Your questions answered

Influence over sales and marketing * Online price mistakes

Marketing moves

Q I am chief procurement officer for a fast-moving consumer goods manufacturer with a strong purchasing function that is linked to business strategy and is performing well. One area I am not responsible for is sales and marketing spend. I think it would benefit from purchasing involvement, but I'm having difficulty in persuading my board colleagues to let me get involved. What would be the effect of applying purchasing principles to this area?

A Tom Casey, from supply chain consulting services at Capgemini, writes: There are two parts to your question. One relates to budget responsibility, and the other to purchasing's influence on sales and marketing services.

Budget responsibility for sales and marketing will not in the foreseeable future fall under procurement. Therefore, do not have this in your short- to medium-term objectives, as you will only be chasing a dream.

However, with regard to purchasing influence, your marketing and advertising (M&A) colleagues will gain a huge advantage if purchasing gets involved.

Procurement has strengths that any business unit will welcome, including negotiation expertise; policy and compliance advice; project management experience; and strategic sourcing and market knowledge.

The immediate benefit your M&A colleagues and the board will gain is the peace of mind that the contract negotiation and agreement are being handled by capable people. They also get to hand off the typically time-consuming terms and conditions discussions - a process they tend to dislike.

A medium-term benefit is that your M&A colleagues can maintain their working relationship with vendors while passing the commercial relationship responsibility to procurement. Large, drawn-out, complex cost negotiations are often better managed by a "neutral" resource, in order to depersonalise the cost-versus-relationship issue.

The long-term benefit for your M&A colleagues is better management information, clearer costs and improved campaign management performance. This is good for the industry, as continuous improvement and best practice become the norm.

The opportunity for reductions within an M&A budget usually lies within the 10-20 per cent range and focuses on subsegments within marketing including above-the-line (such as television), below-the-line (such as direct marketing), print, public relations, sponsorship and internet.

Your M&A colleagues often perceive a threat that procurement involvement will prolong negotiations and delay the reaching of contract agreements and therefore of service delivery. This is particularly relevant in an environment where market and consumer demands are shifting on a continuous basis. However, by applying good sourcing and supply chain management techniques this threat can be reduced.

In my experience M&A soon comes to demand, and indeed rely on, procurement involvement to better manage its spend.

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Bargain basics

Q One of my buyers ordered audiovisual equipment on a website advertised at a very low price and received messages from the seller onscreen and by e-mail that his order had been accepted. Our bank account was also debited. Then they sent us an e-mail refusing to honour the deal, saying that the low price was a mistake. Is this legal?

A Paul Abbiati, a PMMS legal onsultant, writes: Some lawyers tell business buyers and consumers that the internet is lawless and that English common law is out of touch with e-procurement, and cannot be applied. It gets worse, as some will tell you that English law lacks a definition of an e-contract.

Only the latter statement is true.

Several years ago, I was invited to speak on the BBC programme Working Lunch about electronic contracts, following City lawyers' silence over whether consumers had beaten a mighty electronics supplier over a price mistake on a website.

The problem of suppliers' price mistakes and failure to honour contracts is nothing new and will not go away. All that has changed is the environment. We have gone from ordering by letters to ordering by telephone, dien to ordering by telex and fax, and now to ordering online and by e-mail.

So, who wins if the price of the goods or services anywhere - particularly on a website - is a bargain, the buyer orders according to the rules, and die supplier puts it in writing that your order has been accepted on the screen and/or in an e-mail and even debits your account?

Surprisingly, English law and other laws are clear on this. English law says that if a price offer or display anywhere is a genuine mistake, and it is clear to the reasonable person that the item's price is "too good to be true", then contract law will interpret the concluded contract - even if money is debited - as void for mistake.

All buyers might win their argument that the contract is valid just on confirmation of acceptance of the order in an e-mail if, for example, the price was "believable". This might apply, for example, if a DVD player normally priced at �20 was advertised for �1.50, or if the first five or 10 sets had been on sale at the low price as a loss leader.

However, a far greater reduction in price would not be "believable". The press reported recently that the retailers Argos and Homebase had advertised on their websites one bank holiday Monday a 28-inch television and DVD player, normally priced at �350, for 49p.

One buyer bought 80 sets at the bargain price, according to media reports. Argos and Homebase themselves said that 10,000 customers had bought the television and DVD player over the bank holiday.

However, these customers were destined to be disappointed. The retailers apologised, but were refusing to honour the website deals - even though they had debited customers' accounts - because the mistake in pricing was down to a "genuine internal error".

Please note: responses can only be given on this page, represent writers' personal views and should be regarded as general guidance only.