Why retailers need to track market positioning violations Author: PriceCop Thursday August 17th, 2017 • Category: Blog • Updated: Friday April 4th, 2025 “Price is more than just a number. It’s the language a brand uses to communicate with its customers.” — Simon Sinek In modern retail, recommended retail positioning (RRP) is often compromised, and in most cases, it’s the retailers themselves who violate it. Some do it intentionally to boost sales or clear out stock, while others do so unintentionally, as product prices can change multiple times a day, and not all retailers use automated monitoring tools. Content List Why is maintaining RRP important for the market? Key benefits of retail price monitoring What does the data show? How does price tracking benefit suppliers? Conclusion This is why tracking retail prices is crucial not only for suppliers but also for retailers. Ignoring pricing policies can lead to price wars, reduced profit margins, and loss of trust from vendors. Why is maintaining RRP important for the market? Let’s consider a product priced at $250. The vendor has set a recommended retail price (RRP), stating that resellers must sell this product at no less than $250. If any retailer lowers the price below this threshold, they violate the agreement. When prices deviate from the set parameters, consequences are inevitable. If competitors lower prices without the supplier’s oversight, a compliant retailer faces a tough choice: either hold the product in stock without sales or lower the price and lose profit. In both cases, the outcome is unfavorable for the retailer. Key benefits of retail price monitoring Maintaining recommended retail positioning provides significant advantages for both retailers and vendors. 1. Protection from price wars A retailer who follows the RRP avoids getting caught in destructive pricing battles with competitors. Unchecked price wars lead only to losses, reduced profits, and brand devaluation. 2. Preserving perceived product value Stable pricing builds consumer trust in product quality. If an item is sold too cheaply, customers may suspect poor quality, while an overly high price may deter potential buyers. 3. Pricing flexibility for retailers Online retailers can quickly track competitors’ pricing strategies and adjust their own in a timely manner while staying within the recommended price range. 4. Better collaboration terms with suppliers Retailers who adhere to a vendor’s pricing strategy have a better chance of negotiating favorable purchasing conditions, discounts, and exclusive deals. What does the data show? A study by a leading business school, which analyzed data from 226 products and 900 authorized and unauthorized retailers, revealed that only 20% of sellers strictly followed the recommended retail price. Meanwhile, 40% of stores regularly violated agreements. Among unauthorized sellers, violations occurred in 53% of cases, whereas among authorized retailers, the rate was just 15%. These figures clearly demonstrate that price analysis is crucial for vendors. Failure to maintain pricing policies can lead to declining sales, an increase in unreliable market players, and a dilution of brand value. How does price tracking benefit suppliers? Consistently maintaining the recommended price benefits both retailers and vendors. First, it allows for more accurate sales forecasting—when all retailers maintain the same price, selling becomes easier, leading to more regular restocking from the vendor. Second, adherence to pricing policies prevents stock from stagnating due to competitors excessively undercutting prices. Retail price monitoring also helps protect a brand’s reputation. When one retailer drastically lowers a product’s price, it can negatively affect consumer perception. If an item is sold significantly below the recommended price, customers might assume something is wrong with it. Conversely, if the price is too high, it may create the impression that the product is overpriced and not worth its cost. Conclusion Even retailers who believe RRP is too low understand the importance of this agreement, as it protects both suppliers and sellers. Tracking prices helps prevent dumping, maintain profitability, build stronger relationships with vendors, and support market stability. Ultimately, strict adherence to a well-defined pricing strategy benefits all market participants. RRP monitoring is a crucial tool that helps prevent losses, maintain product value, and foster a healthy competitive environment.