Push and Pull Strategy in Automobile Industry

I am fully responsible for the truthfulness of this declaration. Date……………………………. Signature…………………. List of Automotive Companies used as Respondents Daimler Automobile Company BMW Automotive Company Volvo Motor Company Henry Ford Motor Company Peugeot Automotive Manufacturer Volkswagen Group Acknowledgement First, my special appreciation goes to my supervisor, …………. for the unceasing guidance as well as the insight that came in plenty during the preparation and compiling of this project. The sample size of the study was six companies. Questionnaires have used the instruments of data collection, and the collected data was cleaned and coded to facilitate analysis. Statistical Package for Social Sciences package was used to analyze the raw data. The analyzed data was presented using descriptive statistics such as the mean and standard deviation.

Moreover, the cross-tabulation test was used to test the relationship between the categorical variables. 1 Background of the Study 1 1. 1 The Concept of Strategy 3 1. 2 Push and Pull Marketing Strategies 4 1. 3 Marketing performance 5 1. 4 Automobile Industry in Europe 6 1. 5 Social Media Marketing 18 2. 6 Summary of Literature 19 CHAPTER THREE 21 RESEARCH METHODOGY 21 3. 1 Introduction 21 3. 2 Research Design 21 3. 3 Population of the study 21 3. 3 Challenges Associated with the use Push Strategies 29 4. 4 Pull Strategies 30 4. 1 The Level of use of Pull Strategies 30 4. 2 Advantages of using the Pull Strategies to achieve the targeted Objectives 31 4. 3 Challenges of using the Pull Strategies 32 4. RECOMMENDATIONS 40 5. 5 Recommendations for Further Studies 41 6. Limitations of the Study 41 7. 0 Confidentiality 41 References 43 List of Tables Table 4. 1 Descriptive Statistics of Automotive Firms 9 Table 4. 12 Comparative Table for Push and Pull Strategies 19 CHAPTER ONE: INTRODUCTION 1. 1 Background of the Study With the advent of globalization, stiff global competition has emerged within the global market consequently, stimulating the need to adopt effective marketing strategies that will enhance sales volume.

There is a need to have sales promotion strategies that will improve consumer product choices. Sales promotion nowadays has become one of the ideas in the marketing sector, and therefore it is gaining increasing attention. (Aaker, 2014) Asserted that implementing an effective sales promotion strategy can promote a favorable band that will attract an array of consumers. The theory asserts that if the salesperson is useful in securing the attention of consumers, then retaining his interest as well as a desire to purchase the product will be achieved. Eventually, more sales volume will be recorded. Additionally, if the sales agent is highly skilled to maintain a good rapport with the customers, it will lead to high sales volume. The second theory that will be highly used in this paper will be the Marketing Mix Theory (Sthaler, 2015)).

According to this particular theory, the success of promotion of sales is highly dependent on the primary place, price, product, and development of marketing. Use of word of mouth to recommend the customers to make the purchase. b. By use of sales promotions and discounts c. Use of mass media platforms to promote the products. With the rapid rate of modernization even in developing countries, the motor industry is mostly expanding at an increased and very aggressive pace. In this case, it assists the organization to be aware of its current position; it also determines the destination of the company, it establishes where it wants to go and provides the means on how to get there in the first place (Rumelt and Richard, 2011).

According to (Cetinkaya, 2011), strategy determines the overall sense of directing for an organization; this includes its moral perception in the social surroundings, its vision, corporate individuality, objectives as well as the business range. Additionally, the strategy also describes the response that an enterprise develops towards its clients, rivals, suppliers and the respective government authorities of their market. To achieve and maintain overall superior performance and returns, companies depend on positioning strategies (Johnson et al. The processes of positioning strategies take into consideration the entire process of decision making and the issues that an organization is forced to deal with. Incentives are also offered to intermediaries and wholesalers to act as a motivation standpoint for them to recommend and also push the company's products to consumers.

