Push & Pull Marketing

Transcription

1 Push & Pull Marketing As we face the new year, foremost in the minds of business owners are how they will increase revenues in the current economic environment. This paper discusses two specific types of marketing strategies: push and pull. For an overview of Marketing Strategy, see our previous paper at cathedralconsulting.com. For our purposes we will be using push and pull marketing consistent with economic thinking. For the smaller company these terms will help define what their marketing strategy needs to be. What we are finding is that the internet allows smaller companies to create business opportunities in the market that play directly off of push and pull. As always limited marketing resources need to be channeled to the most effective efforts. Knowing whether your marketing needs to be push or pull avoids many wasted dollars. Finally, we should note the business ethic question here. Many are arguing that push marketing is creating demand where none existed. Therefore the company is taking advantage of their customers. Most small businesses do not create markets or market demand, and therefore do not face this issue. However, all companies run into this question relative to individual customers. For example, a bakery can get an added sale by encouraging the customer to try a cookie. Did the customer need the cookie? Should the business encourage the buying of the cookie by making it look so tasty or presenting it so nicely? For the smaller business all of these kinds of sales are what keep us in business. But we also all know the balance. The person who cannot afford our product or would find the service detrimental is not a sale we should be seeking out. I. The Basics of Push-Pull Marketing: A. Pull Marketing: Pull marketing is responding to the market s demand for your goods and services. Customers already have a desire for your product or service. Therefore they pull it off the shelf, creating a pull market. The customer s needs and desires for your product reduces marketing costs. Another advantage of a pull market is repeat business. Because of the market need, you can count on a level of activity. A disadvantage of pull markets is competition. Because the demand is known, competitors develop. This is where market differentiation, pricing and quality of product/service come into play. The marketing strategy for a pull market is a) offer products and services that meet the market demand and customer needs, b) make the pricing fair to the customer and you, c) inform the customers that your products and services are available, and d) make the transaction sufficiently convenient that the customer will buy from you. Most small company s markets are exactly this. Cathedral Consulting Group, LLC Page 1

2 If this sounds so easy, why isn t our business just booming? The first factor is the level of demand, or level of pull. Level of demand is affected by a) competition, b) knowledge that your company exists, and c) available resources to buy. Clearly today s economy is limiting the available resources. This means the overall demand is down and business will be down. Competition can be another factor. In effect competition absorbs demand. A new fresh bakery department in the supermarket will take business from the existing independent bakeries. The level of demand did not change. In this case, marketing efforts will be directed to taking customers away from competition or keeping customers from the competition. Finally, just keeping the market place aware that you exist can be a real part of marketing. Here we see regular contact, such as mail. In retail we describe it as a location. Location allows for traffic that passes by and sees our store, prompting the stopping to satisfy the demand. Some key observations for pull marketing are: a) Level of demand in the market will drive the volume of business. Since you do not create demand, you can only steer it to you. Therefore, spending great amounts on marketing will not move the level of sales and will be a waste of money. Many ads such as radio and even newspaper are a waste of money because they do not move demand levels. b) Keeping your market aware of your offerings requires a steady low cost approach. Generally, this is best done via direct customer contact. Public relations is another cost effective way to keep the market aware of your presence. Media appearances, articles written for publication, and speaking engagements are all ways to provide information that your target segment values and thus will engage through this initial interaction. Added to the traditional methods are now online social networking, which especially permits an increase in relationship building which leads to word of mouth marketing and referrals. On the internet this might be white papers or information provided on your website which encourages the reader to contact your company for more information or sign up for an e-newsletter. c) Where competition exists, your distinctive qualities are essential and the market needs to understand them. The temptation is to over spend in communicating these areas of differentiation. d) Pricing in most pull markets should not be the distinctive. Because the market demand is relatively static, price does not change demand enough to increase the profits. Therefore, price wars in pull markets generally only benefit the consumer. If the business has focused on a, b and c above, they will often avoid the price wars even with competition. In short, avoid coupons! B. Push Marketing: Push marketing is done in a market that requires the business to push your product or service to the desired target audience. In push markets, the demand is being created. As noted in the introduction, all businesses are involved in some level of push marketing. The key difference between push and pull is that the pull is responding to existing demand, whereas in pull the business is actively creating new demand. Therefore push marketing requires the business to actively sell its product. Push marketing can be found in a) building new awareness for an unknown product, b) changing the segment of the marketplace for the product, c) selling products that are complex requiring the customer to relate need, use and price, and d) incremental sales, such as the added cookie. Push marketing strategies typically include 1. Salesmen to pursue consumers. Cathedral Consulting Group, LLC Page 2

