This article originally appeared in the Water Quality Products 2019 issue as "Value Over Price"
As the online marketplace increasingly shifts to be a dominant force in sales, water treatment product manufacturers are searching for new ways to combat discounted products and maintain the integrity of their brand, products and partners. In response, pump manufacturer Goulds Water Technology (GWT) recently began taking a stronger stance on their minimum advertised price (MAP) policy. WQP Managing Editor Lauren Del Ciello asked Dave Rutz, director of sales, residential & agriculture, for Xylem Inc. about this marketplace shift, how dealers and distributors can mitigate unauthorized online sales, and GWT efforts to emphasis value over price.
Lauren Del Ciello: What is MAP policy and why does it matter?
Dave Rutz: The minimum advertised price (MAP) is the lowest price at which a product can be publicly displayed without restricting the actual sales price. A manufacturer or brand enacts a MAP policy to ensure their seller network does not advertise their products below the minimum advertised price. In the growing online world, MAP policy matters more than ever. Adopting a MAP policy helps safeguard a brand’s name, maintains price coordination, keeps relationships with channel partners intact, and allows for equal earning opportunities where the emphasis is on value rather than price.
Del Ciello: How has the introduction of online sales for water products shifted the competitive landscape?
Rutz: The emergence of e-commerce has been a disruptive force in the residential water industry. Years ago, the supply chain for residential water systems could only be accessed via an authorized dealer or distributor. Today, the internet provides more opportunities for sales, but it also makes it far easier for unauthorized sellers to become part of the channel.
While the internet is a useful tool for researching companies and the products they make, homeowners today are also likely to encounter online sites offering direct-to-consumer buying options at lower prices. When it comes to purchasing residential water systems, there is no substitute for professional service and installation. These mission-critical applications are a substantial investment and are designed to be installed by qualified professionals.
Del Ciello: How can dealers and distributors locate and mitigate unauthorized online sales?
Rutz: In order to mitigate unauthorized online sales, enforcement becomes everyone’s responsibility. Goulds Water Technology (GWT) proactively works with our network of professional dealers and distributors to help maintain our brand in the market. We value our professional dealers and their loyalty, which is why we have created a MAP policy and taken a hard stance against violations.
We have updated the membership policy for the Goulds Professional Dealers Association (GPDA) that includes MAP policy compliance requirements. Additionally, GWT has engaged a third-party provider to monitor the internet and we assembled an internal team dedicated to working with our sales team to enforce our policy.
Del Ciello: As online sales continue to grow in strength, what will the future of pump and other water products sales look like?
Rutz: Although one can only predict what the future holds, it seems inevitable that internet sales and the ease of getting these products online will only become more of the norm. However, residential water systems are designed to be installed by qualified professionals. It does not seem possible that drilling a well or making well repairs would be common projects for even the handiest home owner. Qualified water industry professionals have the necessary technical experience and expertise to specify and install the right equipment, and they are familiar with local codes and guidelines.