Styling & Performance - June 2008 - (Page 37)

PRICE PROGRAM BREAKDOWN MAP – MINIMUM ADVERTISED PRICING dealer. Under the agreement, authorized dealers may be found in This price program is designed to maintain a minimum advertised violation of the MVP policy if they sell an MVP product below the pricing level. There is usually no concern regarding the actual established MVP price. Resellers who violate the policy may not selling price. If a dealer or WD advertises the product with a sales be allowed to purchase any new product from the brand that was price under the established MAP levels (this may or may not be violated. The penalty for violating the MVP policy is indeﬁnite. the MSRP), the manufacturer can withhold the marketing allowMRP – MINIMUM RESALE PRICE ance or refuse to sell to the dealer or WD in the future. The loophole in MAP is that the product can be sold at any price, This program was created by DiabloSport and became effective on May 1, 2008. This unilateral pricing program applies to all United it just can’t be advertised at such a low price that the company’s States DiabloSport resellers. It establishes minimum resale prices image, the brand image or the product image could be “damaged —Karen for Horgan, Sussco if retail customers were to see the ultra-low prices advertised.” SussmanDiabloSport gasoline and diesel tuning system products. If a reseller is found to be in violation of the MRP, they can be: removed MVP – MAXIMUM VALUE PROGRAM from DiabloSport’s Website as an authorized dealer; removed by This program was initiated by MSD Performance in April, 2007. DiabloSport’s dealer locator; removal of the reseller’s “marketing The program is designed to maintain the image of the company, allowance as listed on the reseller’s terms of agreement”; loss/ brand and product, but it extends to the actual sales price of the voiding of all factory warranty to both the reseller and the retail item. MVP is a voluntary, authorized dealer program that estabcustomer; removal of authorization to use any and all trademarked lishes minimum resale prices for MSD Performance Products or copyrighted DisbloSport images or text; being listed as an which include MSD Ignition, Superchips, Edge Products and “unauthorized dealer” on the front page of DiabloSport’s Website; Racepak. Resellers sign up with MSD to become an authorized and refusal by DiabloSport to sell its products to the reseller. programs.” “Many companies in other industries have already implemented similar product line. Launched on May 1, 2008, the company says it has already listed six dealers as “selling DiabloSport products at below DiabloSport’s minimum resale price,” in essence, catching dealers that were violating the pricing plan. The dealers are listed as an “Unauthorized Dealer” on the front page of DiabloSport’s Website. The listing also says DiabloSport will no longer sell product to any of the listed dealers, effective immediately. In addition, retail customers are warned that if they purchase DiabloSport products from a reseller violating DiabloSports minimum resale price policy they will lose the factory warranty, and retail customers will be required to pay fees of up to $99 for warranty work for “any” reason, according to the company’s stated policy. TRACKING SALES So how does a company ﬁnd violators? Short of putting a team on the Internet fulltime and checking prices, they can hire an Internet enforcement service such as Net Enforcers. “We have three or four tools we can use to track sales of items over the Internet,” said Kevin Jones of Net Enforcers, Inc., based in Phoenix, Arizona. “One method is to use a sophisticated ‘snowﬂake’ that is laser etched onto the product and cannot be seen without special equipment. This is a patented and licensed technology.” “How do we identify price violators? It’s an education process. We started out as them,” said Joe Loomis of Net Enforcers, admitting that he used to sell stereo components at low cost on the Internet. “We can combat Internet sales at lower than MAP and MVP (and now MRP) prices, but we don’t target individual sales. If someone is selling only one or two items, they can usually ﬂy under the radar.” Net Enforcers has several ways to track sales violators. They can use the serialized laser etching to check on MAP and MVP to see who is complying with the policies and who is not. If a product carries a U.S. patent, they can use a patent licensing program to regulate sales and prevent so-called gray market sales. If the manufacturer has a policy in place, those who violate the policy can be charged with ‘Tortuous Interference,’ and without giving away any secrets they also have more standard track-and-trace programs they can use. “Internet sellers with little or no overhead can charge low prices, avoid taxes in some states and even make additional money on shipping,” Jones says. “We have found that companies with employees and the result- ing taxes, health care costs and more, need to make $100 on the sale, whereas a company with no employees and no overhead can get by with a $20 proﬁt.” The bottom line is that manufacturers will lose customers if regular guys go away. When the customer ﬁnds there is no service and no warranty, that customer calls the manufacturer. This means that manufacturers who want to keep customers will end up handling situations that dealers would normally take care of. “There are cost-effective ways to enforce MAP and MVP if the manufacturers are serious about it,” Jones says. “We check the agreements (we have an attorney on staff) to make certain they are legal and enforceable. The various polices require due diligence, and polices must be clear and in place to be enforceable.” “We also help our customers set up Internet dealer programs to tap into the correct demographic,” Jones adds. “It is possible for a savvy consumer to ﬁnd multi-channel refurbished merchandise online. We have helped companies set up sales for overstock and B-stock items, and we have helped others set up eBay stores to sell older units. When the merchandise comes directly from the manufacturer it eliminates the so-called gray market.” June/July 2008 I stylingperformance.com 37 http://stylingperformance.com

Table of Contents Feed for the Digital Edition of Styling & Performance - June 2008

Styling & Performance - June 2008 Contents Soapbox Buzz Making Money with 1967-72 Chevrolet/GMC Trucks, Part II Red, White, Blue... & Green Limiting Installation Liability The House That Jack Built MAP vs. MVP Pricing Supply Line Distributor Directory

Styling & Performance - June 2008

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