Such incentives provided include being offered stock on credit, discounts especially for wholesalers, specialty items, a bonus to individuals involved in the sales and many others. In the case of automobiles, the manufacturing companies and the chosen distributors market the products to the wholesalers who in turn sell them to the retailers and later to the end users (Daft, 2012). On the other hand, market strategies based on the pull concept invest resources on increasing the demand of a product within the market and therefore all the activities that are promotion oriented are ultimately meant for the end users (Rumelt and Richard, 2011). Once demand has been generated, customers tend to pull the various products from the retailers who pull theirs from wholesalers.

In several instances, the push and pull strategies are used alongside each other, for example, newspaper advertising and sales. Push tactics are usually implemented by the manufactures and their distributors with the objective of persuading retailers to sell their products as well as creating the demand for their products to the end consumers (Rumelt and Richard, 2011). 3 Marketing performance To measure marketing performance is not easy. Challenges come from the complex nature of the metrics that are involved. The essential indicating factors of production in this area vary according to the responsibility areas. For increased efficiency that is in alignment with the objectives, a company has to emphasize accountability as it is critical in this area. According to Kaplan (2001), traditionally, organizations would measure their efficiency using their ratios in historical performance.

Financial reporting is an exercise of measuring chronological enactment and does not communicate a lot regarding the long run value of the firm. According to Yacuzzi (2015), measures of efficiency have in the traditional sense been financial. To deal with the ever-growing complexity in gauging both effectiveness and efficiency, diverse approaches such as multiple dimensions of quality and the balanced scorecard were introduced (Uvah, 2015). The commission also intends to improve the profit/ returns from the industry by encouraging investors, mainly from Asian countries to take a chance in the business. For example, Honda and Toyota have already begun exploring the automobile market of Europe. The automobile industry is a general business across several European countries/ members of the European Union. The automobile industry in Europe is made up of companies that are involved in the manufacture, distribution and retailing of motor vehicles and accessories (Gunther and Autenrieb, 2015).

For a long time now, Germany has been believed to be the world's largest motor producer. Because of the high rate of demand, the manufacture, and sale of products, Germany has been recording an increasing number of new car registration (Wells, 2017). According to the German Association of Automotive Industry, this number is expected to rise in the coming years. In the later periods of the year 2008 when there was a financial crisis in the global economy, the motor industry in Germany was adversely affected regarding both manufacture and supply chain (Pavlinek, 2015). Production and sales of products from this industry dropped following the crisis. 2 Research problem To improve the state of sales performance in the market, sales promotion has to be taken into account by any organization.

4) To recommend the ideal sales and marketing strategies that can be employed to enhance firm’s competitive advantage. The paper will focus on evaluating how the push strategy has been used by BMW, Daimler, and VW (Volkswagen) companies, and how the pull strategy has been used by Peugeot, Volvo and Henry Ford automobile companies. This study will explore how the mentioned companies have used push, pull or both push and pull strategies to enhance sales and marketing of their various car models. The following table depict various motor companies that the study will focus on: Motor Company Main Brands Market shares Sales Volume/year Marketing Strategy Frequently Used Volkswagen Group -Volkswagen AG -Audi -Porche -Skoda 11. 9 million Push strategy Peugeot Automotive Peugeot 307 Peugeot 407 Peugeot 1007 Peugeot 207 Peugeot 508 5.

Investors in this industry will also be perfect beneficiaries of information provided by this study. CHAPTER TWO LITERATURE REVIEW 2. 1 Introduction This chapter will provide a review of theoretical literature that is relevant to the subject matter of this study. It will also offer a critical evaluation of writing to come up with a summary statement and highlight the knowledge gap between the subjects under investigation. 2 Theoretical Foundation This section will provide a review of some of the most critical theories that are related or constructed concerning sales and marketing. The theory of right circumstance of conditions is one of the hypotheses of an offering. The proper organization of states argument is dependent on the presumption that making the precise structuralization of conditions will influence the buyer causing them to have a strong reaction bringing forth a deal (Uvah, 2015).

