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Channel IQ | Know What You Don’t Know Series:

How to Live with Amazon and Prosper: Managing an Effective Resale Price or MAP Policy in 2015 & Beyond David Howell | VP Brand Strategy | Channel IQ Eugene Zelek | Partner | Freeborn & Peters LLP

David Howell

Introductions Today’s Guest Speakers

Gene Zelek

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“Action is the foundational key to all success.”

- Pablo Picasso

Living with Amazon: What is the problem? Simply put.

DIVERSION

3 Core Components to Protecting Your Channel

1.   Reporting •  We have to first identify the problem affecting

our brand and where it’s occurring

2.   Investigations •  We have to “know what we don’t know”- dive

deeper into the unknown

3.   Enforcement •  Unless we actively have a strategy to

enforcement our reporting and research we will never solve the “Problem”

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Survey

Combating Resale Price Erosion: Terminology

Combating Resale Price Erosion: Terminology

Minimum Resale Price (MRP) Program: •  Covers all offers and actual selling prices

Minimum Advertised Price (MAP) Program:

•  Covers some offers, but never actual selling prices

Method: By Agreement or Policy

MRP: Policy only MAP: Either agreement or policy

What’s the Difference?

Agreements: Require approval from other side to implement or change

Policies: Announcements that can be adopted or changed anytime

What’s the Difference?

MRP and MAP Programs: Overall Trends

•  More common in U.S. •  Changing acceptance outside U.S. •  Reseller price matching & hostility •  Moving to second (or later) generation

programs •  Expansion beyond consumer durables

MRP and MAP Programs: Overall Trends more

•  Addressing more behaviors to avoid cheating •  Better controlling distribution •  More sophisticated monitoring ability •  MRP and MAP: Penalties looking more similar

MRP and MAP Programs: Recent Developments

▪  Strong-dollar currency issues ▪  Contact lens cases and fallout ▪  Hybrid policies

•  MRP + MAP •  MAP + Promo MAP

MRP and MAP Programs: Recent Developments (More)

▪  B2B applications •  Point-of-sale reporting •  Accommodating cost-plus contracts

▪  Support for approach

MRP and MAP Programs: Ongoing Challenges

Clash: Long-term vs. Short-term

MRP and MAP Programs: Ongoing Challenges

Whack-a-mole enforcement

MRP and MAP Programs: Ongoing Challenges

The A-word: Amazon Facts of Life

▪  No cooperation with unauthorized reseller problems ▪  Rip-your-face-off contract provisions ▪  Inventory commingling ▪  The algorithm ate my homework & other excuses ▪  Only the nuclear option seems to work

MRP and MAP Programs: Ongoing Challenges

Lack of resolve

▪  Vagueness ▪  May vs. will ▪  Lack of sting ▪  More than three strikes

Lack of Resolve: Policy Timidity

•  Restarting the clock •  Bad behaviors allowed •  Ineffective monitoring •  No uniform enforcement or any

enforcement

Lack of Resolve: Policy Timidity (More)

MRP and MAP Programs: Ongoing Challenges

Rigidity

MRP and MAP Programs: Ongoing Challenges

Myopia

Myopia: Failure to See the Whole Problem

▪  Forgetting other means ▪  Overlooking business and legal conflicts & friction ▪  Neglecting distribution realities

Neglecting Distribution Realities

▪  Uncontrolled distribution ▪  Powerful resellers ▪  Multi-step implications

Multi-Step Implications

▪  Ignoring integrated resellers ▪  Inability to track products ▪  Invisibility of the indirects

And the Retailer of the Year is … Drum Roll Please!

Outlook for the Future?

▪  Policy saturation ▪  Restrictive distribution ▪  More product differentiation ▪  E-tailer evolution and reconciliation ▪  New challenges

Q&A Webinar Recap

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Join us all year for our educational webinar series! Next Upcoming Webinar: June, 2015 “Channel IQ Annual Compass” David Howell & Channel IQ Executive VP Kevin Potrzeba

ciqcompass.com

Thank You! For additional information, please direct all questions to David Howell and he’ll answer them as soon as possible.

David Howell: dhowell@channeliq.com Direct Line: 1-208-340-5866 Channel IQ 55 W. Monroe Street, 22nd Floor Chicago, IL 60603 www.channeliq.com

Gene Zelek: Freeborn & Peters LLP 311 S. Wacker Drive, 30th Floor Chicago, IL 60606 www.freeborn.com