Push
A “push” promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product.
The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers. In a "push" system the consumer does not request the product to be developed; it is "pushed" to the end-user by promotion. The company promotes the product through a wholesaler/retailer who in turn promotes it to yet another retailer or the final consumer. Trade-promotion objectives are to persuade retailers or wholesalers to carry a brand, give a brand shelf space, promote a brand in advertising, and/or push a brand to final consumers. Typical tactics employed in push strategy are: allowances, buy-back guarantees, free trials, contests, specialty advertising items, discounts, displays, and premiums.
An example of this is Perfumes. Women do not request to smell a fragrance they have never smelled before; it is simply "pushed" to them, through the right advertisements or store personnel.
Another good example of "push" selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as ConvergeM. Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia - for example offering subsidies on the handsets to encourage retailers to sell higher volumes.
A "push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.
Push strategies are:
· Applied to that portion of the supply chain where demand uncertainty is relatively small
· Production & distribution decisions are based on long term forecasts
· Based on past orders received from retailer’s warehouse
· Inability to meet changing demand patterns
· Large and variable production batches
· Unacceptable service levels
· Excessive inventories due to the need for large safety stocks
Pull
A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product.
A pull strategy attempts to get consumers to "pull" the product from the manufacturer through the marketing channel. This strategy is often employed if distributors are reluctant to carry a product because it gets as many consumers as possible to go to retail outlets and request the product, thus pulling it through the channel. Consumer-promotion objectives are to entice consumers to try a new product, lure customers away from competitors’ products, get consumers to "load up" on a mature product, hold & reward loyal customers, and build consumer relationships.
Typical tactics employed in pull strategy are: samples, coupons, cash refunds and rebates, premiums, advertising specialties, loyalty programs/patronage rewards, contests, games, and point-of-purchase (POP) displays.
An example of this is the car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by the customers.
Pull strategies are:
· Applied to that portion of the supply chain where demand uncertainty is high
· Production and distribution are demand driven
· No inventory, response to specific orders
· Point of sale (POS) data comes in handy when shared with supply chain partners
· Decrease in lead time
· Difficult to implement
With a push-based supply chain, products are pushed through the channel, from the production side up to the retailer. The manufacturer sets production at a level in accord with previous ordering patterns from retailers. It takes longer for a push-based supply chain to respond to changes in demand, which can result in overstocking or bottlenecks and delays, unacceptable service levels and product obsolescence.
In a pull-based supply chain, procurement, production and distribution are demand driven so that they are coordinated with actual customer orders, rather than forecast demand.
A supply chain is almost always a combination of both push and pull, where the interface between the push-based stages and the pull-based stages is known as the push–pull boundary. An example of this would be Dell's build to order supply chain. Inventory levels of individual components are determined by forecasting general demand, but final assembly is in response to a specific customer request. The push-pull boundary would then be at the beginning of the assembly line.
Car dealers often provide a good example of a combination strategy. If you pay attention to car dealers' advertising, you will often hear them speak of cash-back offers and dealer incentives.
So, from a simple playground maneuver to a sales/promotion strategy, the push-pull concept has come a long way. Now that you know all about it, the next time you end up a store, and you see certain products on display or certain sampling going on, you would be able to identify the strategy of the retailer.