3 2. Strategies to increase purchasing activities. Many industries call this building the ticket. In an auto repair shop the offering of a free car check is a push marketing technique to create needs for repairs. 3. Ads in radio, TV and news papers are often push marketing strategies, because they are creating demand. 4. Coupons and discounts are useful in push marketing, because they get the customer to try the product. 5. Other push marketing techniques are found in such methods as trade shows, direct mail, and cold calls. Marketing materials are focused on describing the company s product or service as well as its reputation. They are likely also to include testimonials and quotes by reputable clients. C. Interplay of Pull and Push Marketing: There are two ways that pull and push marketing connect worthy of note here. 1. Pull marketing means the there is demand leading to traffic. Push marketing is the enhancing or maximizing of each customer visit. The presentation of incremental products and services becomes a way to leverage the marketing effort to get the customer into the sale situation, be it store, show room, or clinic. Using this strategy can clarify the use of coupons, discounts and promotions. A coupon gets the customer into the store, giving the sales person the opportunity to up the total purchases. What products or services should be discounted is another discussion. An example of this conversion is the small computer repair shop that starts by responding to crisis needs, where the customer was generated by a referral. By adding a quarterly service program, a push activity, the customer is now a fully connected pull market. 2. Push marketing generally is not brand based or brand enhanced. Where the marketing will be push means that brand development spend will have little impact and little return. We have seen this time and time again where the startup company spends precious capital on branding development, when the brand is meaningless to the business generation. In this case the connection from push to pull is converting the customer development activity into customer pull activity. Branding can aid this process, but quality products and services combined with good customer follow-up are even more valuable. For example, a retired executive decides to go into consulting with his pharmaceutical knowledge. The consultant will need to sell each client on his services. Will branding make a difference? No, but communication, initial service offering strategy, and quality of service will. II. Push and Pull Marketing in the Digital Age: A. Problems with web marketing thinking: The digital age changes the tools, but not the rules. The tools allow for much more cost effective marketing, customer development, and customer relationship activities. The rules for push and pull markets and marketing do not change. What we are seeing in the application of web based tools are two critical dynamics: 1. Past failures prevent new adoption. Technology in the 1990 s developed the concept of first mover advantage. Most senior business people know that tried and true is a better concept. So many businesses tried the use of technology, making investments in websites, servers and such, only to find no impact on the business. These businesses were ahead of the adoption curve. In 2003 the use of the internet was real, but nothing compared to Therefore, we find the 2003 adopters finding failure in the web application and now holding that using the web is a waste of money. What is missing is that 2009 is a different market environment and the early adopter is missing out on today s business activity. Cathedral Consulting Group, LLC Page 3

