Importance and Types of Promotion Strategy
Marketing is essentially a concept that is applied to marshal the resources of an organization to meet the challenging needs of customers on whom the organization depends.
Thus, Strategy lays down the broad principles by which a company hopes to secure an advantage over competitors, exhibit attractiveness to buyers, and lead to a full exploitation of company resources and customers’ needs are the focal point for all marketing activity.
Organizations therefore try to identify these needs and develop products that satisfy customers’ needs through an exchange process.
Promotion Strategy
The objectives of a company indicate where it wants to be; the strategy sets forth the way it is to get there. In promotion, a major distinction is made between “push” and “pull” strategies.
This distinction is based upon the relative emphasis placed upon mass promotion (primarily advertising) as compared to that on personal promotion (mainly personal selling).
Types of Strategy
1. Push Strategy
A push strategy, sometimes called a “pressure strategy,” places heavy emphasis upon personal selling at all stages of the marketing channel. Sales-men explain product feature and benefits and press for a favorable buying decision.
In diagrammatic form, as shown in Figure 6-2, manufacturers’ salesmen call upon wholesalers, wholesale salesmen call upon retailers, and retail salesmen aggressively sell to consumers.
In this way, the product is forced, or pressured, through the marketing channel. Push strategies are often used in selling industrial goods as well as consumer products that require personal selling efforts.
In order to use the push strategy successfully, the manufacturer must
(1) Have a high- quality product with unique product features and talking points for salesmen,
(2) Have a relatively high-priced product, and
(3) Provide sufficient economic incentives to both middlemen and their salesmen. The presence of these factors suggests and encourages the use of the push strategy.
A high-quality product with unique product features and talking points is necessary because the salesman must attract and hold the prospective.
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2. Push-Pull Strategy
Most consumer goods manufacturers use a push-pull (or combination) strategy to sell their products, with the difference between firms being the ratio of push to pull.
As the name suggests, salesmen are used to push the goods advertising program is conducted.
This strategy requires extensive promotion expenditures and is usually available only to the largest companies.
Push strategies are high-priced and the product must be able to bear the expense.
Run-of-the-mill product features and benefits are often obvious to the customer, and he gives the salesman only a brief hearing. It is also helpful if the product requires a demonstration that will quickly catch the customer’s undivided attention.
A high-priced product is necessary because middlemen must be given sufficiently large margins to justify the extra efforts spent on the product.
Furthermore, salesmen’s calls are expensive and require either a high-priced product (as in the case of Electrolux vacuum cleaners), or a broad line of merchandise with a sufficiently large average order size (as in the case of Fuller Brush).
Resellers normally expect a larger-than-normal margin on products they are expected to aggressively promote and sell.
Furthermore, it is necessary to stimulate wholesale and retail salesmen by offering them extra incentives, such as “push money,” chances to win prizes in contests, or something else of value.
Most wholesale and retail salesmen sell such a broad line of products that they must receive something extra in order to place sales emphasis on a particular manufacturer’s product.
Advertising plays a distinctly minor role when a push strategy is being used. The combination of high middlemen margins and heavy personal selling expenditures leaves little for advertising.
However, small advertising expenditures may be made to create brand recognition or secure prospect leads for salesmen.
3. Pull Strategy
A pull strategy, sometimes called a “suction strategy,’ is just the opposite of a push strategy. Extensive advertising is used to generate consumer demand so that the consumer will ask the retailer for the product, the retailer the wholesaler, and the wholesaler will secure it from the manufacturer.
In this manner, the product is pulled through the marketing channel by consumer demand generated by advertising. In general, middlemen are willing to stock the product, since the demand for it is established and little time or effort is needed to sell it.
Pull strategies are characterized by the heavy use of consumer advertising expenditures relative to personal selling expenditures. Salesmen become order takers rather than order generators and do not have to be paid as highly.
There is less emphasis on personal selling at all stages of the marketing channel, and middlemen are willing to accept lower trade margins, since little time and expense are spent in selling the product.
