The United States Supreme Court recently handed down a ruling overturning a longstanding antitrust rule. Manufacturers now might in some cases be allowed to agree to set and enforce minimum retail prices. In such cases it would then be more difficult for consumers to shop for a better price because unless a retailer had insufficient competition in a market so they could mark up above the MSP and the presence of competition would lead only to all channels selling the product at the same required minimum price. The court ruling doesn't allow this kind of agreement in all cases but no longer bans it in practice. Antitrust suits can still be heard but are to be decided on a case-by-case basis.
The case that led to this ruling was of a manufacturer who wanted only to sell through specialty boutiques that would provide high levels of customer service and not focus on selling the product through discounting.
The underlying case now goes back to a lower court for a decision as to whether or not the manufacturer's marketing strategy is legal.
Should it be ruled legal it is one that I think manufacturers would be foolish to pursue (although one that can be achieved more or less in practice on many products today). If you want only retailers who provide exceptional customer service to sell your products to consumers then only sell your product to customers (the retailers) who meet your standards for customer service. Once you sell it to them at the price you can command then it should be the retailers strategy for the market it serves and the competition it faces to dictate the pricing strategy it employs and margin it makes on the product. Another option would be to only retail and sell your product to consumers directly. However, manufacturing and retailing are very different business and few companies would be wise to try to do both to the exclusion of all other sales channels.
Another world in which the legal option isn't always the smart option in the long run. Banking and credit cards, for example. David Lazarus in his column at the San Francisco Chronicle points out that when it comes to bank fees, banks often profit from deliberately confusing their customers. Cell phone service providers and credit card issuers benefit from similar tricky language as well. Companies in these spaces can get away with such practices because they are either following the letter of the law or taking advantage of the absence of regulation. Such behavior invites consumer backlash and efforts to increase regulation regarding disclosures.
Although such fees gained from customer confusion might be profitable and attractive to Wall Street in the short run, imagine the goodwill and profitability a company could gain in the long run were it to actually operate by serving consumer needs rather than preying upon them. USA Today offered an opinion piece last year summing it up this way:
What's seems far more unfair — in fact downright sleazy — is imposing onerous rates and fees on consumers and failing to tell them about it in plain language.
In banking, credit unions provide an alternative. I've been banking with a credit union for nearly a decade, sticking with them even though I live on the other side of the country now because the provide great customer service and make no effort to fool me into paying exorbitant fees. I imagine I will be their customer for decades to come and they will continue to profit from my business.
Among the major banks, credit card issuers and all cell phone service providers in the United States there are few if any alternatives. For protection then consumers will have to rely on the government to help rather than giving their business to companies who develop smart, alternative consumer-friendly strategies.
When developing your marketing strategy think about whether you choices are smart or just what you can get away with.