4 2. Improper use of web technology. The web is a tool and as such it must fit in the business model relative to push or pull marketing. Once this is determined then the tool is built to deliver sales results, which may mean no sales for the consultant, but new sales for the merchant. Below is a discussion of how to approach the web marketing situation. B. Basic of web marketing: The web market is essentially a pull market. Customers go to the market looking to fill a need. Therefore, pull market strategies are relevant. Search engines are designed to allow a customer in a pull exercise to find you. Optimizing your website so that you show up in the first page of the search is then vital to being seen as an expert in that specific area that you wish to target and allows your information to be pulled easily. Beyond search engine optimization, which is also readily available for a fee, there is also the option for pay-per-click advertising, which pushes your short ad to the front page of a search and allows easier accessibility for a consumer to find you. But what about comparison shopping on the web? Comparison shopping is all about competition. Therefore, the strategies in dealing with competition become essential. A full discussion of these strategies is beyond the scope of this paper. However, the biggest impact of this kind of comparison shopping is to make your product a commodity, which means buying decisions are price focused. Breaking the commodity dynamic is the essential web marketing strategy focus. But can the web be used for push marketing? Indeed the banner ad is designed for just this purpose. Home mortgages have been successfully pushed via banner ads, particularly with the dancing photos. At the same time, many banner programs have proven very unsuccessful. What does the web allow for the smaller business? There are several customer relationship development tools that can be enhanced by the use of the web: 1. E-newsletters are the most popular way to push information to your customer base. Providers such as Constant Contact allow companies to send e- newsletters or surveys at a relatively low cost and bypass the typical spam filters. With the ease of unsubscribing, it is vital that e-newsletters be kept short and useful. However, the ease of unsubscribing also allows databases to stay up-todate with truly interested consumers, thus decreasing costs by allowing uninterested parties to remove themselves. 2. Useful information or content becomes a connection point for customer development. Really Simple Syndication (RSS) feeds allow users to find and pull information regularly from desired sources. Although checking bookmarks is required, information is pushed to the user in a more easily accessible format. Product or service companies today can easily and cost-effectively provide this desired information online, thus building a rapport with the audience. 3. The ability to contact the company or receive further information electronically continues to provide the opportunity to generate a lead towards a sale. The information provided must be viewed by the consumer as a solution so that they are motivated to make contact or purchase your service. A consumer that contacts the company for further information is a hot lead in comparison to the business card handed out at a trade show. 4. Creating an online community also allows users to increase trust as they interact with the company and others interested in the same topic, product, or service. Cathedral Consulting Group, LLC Page 4

5 Amazon has done this well as they allow users to review products and provide interaction with other potential buyers. However, online interaction also allows small businesses to brand themselves through the comments they leave on forums or blog postings they create. Push and pull marketing should typically be used in some combination to be most effective. Once you have pulled potential clients to you and received their contact information, be sure to follow up. Useful information can than be pushed to this prospect on a routine basis. One example is CFO.com which allows thought leaders to post credible white papers which readers can download by providing basic company information and the willingness to be contacted by the paper s author. In return, CFO.com sells this information as targeted leads to the paper s author. Individual websites can also do the same thing at no cost once the site gains a positive reputation. C. Recommended action steps for web marketing: The following are recommended action steps for enhancing the use of the web: 1. Evaluate your market against push pull to understand whether the web will be a selling platform or a relationship platform. 2. Identify specific customer values to be gained via the web. 3. Undertake an evaluation of your current web function, site and support, against these values. From this evaluation should come the needed adjustments to deliver the targeted customer values. 4. Do a cost benefit analysis for investment in web site and function to implement the adjustments. In many cases this analysis will cause streamlining of the web exercise, because added features will not generate benefits. 5. Develop an implementation plan to revise the site and to adjust support functions. 6. Develop and implement a monitoring program. There are excellent tools available to monitor the customer impact of the revised sites and the support functions. This monitoring will enable you to adjust the site and function to reflect customer responses. Articles for further reading 1. Push Marketing vs. Pull Marketing. This blog provides readers with some ideas of how to use push and pull marketing strategies to increase traffic on their sites Pulling Your Customers on the Internet. This article discusses several ways to optimize your site in order to pull customers to your company Push Marketing vs. Pull Marketing. This article provides definitions of push and pull marketing. Phil Clements is CEO of Cathedral Consulting Group, LLC and a Managing Director in the New York Office. Sharon Nolt is a former Senior Associate in the New York Office. For more information, please visit Cathedral Consulting Group LLC online at or contact us at info@cathedralconsulting.com. Cathedral Consulting Group, LLC Page 5