Thursday, December 18, 2008

The Minimum Pricing Debate

The weak economy, as I mentioned in my last post, is encouraging cutthroat pricing wars between retailers trying to make the most of this slow year. However, manufacturers are hurting as well and trying to protect themselves with minimum pricing agreements.

This issue is currently gaining a lot of attention. As pricers we can see all sides of the issue, especially as most of these debates are centering mostly on commodity products rather that high value offerings.

As a pricer, where do you stand on the issue? How is this debate affecting your current pricing operations? More to come - Warmly, EM

The Wall Street Journal Reports:
"WASHINGTON -- Hoping to roll back a Supreme Court decision that allows manufacturers to set minimum prices on products, opponents launched a campaign that will include use of eBay Inc.'s popular Web site to garner consumer support.

At a closed-door meeting whose attendees included representatives of auctioneer eBay and discount retailer Costco Wholesale Corp., opponents decided to lobby for a bill now pending in Congress that would make minimum-pricing agreements a violation of antitrust law."

"Discounting, of course, remains a fixture on the retail landscape -- particularly in this year's holiday shopping season, due to the weak economy. MAP agreements don't cover all products and sometimes manufacturers grant exceptions. Typically the agreements apply to high-end goods, electronics and new product lines that manufacturers don't want to see tarnished by immediate discounting."

"Minimum-Price Foes to Use eBay in Effort"
"Manufacturers have been racing to enforce minimum-pricing policies since last year, when the Supreme Court ruled them to be legal, and not a violation of antitrust law. EBay and a group of other retailers and antitrust advocates are meeting Thursday in Washington to craft a strategy to overturn that ruling.

Manufacturers say minimum-pricing requirements are good because they protect a brand's image from being tarnished by discounting, while helping retailers make enough profit to pay for customer service. Consumer advocates argue that minimum-pricing deals hurt shoppers by keeping prices high and diminishing consumer choice."

"Discounters, Monitors Face Battle on Minimum Pricing"

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