The movement of information or product down the supply chain of any business is termed as push-pull system. In a market, the consumers generally try to “pull” the product from the market to meet their needs, whereas the suppliers or retailers attempt to “push” their goods or information towards the consumers. The pull strategy will be applied by considering the actual demand, on the other hand push strategy will be applied by considering the predicted demand of the product. The portal in-between these two is termed as “decoupling point”. (Marketing-made-simple.com, 2016)
Push is a promoting strategy, through which the product is directly reaches the customer so that the people are aware of the brand or the product. In simple words, push means “Taking the product to the customer”. Meanwhile the pull strategy is to make people to pursue the company or the brand and purchase them for their needs. In simple terms, “Getting the customer to come to you”. Still confused?? To give a clear idea, advertising, word of mouth, discounts are the examples of pull strategy as it attracts the mass towards the company. And tactics like point of sale displays, attractive packaging, direct selling to customers are few push strategies since these factors push the product towards the consumers. (Brandalyzer, 2011)
Now let’s see how Hewlett-Packard uses these in tactics in their distribution.
Hewlett-Packard has one of the strongest global supply chain management system. Xavier de Montgros, the supply chain director declared that their company is following “4ps” in their supply chain management, planning, push, pull and partnering. The hp’s logistics adapted a tactic from pull strategy called build-to-order(BTO). The principle is that, they company will start to manufacture their product only when they receive the orders from first or second tier resellers, that means they will not have a stock of their products. They are following BTO so that they can supply at the rate of demand. One advantage is that, they can increase the price if there is increase in demand and added advantage is that they are minimizing the wastage of surplus production and thus empowering their supply chain.
HP not only follows pull tactics, it also trails from push strategy. To make their channel effective, the company had an eye over their resellers inventory and depending on their stock the company will have its production number. By doing so the company has a strong knowledge of their resellers stock so that it will be helpful it pushing the product towards the market. (Interactive, 2016)
In a nutshell, hp’s methodology was very simple, it is just trying to have a very strong supply chain using these principles because 10-20% of its revenues have been scheduled to logistics department.
A successful company should successfully imply both push and pull strategies in an effective manner. If you are planning to start a new business, you will have to pursue channels to stock the products. You will have to make your brand famous by “push” and also make the people to buy to via “pull” strategy. Applying push and pull tactics in your business is proficient way on running it because it is in equilibrium state as the consumer is trying to pull the goods towards the market whereas the resellers are trying to “push” towards the market
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Marketing-made-simple.com. (2016). Push pull strategy. [online] Available at: http://marketing-made-simple.com/articles/push-pull-strategy.htm [Accessed 16 May 2016].
Interactive, H. (2016). From “Push” to “Pull” – Ten Years of Supply Chain Evolution at Hewlett-Packard – Management Today. [online] Managementtoday.co.uk. Available at: http://www.managementtoday.co.uk/news/548069/Push-Pull—Ten-Years-Supply-Chain-Evolution-Hewlett-Packard/ [Accessed 16 May 2016].
Brandalyzer. (2011). Push vs. Pull and how promotions may take your market share down?. [online] Available at: https://brandalyzer.wordpress.com/2011/09/19/push-vs-pull-and-how-promotions-may-take-your-market-share-down/ [Accessed 16 May 2016].