This theory is crucial to the study because it gives a precise clarification of how a company develops client interest in their product. For the processes in the pull, client interest for the products is developed through publicizing an item by the administration (Spearman, 2013). 2 Marketing Mix Theory This concept was first published in 1964 by Neil H. Compared to the past, marketing has been incorporated mostly by organizations and products and markets are now of a wider variety. Because of this, there have been several attempts at the extension of the importance of marketing by some authors who suggest a chance for the fifth P for example, people, packaging and even process. However, despite these attempts to expand the fixings, even today the marketing mix of today is still solidly based on the 4Ps.

The reliance on and the utilization of this model is stable even with the limitations it presents. This is probably because of the simplicity that it entails and also the fact that several textbooks about marketing have been organized about the concept as well. The finding in this research indicated that these forms of strategies could as a way of establishing a difference between a company's products and those of their rivals/ competition to profoundly influence the attitudes of their customers towards their products positively. In 2014, Johnson found out and asserted that the combination is a positive venture and option for organizations that are seeking to improve their sales and profits in return. Other studies have been conducted to compare the effectiveness of a combined marketing strategy with that of pull strategy.

From these studies, there is no clear evidence that there is a difference in outcome after using the two. They seem to have a similar effect eventually (Terpstra and Sarathy, 2015). There is a significant correlation between product prices and company’s performance. Findings by Louetr (2008) prove that there is a close link between valuing methodology and solid execution. This shows that there is a robust relationship between the general implementation and estimating system. In 2009, Christensen et al. discovered a list of six decisions that might be related to the establishment of prices and their probable impact on the sales performance of a company. It is vital for them to build good and healthy connections with suppliers of materials such as metals because they play an essential role because they contribute about 70% of the value of the final product (Pavlinek, 2018).

The automotive industry part of mechanical engineering and makes up a significant branch of engineering as a whole. The European Commission assists automobile companies in reducing the costs of development and also avoiding the duplication of administrative procedures. Harmonization is a crucial factor in the facilitation competitiveness within the automotive industry. The commission has also invested an enormous amount of funds to be used in the “research and development particularly of green cars, decarbonization of conventional engines, safety, and information technology infrastructure” (Calabrese, 2016). 1 The pearl necklace concept What is the relationship between a pearl necklace and automobile production? At first, this question is seemingly far-fetched. The two ideas have nothing at all in common. Nevertheless, discussions about pearl chains in the automotive industry are prevalent, especially where their arguments are based on automobile logistics.

The pearl necklace is a representation of the complex processes involved in automotive sectors (Wells, 2017). In this concept, the sequence of production is determined several days before the actual production begins (Pavlinek, 2915). For example, if a container that consists of the mounting parts is delayed and provides to the assembly line too late or it is misdirected to the wrong sequence interval, the whole process of production can be brought to a halt (Manello, 2018). The chain is a proper way for professionals in the automobile industry to efficiently master the complexity of processes that are involved in the manufacturing/ production of motor vehicles. There is also a direct link between sales performance and pearl chain. If a pearl chain sequence is maintained and followed, the chances are that the sales performance will rise while if it is disrupted, then the execution will proceed to a lower level (Calabrese, 2016).

The pearl chain concept is relatable to the mixed marketing strategies since it can be used as a technique within this system to improve sales performance and general execution at large (Manello, 2018). , (2013) logistics processes within the car industry are as complicated as the vehicles themselves. Bainey, (2008) asserted that synchronization of supply network is a crucial management approach that can aid to ensure there is steady flow of the raw materials. Nowadays the customers are compelling the automakers to move from the supply network where they tend to push stock to wholesalers and retailers to one where the customers pull the products. According to a marketing research study carried out by Calabrese, (2016) revealed that in order for the firms to compete effectively, the automakers need to reduce the cost structure and enhance the agility.

