PULL AND PUSH STRATEGIES
Sales promotion decisions are significantly affected by whether the company decides to do to pull or push strategies to accomplish its objectives. Such a decision may require a little or a lot of cooperation from resellers. The requirements to implement one strategy might be little more than to just stock the product by the retailers. The other strategy may demand more participation from resellers such as the ability to explain to the consumers as to how a product works.
In case of using a pull strategy, marketing efforts are directed at the ultimate consumer and consumer promotions such as consumer contests and sweepstakes, rebates, coupons, free samples, consumer premiums, etc are used. If this strategy is also chosen to include advertising, there are large advertising expenditures. The objective of such promotional efforts would be to create sufficient consumer demand to pull the product through the channels, that is the consumers are encouraged to demand the product from retailers who in torn place orders with wholesaler or manufacturer to meet the consumer demand.
PULL
§ Bajaj Auto Ltd. offered a scheme of taking home a scooter at Rs 999 was a sales promotional offer communicated through effective advertising and was essentially a pull strategy.
This strategy may require little promotional efforts from the resellers except to stock input the product on shelves.
A pull strategy is appropriate when
· The product demand as high.
· It is possible to differentiate the product on the basis of real or emotional features,
· Brand consumers show high degree of involvement in the product purchase,
· There is reasonably highly brand loyalty and consumers make brand choice decision before they go to the store.
If a firm decides to use push strategy, its efforts are directed at resellers and the manufacturer becomes very dependent on their personal selling abilities and efforts. The promotional efforts are focused at pushing the product through the distribution channels; the resellers may be required to display, demonstrate and offer discounts, to sell the product. The communication to resellers is generally through trade circulars or the sales force.
PUSH
Push strategies generally appropriate for product categories where there is low brand loyalty and many acceptable substitutes are available in the market. It may also be suitable for relatively new products or when the brand choice is often made in response to displays in the stores, the product purchase is unplanned or on impulse and the consumer is familiar and has reasonably adequate knowledge about the product. Manufacturers, who cannot afford to engage in sustained mass advertising, often use push strategy and offer effective incentives to dealers.
Retailer promotion: Buy Cadbury’s products worth Rs.3000/- and get any 30 chocolates worth Rs.5 each free.
Through this offer the company is pushing its product to the retailers and now that the retailer has enough incentive the retailer stocks more and thus it becomes essential for the retailer to push the product to the consumers.
PULL AND PUSH
| Pull promotions (Manufacturer to consumer) | Push promotions (Offered to trade) | Push promotions (Offered by retailer) |
| Sampling Coupons Price packs Rebates Continuity programs Contests Sweepstakes Tie-in promotion Financing incentives Special events Premiums Bonus packs Exchange offers | Discounts Display allowance Advertising allowance Free goods Contests Trade coupons Quantity discounts | Price cut Free goods Premiums Displays Feature advertising Quantity discount Clearance sale |
"Product life cycle and pull or push strategies"
It is quite important for brand managers to analyze and identify the stage of a particular brand in its life cycle before deciding about using sales promotion. During the stage of product introductions, a product requires different sales promotional tactics.
Likewise, during the product growth stage, its maturity and the decline stages, the sales promotion tactics required are likely to be quite different. Promotional strategies are also likely to be affected for different non-durable and durable products. Also important in the development of promotional strategy would be the target audience is towards whom the sales promotional messages would be directed.
¨ Introduction stage
When the product is being introduced, the major objective is to increase the trial rate and distribution of the product. For increasing trial sampling, coupons, demonstration which are all pull promotions, can be used. To make the product available in distribution channels, it may become necessary to use some kind of incentive scheme for the resellers to encourage them and minimise their risk associating stalking a new product. Manufacturers can offer display allowances to resellers to make the product highly visible. There could be liberal guarantees to take back the stocks, if unsold, to reassure the trader. These are all push promotions. For most new products, it would be difficult to be successful without pull promotions. In fact when new products are introduced, much more emphasis is given to pull rather than push promotions.
§ Fair and lovely is introducing the Fair &Lovely dark circle remover crème by having an introductory offer Rs10 off which will be available through the coupons that are distributed with newspapers like the Times of
¨ Growth stage
In this stage, the dominant objectives are to expand the market for increasing the number of new customers who would try the product for the first time and to encourage the repeat purchase by those who have already tried the product. Another important objective is to expand or at least maintain the distribution. For increasing trial, pull promotions are appropriate however as the trial rate increases free samples become quite an expensive proposition. To encourage repeat purchase by consumers, in pack or on-pack coupons can be used.
Samsung had launched the ‘Phod Ke Dekho’ offer last Diwali between October 15 and November 20, 2001, to optimise sales of its consumer electronics and home appliance products during the festival season, which resulted in tremendous sales. Samsung's sales during Diwali grew by over 28 % over last year's corresponding period and closed the period with sales of Rs 275 crore. While Samsung's CTV sales grew by 46%, refrigerator sales grew by 25% and microwave ovens by 52%.
Due to the success of this promotional scheme the Samsung "Phir Se Phod ke Dekho" Consumer Offer, valid between October 1~November 15, 2002 had been reintroduced by the company to optimize sales.
This would also help in converting those customers who have already tried the product into regular users of the product. Another tool of sales promotion that can be used is to offer bonus packs containing additional quantity at the same price as an incentive to encourage repeat purchase. To expand the distribution, push promotions such as different types of discounts, free goods that increase the profitability of the trade, can be used.
¨ Maturity stage
When the product is in maturity stage, many similar brands are available to customers. Due to price discounts or other extra benefits, consumers often switched brands. This phenomenon of brand switching is more common if the product category happens to be one of low involvement. The sales promotional strategy in this stage can focus on attracting maximum number of brand switchers, reward and reinforce the loyalty of regular users and use more of push promotions to build inventories with resellers. Many tools of sales promotion such as premiums, price discounts, extra goods, displays, dealer contests, feature advertising become important.
Generally a combination of pull and push promotions prove more effective during maturity stage of a product life cycle. The market share of the brand is an important factor in gaining the support of resellers.
¨ Decline stage
Survival of the brand often becomes more important during decline stage. Another important objective is to maintain distribution. Sales promotions that help in generating sales volume become quite important. Resellers, in general, are not a tall enthusiastic about declining brands and for this reason we do not show any kind of interest in promoting them. Because of this negative factor, manufacturers use pull promotions. In many cases this becomes a game of endurance for marketers.
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