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Whose job is it to understand the market?

July 16, 2013

In the past, it was assumed that the Marketing department was responsible for gathering market requirements, which they would then pass to product or service development for inclusion in ‘go-to-market’ strategies.

That approach never worked well when it came to contracting. In part, that was because there was frequently a disconnect between product management and contract development (so requirements rarely got considered). But more fundamentally, Marketing never considered terms and conditions as part of their remit. If you asked a marketer whether the approach on, say, Liabilities was material to customer buying decisions, they would give you a very strange look and most likely ask ‘What are Liabilities?’

While some organizations have developed a more sophisticated and holistic approach to their contracting, many have not. And in general, I think it is true to say that Marketing still have no greater grasp of terms and conditions than they did twenty years ago. This means that there is little understanding of the impact of contract terms and we are mostly reactive to market experience.

Does it have to be that way? Clearly the answer is no. Indeed, an interesting blog in Logistics Viewpoints illustrates the value of market research. It cites a study by UPS that found the value customers place on things like the right of return, the options for shipping speed and the value of ‘free’ shipping (each of these being, in my view, a term and condition). Much of this research results in value options being provided to customers – giving them the ability to select trade-offs, typically related to price but sometimes to term alternatives.

I see no reason why similar research and ‘optioneering’ cannot be applied to most – perhaps all – terms and conditions. IACCM analysis already offers some insights to the value that organizations place on specific terms; it also confirms that we pay too little attention to some of those that really represent value and should be influencing selection decisions. But part of the problem is that term alternates are not actually presented that way. For example, if data security is important, why can’t I decide just how important it is (and how much I want to pay for it) based on several alternate positions? And the same applies to liabilities, or to payment terms, or to rights of termination.

I doubt that those in Marketing or Product Management are ever going to spend much time understanding the impact and value of terms and conditions. But surely those who are charged with their development and management should be interested in that understanding – and would have far more business influence if they did so.

One Comment
  1. VBK permalink

    Good Article Tim

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