Push–pull strategy
The business terms push and pull originated in logistic and supply chain management,[2] but are also widely used in marketing.[3][4] Wal-Mart is an example of a company that uses the push vs. pull strategy. A push–pull system in business describes the movement of a product or information between two subjects. On markets the consumers usually "pull" the goods or information they demand for their needs, while the offerers or suppliers "pushes" them toward the consumers. In logistic chains or supply chains the stages are operating normally both in push- and pull-manner.[5] Push production is based on forecast demand and pull production is based on actual or consumed demand. The interface between these stages is called the push–pull boundary or decoupling point.[5]
Push strategy
Another meaning of the push strategy in marketing can be found in the communication between seller and buyer. Depending on the medium used, the communication can be either interactive or non-interactive. For example, if the seller makes his promotion by television or radio, it's not possible for the buyer to interact with. On the other hand, if the communication is made by phone or internet, the buyer has possibilities to interact with the seller. In the first case information is just "pushed" toward the buyer, while in the second case it is possible for the buyer to demand the needed information according to their requirements.
- Applied to that portion of the supply chain where demand uncertainty is relatively small
- Production and distribution decisions are based on long term forecasts
- Based on past orders received from retailer's warehouse (may lead to Bullwhip effect)
- Inability to meet changing demand patterns
- Large and variable production batches
- Unacceptable service levels
- Excessive inventories due to the need for large safety stocks
- Less expenditure on advertising than pull strategy
Pull strategy
In a marketing "pull" system, the consumer requests the product and "pulls" it through the delivery channel. An example of this is the car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by the customers.
- 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
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Supply chains
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 historical 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 (the bullwhip effect), unacceptable service levels and product obsolescence.
In a pull-based supply chain, procurement, production and distribution are demand-driven rather than to forecast. However, a pull strategy does not always require make-to-order production. Toyota Motors Manufacturing is frequently used as an example of pull production, yet do not typically produce to order. They follow the "supermarket model" where limited inventory is kept on hand and is replenished as it is consumed. In Toyota's case, Kanban cards are used to signal the need to replenish inventory.
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 sometimes known as the push–pull boundary.[5] However, because of the subtle difference between pull production and make-to-order production a more accurate name for this may be the decoupling point. 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 decoupling point would then be at the beginning of the assembly line.
Push–pull music marketing future
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Many media and music futurists have observed large changes within the music industry and predict larger ones to come. The introduction and success of social networking, along with the rise of digital music, has transformed the way music is marketed to the consumer; shifting from a push to pull strategy. The prior push strategy would feature a marketing campaign in total control of the message being sent out. The newer pull strategy has been viewed as a shift in power from advertisers to consumers, and so requires a more adaptive approach by marketers.
With the increase of social networking platforms and users, social networking has become a major and focal part to music marketing adopting the pull marketing strategy. Pull marketing shifts the emphasis and attention onto the customer, trying to market in the correct places by knowing who the target audience is.
Consumers are increasingly customizing to better suit their individual needs. Rather than relying on music companies or a DJ to pre-determine the mix of songs on a CD, an increasing number of music listeners are downloading individual tracks and assembling their own sequence of songs. This process is also being replicated with the creation of playlists through platforms such as iTunes, Spotify and Last FM. Fan-built playlists and mixes are taking over the way people get their music. Playlists are inevitably becoming a pull marketing resource that marketing alliances must embrace, due to their ability to be shared via Peer to peer networks. People are choosing what they want to hear rather than having it pushed on them.
As consumers gain access to a greater number of options and platforms, and more information about such services, the consumer will probably become more demanding on resource providers, requiring services to be made available on consumers terms, rather than when it is convenient for the resource providers to deliver them. In addition, consumers are demanding the ability to configure their own products from resource providers, leading to rapid growth in options and music services. To thrive in a broad market, digital music services attempt different models and features to find the optimum mix and ensure consumer satisfaction.
See also
References
- ^ Martin, Michael J.C. (1994). Managing Innovation and Entrepreneurship in Technology-based Firms. Wiley-IEEE. p. 44. ISBN 0-471-57219-5.
- ^ Edward G. Hinkelman & Sibylla Putzi (2005). Dictionary of International Trade – Handbook of the Global Trade Community. World Trade Press. ISBN 1-885073-72-0.
- ^ Peter, J. Paul (2002). A Preface to Marketing Management. McGraw-Hill Professional. p. 132. ISBN 0-07-246658-8.
{{cite book}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ Dowling, Grahame Robert (2004). The Art and Science of Marketing. Oxford University Press. p. 266. ISBN 0-19-926961-0.
{{cite book}}: Cite has empty unknown parameter:|coauthors=(help) - ^ a b c Terry P. Harrison, Hau L. Lee and John J. Neale (2003). The Practice of Supply Chain Management. Springer. ISBN 0-387-24099-3.