MAP Pricing

Forest River has instituted a new internet dealer protection policy that will force all dealers to only put the ‘Minimum Advertised Price’ on-line. They call it MAP.

The question is, does MAP have a place on the Internet and why would a manufacturer want to force their dealers to hide their pricing from the consumer?

An RV Manufacturer (RVM) has to have a fairly large base of RV dealerships across the US and Canada to take care of service and warranty issues. The RVM grants the dealership a territory and product line that they will not permit any other dealer within the region to market or sell. This allows the dealer the opportunity to harvest the market and invest in local advertising and marketing to drive business. Traditionally if was difficult for the consumer to go outside their demographic area for pricing – but the internet has changed that. Consumer’s can search, view and price a camper from a dealer located anywhere in the world. The regional boundaries have been effectively removed.

Brand Value

In the marketing world “Brand” is the perceived value of your product or service by the consumer. A strong brand is built by factors such as quality, price, materials, marketing and corporate perception. Often a manufacturer will impose MAP pricing on their premium product line to keep the consumer perception of the Brand high. For example, Cadillac. GM will never produce a $12,000 Cadillac for fear that the image/Brand that Cadillac is a premium auto will be tarnished. Conversely, GM will also demand a higher sticker for the Cadillac line of cars to maintain the premium perception.

The same can apply to the RV market. A Forest River Cedar Creek camper is the top of the line RV product with high quality design, parts and build. To maintain the overall Brand of Cedar Creek FR prices it accordingly and must maintain a price gap between Cedar Creek and the other non-premium brand RV lines. In theory, this is all in the best interest of the manufacturer, dealer and the consumer. The consumer benefits because the camper will hold it’s value on re-sell, the dealer gets a nice profit and the RVM can build a premium camper with quality parts and appliances.

Where MAP starts to fall apart is when dealer’s begin to take advantage of the program by pricing the camper too close to the MAP price to make a higher profit. They can do this because the actual price other dealers will charge for the identical product is ‘hidden’ due to the RVM’s MAP policy. The consumer ends up paying thousands more than they could have and the real problem comes in 3-4 years when they decide to upgrade to another camper. They are so far upside-down on the camper value that they can’t possibly trade it or sell it above what they owe. This shows the short-sighted approach the RVM and dealers are taking and how they are shooting themselves in the foot.

For the sake of the short term ‘kill’ they are killing the future RV market by selling campers at a price that will prohibit the consumer from making a future purchase in the next 5-7 years. We take calls every day from owners looking to trade up their RV and what they still owe exceeds what we are selling a ‘new’ camper for. It is then that they realize that they were taken advantage of by their ‘local’ dealer.

The fact is that the internet changes everything and any dealer or manufacturer that believes that they can ‘hide’ from the consumer is mistaken and will pay the price in the long run. The consumer is smart and the smart dealers will find ways around the MAP policy. It is in everyone’s best interest to price new RV’s at a price point that allows the dealer a fair profit and return on their investment. What the MAP policy does is protect the dealer that does not want to invest in internet marketing, price their product aggressively, and compete in the quickly changing internet market. Even GM is now getting it – they have begun to allow their dealerships to sell auto’s on eBay.com … opening up the market to allow their more successful and forward thinking dealers to thrive.

As a final point what the manufacturer’s don’t realize is that unless every RV manufacturer instituted MAP pricing they are putting their product and dealers at a competitive disadvantage. There will be RVM’s that will not burden their dealer network with MAP policies and the consumer demand will shift over to their RV’s provided the quality, service and other factors are on par with Forest River’s. This shift in consumer preference for brand will continue to accelerate as more and more internet savvy consumer’s enter the RV market.

I spent two years working with Cintas, developing their website, Cintas.com to promote their products and services over the internet and support their ground logistics efforts. Through the internet Cintas has been able to expand their market efforts and grow / maintain service lines through what has been a difficult economic period. The same factors are working against the RV industry and unless the RMV’s work with the internet to grow their consumer base, they will find themselves behind their competition quickly.

Next: What Forest River should do, how their dealers are implementing MAP pricing on their web sites and how you can find the best deal on the internet…