Push-Pull strategy
Encyclopedia
The business terms push and pull originated in logistic
and supply chain management
, but are also widely used in marketing
.
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 "pulls" 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. 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.
. Ford Australia only produces cars when they have been ordered by the customers.
), unacceptable service level
s 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. 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
.
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.
Logistic
Logistic may refer to:* Logistics, the management of resources and their distributions** Logistic engineering, the scientific study of logistics** Military logistics, the study of logistics at the service of military units and operations...
and supply chain management
Supply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...
, but are also widely used in marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
.
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 "pulls" 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. 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.
Push strategy
Another meaning of the push strategy in marketing can be found in the communication between seller and buyer. In dependence of the used medium, 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 his 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 effectBullwhip effectThe Bullwhip Effect is an observed phenomenon in forecast-driven distribution channels. It refers to a trend of larger and larger swings in inventory in response to changes in demand, as one looks at firms further back in the supply chain for a product...
) - Inability to meet changing demand patterns
- Large and variable production batches
- Unacceptable service levelService levelService level measures the performance of a system. Certain goals are defined and the service level gives the percentage to which they should be achieved...
s - 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 AustraliaFord Australia
Ford Australia is the Australian subsidiary of Ford Motor Company and was founded in Geelong, Victoria, in 1925 as an outpost of Ford Motor Company of Canada, Limited. At that time, Ford Canada was a separate company from Ford USA...
. 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 salePoint of salePoint of sale or checkout is the location where a transaction occurs...
(POS) data comes in handy when shared with supply chain partners - Decrease in lead timeLead timeA lead time is the latency between the initiation and execution of a process. For example, the lead time between the placement of an order and delivery of a new car from a manufacturer may be anywhere from 2 weeks to 6 months...
- Difficult to implement
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 effectBullwhip effect
The Bullwhip Effect is an observed phenomenon in forecast-driven distribution channels. It refers to a trend of larger and larger swings in inventory in response to changes in demand, as one looks at firms further back in the supply chain for a product...
), unacceptable service level
Service level
Service level measures the performance of a system. Certain goals are defined and the service level gives the percentage to which they should be achieved...
s 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. 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
Build to order
Build to order and sometimes referred to as make to order , is a production approach where once a confirmed order for products is received, products are built...
supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
. 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
Assembly line
An assembly line is a manufacturing process in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods...
.
Push–pull music marking future
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 is bad news for 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
Target audience
In marketing and advertising, a target audience, is a specific group of people within the target market at which the marketing message is aimed .....
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
ITunes
iTunes is a media player computer program, used for playing, downloading, and organizing digital music and video files on desktop computers. It can also manage contents on iPod, iPhone, iPod Touch and iPad....
, Spotify
Spotify
Spotify is a Swedish-founded, UK-headquartered DRM-based music streaming service offering streaming of selected music from a range of major and independent record labels, including Sony, EMI, Warner Music Group, and Universal. Launched in October 2008 by Swedish startup Spotify AB, the service had...
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
- Technology pushTechnology pushTechnology push is a term used to describe a part of a business strategy of a company. In the innovation literature there is a distinction between technology-push and market-pull or demand-pull...
- Supply and demandSupply and demandSupply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
- Digital marketingDigital marketingDigital Marketing is the promoting of brands using all forms of digital advertising channels to reach consumers. Digital marketing extends beyond Internet Marketing to include channels that do not require the use of the Internet...
- Publish/subscribePublish/subscribePublish–subscribe is a messaging pattern where senders of messages, called publishers, do not program the messages to be sent directly to specific receivers, called subscribers. Published messages are characterized into classes, without knowledge of what, if any, subscribers there may be...