring a positive experience for the customer. This might involve greater transparency around pricing and allowing for some flexibility on the retailer end to run promotions.