Potential Product

Demand-Pull V/S Stock-Push

What’s your strategy to drive sales and get the maximum out of your potential product!!

 

1) Stock-Push with Distributors
On one side practitioners continue to focus on stock-push with distributors by offering margins, schemes and promotions. This has worked traditionally on the belief that if your business partners has stake in it, he will go ahead and replenish at existing retailers and find new retailers continuously. Challenge however remains that often a distributor does not have the knowledge base on what is the exact potential of a territory and its demographics. The question is should you consider your distributors as link in the supply chain or sellers of your product. I will tend to believe it just the former.

V/S

2) Demand-Pull with Consumers
No. I am not talking about advertisements. I am talking about product displays at MRF or GT stores. I am talking about having own sales team that reliably visits a retailer and keeps a tab on visual merchandizing and stock levels. I am talking about investing in territory penetration by continuously analyzing a territory and having own sales team invest time in territory penetration. Demand-pull is about ensuring your products are well represented to consumers when they walk into a store.

Comments from Senior Industry Professionals on this blog….

Speaker
Chintamani Kale (See LinkedIn Profile)
Sales Manager at PKM FOODS Pune
There are different ways to look at it. Also important is the type of industry & products you are in. If the product category is established & you want take share of the shelf space you can go for Push. But the same may not work with limited shelf life products such as food or new concept products.
It really depend on the type of product & type of market you are in…

speaker2
KK Bhan (See LinkedIn Profile)
Experienced Sr Operations Professional
Most of the marketing managers always push the products and believe in the theory of ” Maal Thok Do ” but seldom do they realize that a consumer may be pushed to buy the product on a one off basis but won’t return back if there is no pull or demand for that particular product.
On the other hand if there is a demand of other product , consumers go and seek that product. Now one may argue theories of visibility, shelf availability etc etc….the products may be visible but if people don’t like them they will result in non-moving inventory .
Again most companies focus on primaries and sales nos based upon product pushed to retail stores but if the same is not getting translated into retail sales , how can you push the next lot.
Hence I always believe in creating a pull for your product rather than push …yes of course you need to create brand awareness, product awareness and must create proper visibility of the same as well.

I have enormous PRACTICAL examples to demonstrate above which I have observed during my career.

speaker3
Chironmoy Chatterjee (See LinkedIn Profile)
Chief Operating Officer at Perfetti Van Melle Sri Lanka
Stock Push is no longer possible in today’s context , Stockists and Distributor cannot be treated as agents of the companies, they have to be treated as customers, Primary sales have to be based on Secondary sales with a fixed closing stock norm. A Large Multinational company had to suffer, by pushing primary sales their distributors started leaving them, and today they have changed their way of working, today they have no concept of primary sales and only stocks that are sold is replenished.
But for the retailer both push and pull are required, push to block competition and pull so that the stocks given is sold off.

speaker2
KK Bhan (See LinkedIn Profile)
Experienced Sr Operations Professional
Well said Mr Chatterjee, companies should abolish the term Primary sales and report Secondaries only as authentic numbers since rest is just an inventory in the system. We should also teach the same to new young sales personnel and accountants . BTW not one, I know many large FMCG companies suffering by this mess of primary reporting and showing inflated numbers as sales figures , where in actual sales had never happened.
Placing product on retail should not be termed as push but just a shelf filling exercise or stock replenishment activity and the same needs to be highly efficient , which is part of supply chain function not sales.

speaker4
Tanmoy Panda (See LinkedIn Profile)
RSM – VLCC Personal Care
I totally agree with u Chironmoy Sir . Stock push was a strategy which has become old and almost obsolete . But they still r being followed at different sectors even today but with no huge success but landing in a mess . Today’s Distribution business is being driven by Business minded , young and well educated people and the success of Companies depends on how well they treat their Channel Partners by showing them the way forward aligned to Company’s vision . The whole cycle has to be driven based on Secondary Sales with Closing Stock norms based on location , category of town and seasonality . More focus needs to be given to the Second Strategy – The Demand-Pull Strategy – by ways of Merchandising , Shelf hiring . Push Strategy at Retail level works mostly for seasonal products for blocking competition and with low Brand loyalty products .

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