Retail prices, tend to be relatively low, but this is made up for by the higher turnover rates. Small companies seldom depend primarily on the pull strategy, because of its heavy emphasis on consumer advertising and the large investment required.
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Conditions under which Wholesalers are Important to Promotion Strategy
Wholesalers can perform many functions of importance to the promotion strategy of a manufacturer. They provide a ready-made sales organization capable of contacting and servicing retailers in their areas.
Although wholesale salesmen do not commonly sell aggressively and are slow in introducing a new product line, they can economically sell to many small retailers that the manufacturer cannot afford to contact with his own salespeople.
Wholesalers often provide credit to their retailers and are in a better position to assess local credit risks than the manufacturer. Wholesalers buy in large quantities and break these down into smaller quantities for sale to their retailers (break bulk).
They reduce the amount of inventory a manufacturer must carry and can serve as the “eyes and ears” of the manufacturer in the local market, to keep him aware of important happenings there.
Conditions under which Retailers are Important to Promotion Strategy
The roles assigned to resellers in a firm’s promotion strategy reflect six factors:
(1) Consumer buying habits,
(2) Nature of the product,
(3) Amount of control wanted by the manufacturer,
(4) Availability of resellers,
(5) Reseller credibility, and
(6) Competitive practices.
Role of Wholesalers in Promotion Strategy
Wholesalers depend upon repeat sales to stay in business. Although personal selling is by far the most important promotion tool used, wholesalers who sell an extensive line cannot aggressively sell every line or product handled.
Wholesale salespeople try to be able advisors to retailers so that they become trusted sources for many products. Most aggressive selling is limited to lines for which the wholesaler has the exclusive franchise or on the wholesaler’s own private brands.
Although personal selling plays the dominant role in wholesaler promotion, the sales promotion, the sales promotion device of sampling is widely used.
This may involve full- sized samples for retailer examination or samples of products that are consumed in the demonstration process. For example, food retailers are often given product samples by wholesale salesmen.
Publicity is scarcely used, since the wholesaler prefers to handle products with established demands, but advertising programs may be carried on, although they tend to be simple and limited to direct mail and trade-paper advertising of an institutional nature, unless the wholesaler is promoting his own private brands. In general, aside from personal selling efforts, wholesalers do little promotion.
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Role of Retailers in Promotion Strategy
Retailers concentrate on promotions that bring direct sales results. Local advertising of the merchandise carried, sales events, and services are important. Personal selling, although declining in importance, is still widely used in shopping-goods outlets.
Publicity for special sales, shopping-center promotions, and special days such as anniversaries, is widely sought. Sales promotions such as special displays, sales events, sewing classes, babysitting services and so on, are used extensively.
If given the proper incentives, retailers will tie in with manufacturer advertising, cooperate with manufacturer-sponsored sales promotions, engage in POP display, participate in cooperative advertising programs, and follow up leads developed through consumer advertising.
Push and Pull Promotion Strategies and Their Effects on Resellers
A push strategy assigns major responsibilities for promotion to resellers; under the pull strategy, the manufacturer assumes major responsibility for promotion and places minimum reliance upon resellers.
The manufacturer should determine in advance what roles of resellers are to be under his selected promotion strategy.
In order to make a push strategy effective, the manufacturer must provide resellers with monetary incentives, such as high trade discounts and the possibility of high profits, in order to compensate them for additional effort.
In addition, he must be willing to offset some of the costs of promotion by such means as cooperative advertising, buying allowances, and trade deals. Push strategies are supported better by resellers when they have selective or exclusive distributorships.
In contrast, when the manufacturer uses a pull strategy, he places little dependence upon resellers for promotional support.
By creating strong consumer demand, mainly through consumer advertising, the manufacturer consumer demand, mainly through consumer advertising, the manufacturer pulls the product through the distribution channel while providing only minimum margins for resellers.
The reseller’s job is viewed as physical distribution, and all the manufacturer expects to get from his resellers is availability at the retail level. He does not expect nor will he receive much reseller promotion support.
For instance, supermarkets carry laundry detergents at very small gross margins in order to satisfy customer demand, but they do little, if any, promotion of these products.
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