Posted on 16. Nov, 2012 by planetmitch
Many have been confused by some recent price increases on DSLR cameras and we’ve recently been reading about Minimum Advertised Price (MAP) and think you may want to know more too.
In October, we saw some aggressive pricing on the Canon EOS 5D Mark II and even the Canon EOS 5D Mark III for example – and Canon even had some rebates – but as of November 1st, Canon began re-enforcing their MAP pricing. So if you were lucky enough, you saved some money – but now, you’re at the mercy of the pricing gods at Canon and Nikon and everyone else.
There are some very good reasons for MAP as you’ll see below – so don’t just jump all over the vendors right away, please read first.
What is MAP?
This is a very good explanation of why MAP exists and what some vendors are doing… it is from About.com and explains why TV vendors are doing it – but it also applies directly to other companies like DSLR camera manufacturers.
Are you a dedicated price comparison shopper? Are you one of those consumers that go to stores like Best Buy to get a demo on the latest TV, then end up buying it a lower price from an online dealer or run around for store-to-store to take advantage of price matching policies? If you are what is referred to as a “Showroomer”, and/or aggressive price comparer, then this news is for you…
Samsung and Sony are instituting a new Unilateral Pricing Policy (UPP) that may just put the brakes on consumer “showrooming” and price matching by informing dealers what MAP (Minimum Advertised Price) that is allowed.
What this means is that the affected product cannot be advertised or sold below a price announced by the manufacturer. However, there is no restriction on how much above the MAP price the product can be sold for, and there is no signed agreement between the manufacturer and dealer that the product must be sold for a specific price. However, if a dealer advertises or sells the product below the MAP price, it risks losing its dealer association with the manufacturer.
It is interesting to point out that the MAP and Unilateral Pricing Policies being implemented by Samsung and Sony are legal, as the manufacturer and dealer do not conspire to set the actual prices for the products involved, and the dealer is not required by the manufacturer to sell the product for a specific price. However, if a dealer does advertise or sell the product for lower than the manufacturer’s announced price, the manufacturer can simply stop shipping that product to the dealer, or discontinue its association with the dealer entirely.
Here’s another explanation from a B&H employee:
MAP (Min Advertized Price) has been a fact of life in our industry for a decade or more. What we’re seeing today are new components:
- Much stricter enforcement with more strict limitations on how to convey an item’s real selling price to customers when that price is below MAP, and in particular restrictions on how this information can be conveyed on a retailer’s web site. This is coupled with more strict enforcement and more draconian penalties to a retailer who violates the restrictions.
- Unilateral pricing which sets the minimum SELLING (not advertized) price. This has been legal since the US Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc. Once again — strict enforcement and draconian penalties to the retailer who flouts these rules. This was adopted first (as far as I recall) by Sony USA and is now also employed by Samsung, LG, Nikon USA, Pentax USA and others.
- Sales restrictions include limiting which items a retailer may sell online or geographical limitations, like Nikon USA prohibiting authorized retailers from sending any digital slr body to an address outside the USA.
Years ago I attended a retailer’s roundtable in northern NJ. I was the only rep from a big store with a substantial mail order and online presence. Everyone else was the owner of a smaller regional or local mom-n-pop store doing business primarily from brick-n-mortar stores. They all LOVED MAP and wanted higher MAP values so they could charge customers those MAP prices without the customer asking them to match our lower selling price.
Now, it’s my PERSONAL opinion US distributors are bending to international pressure. After all, I doubt anyone from Nikon/Canada (to pick one brand at random) or anyone working for a Canadian retailer wants to compete with us. After all, if they make no profit on the sale but are expected to support the owner afterwards, it’s lose-lose for them. Further, I think these restrictions are the distributors’ way to shore up their authorized retailer network. If B&H and one or two other super-retailers are all that’s left in a few years, I think Nikon, Canon, et al fear we’ll be the dog and they’ll be the tail and we’ll be able to do whatever we want with impunity. Once again this is my PERSONAL opinion.
How does this affect you? In theory it broadens your choice of where to buy by making our price the same as the tiny store on Main Street. In reality it means we cannot offer a lower price even when we’d otherwise be willing and able to do so. Of course that tiny Main St store may be able to offer the camera they stock and the few lenses at the same price but in terms of breadth or depth of products and brands, they still can’t touch us and in terms of the professional advice (uncolored by commissions since we don’t employ them) I believe we remain at the pinnacle of our industry. YMMV.
Is MAP Legal?
This is also interesting discussion on Bob Atkins site
MAP schemes are legal. They are not a Minimum Retail Price scheme. A dealer can still sell a Canon product for less than the Minimum Advertised Price, they just cannot advertise that price. MAP programs are not “price fixing” and are allowed by law, though exactly what consitutes “advertising” in the context of minimum ADVERTISED price is still open to question and may depend on the exact wording of the MAP agreement between Canon and the dealer.
It remains to be seen what effect this will have on Canon prices, but the probability is that that they will increase from prices before November 1st. Canon has always has a MAP but has not generally enforced it. Dealers can still sell items at whatever price they want, they just can’t advertise that price. How they “get the word out” also remains to be seen. They could advertise a price of $399.99 but charge only $349.99 when you complete the checkout pricess. How you find out if that will happen is the question. Dealers could also not give a price and use the “add item to shopping cart to see price” scheme. Whether Canon would (or legally could) object to these practices remains to be seen.
What to do?
Is there anything you can do about MAP and/or does it even make sense?
First, because of the size of these manufacturers, I don’t believe there’s much we can do about it. They determine the suggested retail price and also establish the minimum advertised prices – and they’ve controlled those for years, it is just that most of us didn’t know about it or think about what was going on.
As to making sense, well, MAP may indeed be saving the brick and mortar or “mom and pop” camera retailers. If you think about it, it is quite common to go ask them for some decision making help in the store and then you say “I’m going to sleep on it” and never come back – deciding to buy online to save a bit of money (assuming the large online retailers can give lower pricing because they can buy more in bulk and get pricing discounts from the vendors in the first place).
Now, actually, even with MAP, some buyers may still choose to buy online because they can possibly avoid paying local sales tax – which can be significant on a large purchase. I must confess that I’ve done that myself. But I did buy my Canon EOS 5D Mark III thru our local dealer because Canon was shipping to the local brick and mortar shops weeks before they sent inventory to the online retailers. This is another way to reward the brick and mortar local shops altho if you asked Canon, they’d likely deny that they do this.
What can retailers do to get around MAP?
As the canonrumors article pointed out, we may see online retailers and heck, even brick and mortar retailers vying for your purchases by offering bundles – including things like flashes or tripods or cleaning gear etc. – to make you think you’re getting a better deal since they can’t lower their pricing without risking losing the whole deal with the vendor.
There is also this idea of unique bundles from The Photo Video Guy:
Resellers work with manufacturers to prepare bundles that are reseller unique that have approved pricing thresholds. These bundles are not generically available, and so makes comparison shopping more difficult. Itβs an obfuscation scheme at best.
What do you think?
It looks like the retailers have some challenges to try to get your attention and to sell you some gear, but does this pricing situation cause you problems? Does it help or hinder camera sales? Sound off in the comments!
(cover photo credit: snap i stole from google images)