MSRP stands for Manufacturer's Suggested Retail Price. It's the price a manufacturer recommends retailers sell the item for. The intention with MSRP is to standardize pricing across different retailers and regions. This helps ensure a consistent value perception in the market.
One of the key areas of pricing in manufacturing is to control the RRP across your retailers. If stores or big shops sell your product at a lower rate to attract more customers, this would significantly undervalue your item. Likewise, wholesaler price tends to undermine the MSRP impacting the product value and eventual profitability from future purchases.
In this blog, we break down the importance of the manufacturer's suggested retail price (MSRP) from a manufacturer’s perspective. We will also address who might be undermining market stability and how to assess pricing adherence across different countries.
Why Monitor Manufacturer-Suggested Retail Prices Across Stores?
Manufacturers establish RRPs to set a standard price for their products across retailers. This helps ensure a consistent brand image and fair competition. Products whose prices follow MSRP maintain consistent value perception among the final consumers.
However, once products are sold to wholesalers and retailers, manufacturers lose direct control over final pricing. Monitoring the manufacturer-suggested retail price levels helps manufacturers see if their suggested prices are being adhered to by their customers – the wholesalers and retailers.
Here’s why you should track MSRPs and instruct retailers to maintain price adherence to the manufacturer's suggested retail price MSRP:
- Helps maintain brand integrity: Consistent pricing helps maintain a brand’s value and reputation.
- Fair competition among stores/retailers: Adhering to Manufacturing Suggested Retail Prices (MSRP) ensures a level playing field among retailers. Now, retailers must find out how to set prices when their competitors are selling the same products.
- Market strategy: Insights into pricing behaviour can inform future pricing strategies and market positioning.
Pricing Lesser than the MSRP: Who is Ruining the Market?
When manufacturers notice significant deviation in the market from their Recommended Retail Price, it’s crucial to identify who is responsible. These deviations can indicate which wholesalers or retailers are ‘ruining’ the market by selling at prices much lower than the recommended price levels. But, to continue boosting sales and revenue, retailers can instead sell alternative products and set prices accordingly.
This practice can lead to a price war, ultimately devaluing the product and damaging the brand. Often sellers set low or wholesale prices for end customers that bleed the product’s profitability and ruin the market eventually.
To avoid this, manufacturers need to ask:
- Which wholesalers or retailers are consistently undercutting the MSRP?
- Are these deviations more prominent in specific markets or regions?
Identifying the source of such undercutting helps manufacturers address the issue directly, whether through renegotiation, penalties, or other measures to encourage compliance. Overall there should be a change in strategy for future partnerships regarding the manufacturer’s suggested retail price (MSRP) as well.
Also Read: The Price Elasticity of Supply and its Impact on Production Decisions
The Importance of Country-Specific Manufacturer-Suggested Retail Price Monitoring
Manufacturers must check MSRP adherence even across countries. Price adherence can vary country-wise. Manufacturers need to track retail prices per country to understand the market behaviour. From there, they can control prices across the entire supply chain. For instance:
- Average Retail Prices: Compare the average retail prices in different countries to the RRP.
- Deviation Percentage: Calculate the percentage deviation from the RRP in each country.
For example:
- In France, the average retail price might only be 2% off the RRP, indicating strong adherence.
- In the Netherlands and the UK, prices might deviate by 20%, showing significant undercutting.
Controlling Prices Across the Supply Chain
Understanding these variations is crucial for manufacturers who sell to wholesalers and distributors, as it allows them to:
- Implement Pricing Strategies: Adjust RRPs or negotiate with wholesalers and retailers based on market-specific data.
- Monitor Compliance: Set up systems to regularly check retail prices and ensure adherence to RRPs.
- Address Non-compliance: Take action against wholesalers or retailers who consistently undermine the RRP.
Monitoring recommended retail pricing in manufacturing is a critical task for manufacturers to maintain brand integrity, ensure fair competition, and implement effective market strategies. Keeping an eye on the manufacturer pricing (MSRP) allows manufacturers to maintain control over their prices throughout the entire supply chain. Since they are selling to wholesalers and distributors/retailers, rather than directly to consumers (B2C), monitoring and managing prices at each stage ensures consistency and protects their brand's value.
By understanding who is disturbing the market and analysing country-specific pricing behaviour, manufacturers can better control their prices across the entire supply chain. This strategic oversight not only protects the brand’s value but also fosters a stable and competitive market environment.
How SYMSON Helps Manufacturers Manage MSRP Across Retailers and Wholesalers
SYMSON's platform provides powerful tools to help manufacturers manage their Manufacturer’s Suggested Retail Price (MSRP). You can track MSRPs throughout the supply chain, including retailers, wholesalers, and distributors. You will receive an automated report of price adherence to your MSRP. Here’s more on how SYMSON can assist:
1. Real-Time Price Monitoring
SYMSON provides real-time price monitoring, allowing manufacturers to track retail prices across different markets and regions. This enables manufacturers to ensure that their MSRP is being adhered to by all parties involved. By receiving instant alerts when deviations occur, manufacturers can take prompt action to address any discrepancies.
2. Data Analytics and Insights
Our platform offers powerful data analytics tools that help manufacturers analyze pricing trends and behaviours. By leveraging SYMSON’s analytics, manufacturers can identify patterns of non-compliance, understand the impact of pricing deviations, and make data-driven decisions to adjust their pricing strategies accordingly.
3. Automated Reporting
SYMSON simplifies the process of generating reports with automated features. Manufacturers can easily access detailed reports on pricing adherence, deviations, and market behaviours. These reports can be customized to focus on specific regions, products, or retailers, providing valuable insights to support strategic decision-making.
4. Strategic Pricing Adjustments
With SYMSON’s strategic pricing tools, manufacturers can proactively adjust their MSRP based on market data and competitive analysis. This ensures that their pricing remains competitive while maintaining profitability. The platform also allows for scenario planning, helping manufacturers anticipate the impact of pricing changes on different parts of the supply chain.
Do you want a free demo to try how SYMSON can help your business with margin improvement or pricing management? Do you want to learn more? Schedule a call with a consultant and book a 20 minute brainstorm session!
