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UPP Should Continue To Work During Q4

10/06/2013 08:00:00 PM Eastern

TWICE: How much pressure will Black Friday promotions put on CE unilateral pricing policy (UPP) programs? How have UPPs held up this year?

Rob Eby, D&H Distributing: D&H has been supportive of UPP and MAP policies from our vendor partners, working with them to develop a procedure that expedites the authorization process. That “Get Authorized” program has accelerated rapidly to include more than 60 manufacturers in just a few months since its launch.

This is evidence that UPP guidelines are providing a certain amount of value in the market. Vendors will use derivative models and buy-ins to avoid impacting those models with strict pricing.

Fred Towns, New Age Electronics and Jack of All Games: UPP programs will be upheld more now that pricing for tier-one manufacturer products like tablets have reduced. More retailers will be compliant as manufacturers build more meaningful programs with some teeth around them. UPP programs reduce pricing wars between competitors, which actually gives them each the ability to make more money on those products.

Warren Chaiken, Almo: Overall, the UPP programs have held up well, and in 2012 the vendors took the UPP pricing down to very aggressive price points, which will be repeated this year. The downside to the promotional UPP pricing is margin funding by vendors — when the pricing is reduced, the dealers experience additional margin pressure.

Tim Coakley, Ingram Micro Consumer Electronics: CE UPP programs have been tremendously successful year to date for IMCE. For IMCE specifically, the majority of our Black Friday promotions will not be affecting any of our partner’s UPP programs due to most are derived from unrelated product categories.

Curt Hayes, Capitol: UPP continues to hold up very well, and I expect it do so for the foreseeable future. The bigger companies really put teeth into the effort at every level, from selling the message to keeping a close eye on pricing.

Dennis Holzer, The PowerHouse Alliance: Black Friday promotions will not put any additional pressures on UPP. These products will be omitted from UPP because they are pre-authorized by the vendors. For the most part, UPP’s have held pricing fairly consistent amongst all vendors. While there have been some exceptions, for UPP to remain successful, retailers need to know if MAPs are violated. The penalties will be significant and enforced regardless of dealer size.

Jerry Satoren, DSI Systems: I don’t think that Black Friday will put much pressure on CE UPP programs at all. From the retail side, I believe that most of the crazy deals that are promoted will come from non- UPP models or from brands with no programs at all.

In addition, many manufacturers that have UPP programs offer limited-time drop in Black Friday models to allow retailers to be aggressive without compromising UPP. I think these are intelligent promotional strategies and are really a result of the fact that, generally speaking, UPP programs have held up pretty well in 2013, resulting in dealer margins that, while still too low, have stabilized. We all need this to continue.

Bill Stewart, Petra Industries: Retailers spend a significant portion of their advertising budget during the Q4 holiday season and much of that is dedicated to Black Friday promos. Relevant CE brands certainly want to be included in that promotional media blitz. We suspect vendors with unilateral pricing policies in place will select or develop products outside of their UPP to ensure their brands are represented in Black Friday promotions.

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