Minimum Advertised Price : Selling On More Than Price

New company
aims to help
manufacturers
focus on value
and brand.

In a world gone mad for the lowest price and least cost, is it viable for vendors and their channel partners to focus instead on value and brand?

Industry veterans Bill Johannesen and Andy D'Amico believe so, and they're teaming up to offer manufacturers comprehensive strategies and programs to do just that.

"We really have to get back to discipline in how we embrace the market, place product, price product, support the channel and engage the end consumer," said Johannesen, managing director of Vision Werks Consulting.

Through Vision Werks, Johannesen focuses on the sales, marketing and operations strategies needed for such a shift. D'Amico, an attorney with his own consulting business, works the legal angle, helping clients develop the contractual agreements needed for effective minimum advertised price (MAP) and unilateral pricing (UP) programs that do not run afoul of state or national anti-trust laws. (See related sidebar.)

An Experienced Team

For 30 years, the industry enjoyed "a fabulous tailwind of hot products" that drove retail traffic and sales, Johannesen explained. Manufacturers increased product SKUs and expanded distribution. New manufacturers jumped into the fray. But at the same time, channels blurred and distribution discipline weakened.

None of this served the industry well when the economic bottom dropped out last September. The Internet has amplified both product availability and price competition, and now vendors and retailers ruthlessly compete on price and on product lines that were previously not subject to intense pricing pressure.

A 30-year industry veteran, Johannesen's bona fides include retail (PRO Group founding retailer Sounds Great in the 1980s), manufacturing (Bose for 11 years, then Sharp Electronics), and distribution (AVAD, division of Ingram Micro). He founded Vision Werks in January 2007.

D'Amico became Bose's first lawyer in 1988, leaving the company as associate general council in 2002. After that he became a consultant, providing legal services—occasionally on a full-time basis—for such companies as Boston Acoustics, Tweeter, Brookstone and Tivoli Audio.

D'Amico and Johannesen worked together at Bose, then reconnected in early 2009, spending a great deal of time talking about how the industry has changed. Eventually they joined forces as consultants. Said D'Amico, "We believe because of the economy, because of the maturation of some of these product categories, manufacturers are now reduced to competing on price," D'Amico said. "That is a lose-lose game for them."

Trusted Counsel

Vision Werks's mission is to help vendors to keep their brand, products or a segment of their product line out of the commodity pricing wars. "We can help them with their pricing, distribution channel structure, distributor and dealer agreements, pricing programs (MAP, UMAP, UP) and get some structure back into the market place, and profitability into higher-end products," Johannesen said. "The biggest thing is to help the channel be able to sell and market again."

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