The procurement function gets a lot of stick.

Organisations that supply services to big client companies (especially agencies) frequently complain about that they see as mean procurement departments. ‘They beat us up on price’. ‘They make us jump through all sorts of hoops’. ‘They impose tough payment terms on us’.

I’ve been known to say the same sort of thing myself!

But there’s a big truth out there: procurement’s job is to buy raw materials, goods and services for their company, and to do it selfishly. That’s because we all buy selfishly. We want things on our terms, at the lowest possible price, provided the quality is OK. The language is littered with sayings and aphorisms to underline this point.

“They are so desperate for the business, they’ll drop the price in the end”
“Never pay more than you have to”.

But the buyer can be sceptical too.

“No such a thing as a free lunch”.
“Pay peanuts, get monkeys”.

It is unrealistic to expect your commercial equation to defy the laws of gravity – whether you are an agency seeking a higher fee, or if you are trying to sell your house in a depressed market. Buyers will be buyers. But the other side of the coin is rather less obvious. If you want to be a success in sales, you can’t sell selfishly. If you sell what you want to sell, at the price you want to get, on the terms you insist on, you are likely to have very limited success.

That’s because we have to sell generously. We need to work out what people want to buy. We have to allow people to choose. We must get the pricing right. We are obliged to offer terms the buyer will accept.

Yet so often, we come across ungenerous sellers:
• The take it or leave it mentality
• Agencies that tell the client there’s only one creative solution, only one photographer, only one director
• Inflexible media deals, that aren’t deals, precisely because they are inflexible
• The used car that’s too pricey, or the house seller that won’t drop their price

Selfish buying demands generous selling. Hard-nosed buying makes sense. Hard-nosed selling makes none. Unless you are very tough – or very, very good.

This is where consumer decisions meet marketing decisions. 

Definitions vary. The First Moment of Truth (FMOT) is either when you put a product in your trolley, or when you check it out. The Second Moment of Truth (SMOT) is when you eat it or use it. In a bar FMOT is the bar call, SMOT is the ‘cheers’ moment. 

Research has shown that shopping lists overwhelmingly consist of products, not brands. Also that just over 75% of in-store purchase decisions are on impulse, and that it takes between three and seven seconds to choose the item you want. 

For those of us who spent the best years of our lives planning ad campaigns, these stats are pretty depressing.

Nor are they very reassuring for a veteran pitch consultant. All that time and process to find the best agency in the world, and Mrs Cameron in Notting Hill chooses an own label yoghurt in 5 seconds flat. 

Even Professor Spence must shudder. Some of the best minds in Oxford have advised the wine company on the shape and weight of the bottle, the design and colour of the label, even on the flavour and nose of the wine itself……………and Mr Osborne has selected half a case of Chile’s finest at £4.99 a bottle. 

But that’s how it is with decisions. You can be very influential in the ones you contribute to yourself. But a stressed customer in a hurry and a cash flow crisis can decide against logic and reason, and your best laid plans are frustrated. 

None of this means that marketing and advertising decisions do not need the greatest care, and informed inputs. 

Of course it is worth finessing product formulation and packaging by building in sophisticated calculations on how it impacts on the consumer’s taste, touch, sight, smell, and hearing. It is everyone’s task to make the product deliver at both FMOT and SMOT. 

Traditional and digital advertising and marketing communications are as vital as ever to set up the desire. 

Just as long as we never forget that the real consumer isn’t in a focus group or lab. She’s left herself just three to seven seconds to load her trolley with a brand (yours, someone else’s or an own brand). 

Marketers have to make their decisions with all the limitations of  consumer decision making in mind. 

So why don’t they invest more money at or near the point of sale? Good question. Those clever people at P&G have upped their spend by four times.

It was shattering news on the radio this morning. We knew that Steve Jobs had to be very ill to stand down from the helm at Apple. But to die so soon after. At the age of only 56. 

I wrote earlier in the week about Saras Sarasvathy’s seminal  paper: “What makes entrepreneurs entrepreneurial”. I urge you to google it and print a copy. In her study into what makes entrepreneurs different from everyone else, she highlights the way they think. She describes it as ‘effectual’ reasoning, and contrasts it with predictive and rational thinking, which she calls ‘causal’. 

For Sarasvathy, a decision based on causal reasoning is designed to cause an outcome which will bring you closer to your goal. Causal reasoning or decision making is about means to an end. Logical. Sequential. Linear. This is command and control behaviour. 

Effectual reasoning is not about setting a goal and making decisions based on how to achieve it. Effectual thinking and decision making is about making things happen in a broader sense. Effectual decisions can work just as well in an indirect way. 

In marketing and advertising, we are very familiar with both approaches. Marketing plans are predominantly causal, relating actions and investments to financial and verifiable targets and data. 

Advertising, on the other hand, particularly in the brave new world of consumer conversations, tends to be based on strategic thinking and insights into consumer behaviour, and what might influence it. Planning and creative are inherently effectual, while media, direct marketing and promotions are causal.

Which brings us back to the amazing career, influence and sheer creativity of Steve Jobs. Not only an innovator par excellence. He was also a true visionary in that he was able to conceive, make and market a legendary line of products under the Apple, Mac and “I-“ labels, which his loyal followers adopted as if the branding was actually theirs. 

Effectual is of course the exact opposite of ineffectual. Jobs was effectual and influential to an extent unmatched by any of his contemporaries. We can cite a distinguished list of pioneers from former generations: Stephenson, Brunel, Hargreaves, Ford, Marconi and so on. Or early consumer champions who built giant companies like P&G, Unilever, Nestle, Cadbury and co. But the mechanics of manufacture, distribution and selling in those days were much more straight line. People were still customers. They had not yet learned to become consumers. 

Jobs has been the most effectual leader and champion of the consumer revolution – understanding that entertainment, leisure, friendship and fun are just as important as producing documents and making phone calls. Pixar and the App Store are as much a part of his extraordinary legacy as the Apple Mac and the iPhone. His inventions haven’t just given us great products to buy. He defined, shaped and framed the empowered world we now take for granted.