In order to achieve an overall optimum in the supply network system, it is imperative to consider the role played by the suppliers. 5 Social Media Marketing With the advent of the internet, new concepts such as interactive media have gained a lot of popularity among the digital age. Internet usage and social media penetration in our daily activities have increased dramatically. An eMarketer’s research study conducted by Agnihotri et al. , (2016) revealed that scores of people spent a significant amount of time on mobile devices such as tablets. Moreover, it was predicted that amount of time spent on tablets and smartphones is likely to exceed the time spent on desktops. , (2016) noted several companies are aware that social media platforms have an immense potential to serve as medium for marketing the offered products.

However, in most cases these companies perceive social media platforms such as Twitter as unconnected elements. The failure to use these platforms to increase the product exposure among the customers have curtailed the ability of companies to achieve the targeted sales volume. It is prudent to understand that social media provides an array of marketing tools and automobile companies should devise a way of how they can integrate these tools based on their target groups. 6 Summary of Literature This section of literature review has investigated two of the most plausible hypotheses in customary sales and marketing strategies. The concept of internet and social media sites is among the technologies that have brought tremendous change within the marketing field. It is prudent for the automobile companies to consider how to employ the marketing tools offered by various social media platforms.

Change is inevitable and therefore, automobile industry should be always be willing to adopt the recent technological changes taking place. With this same concept, we are made to understand that production in the automotive industry is like a chain which when it is broken, the whole process falls apart. If companies are not careful to maintain a sufficient chain, they might incur losses both financial and consumer wise. Descriptive cross-sectional survey elaborates the data collected and the various characteristics regarding the company being studied. The design of this research study was appropriate to gather information that will depict about the push and pull strategies employed in the sales and marketing by (Beamish & Munro, 2009 p. 3 Population of the study According to (Berkiwert 1997 p.

59), population study refers to a group of individuals drawn from the general population and this group tend to share common attributes such as taste and preferences. The group may be studied for varying purposes to enhance a deep understanding of the features that can precisely define the targeted group. This study used the questionnaires to collect primary qualitative data. The qualitative data will be used to explore the effectiveness of combining both the push and pull strategies. The questionnaires used to gather qualitative data were classified into sections. The initial segment recorded the information that assessed the reliability of the information provided by each respondent. The second section answered the key objectives of the research particularly the efficacy of push-pull strategy.

Coding was another crucial exercise that was conducted to facilitate the analysis of qualitative data. After coding the qualitative data, the raw data was fed into the Statistical Package for Social Sciences (SPSS) version 21. The analyzed data was presented using the descriptive statistics, that is, the mean, mode and the standard deviation. Moreover, the cross-tabulation test was used to analyze the frequency in which different automotive companies use either push, pull or both the strategies. Use of the cross-tabulation analysis tool was the appropriate analytical tool since the collected data was categorical. The following is the analysis of the main factors that were raised by the respondents. Table 4. 1 Descriptive Statistics of Automotive Firms Statistics Volkswagen Daimler BMW Peogeot Volvo Henry Ford N Valid 6 6 6 6 6 6 Missing 0 0 0 0 0 0 Mean 2.

50 Std. Deviation 1. The following descriptive table indicates the approaches currently used by most of the motorized firms. Table 4. 3 Descriptive statistics Sales and marketing strategy Frequency Percent Valid Percent Cumulative Percent Valid Push strategy 2 33. 3 Pull strategy 3 50. 3 Both Push and Pull strategy 1 16. 0% % within Automotive 100. 3% % of Total 16. 3% Pull strategy Count 0 1 1 1 0 0 3 % within Sales and marketing strategy 0. 0% % within Automotive 0. 0% % of Total 0. 3 percent as depicted on the cross tabulation table. On the other hand, Daimler, BMW, and Peugeot frequently use the pull strategy to enhance the sales and marketing of their various vehicle brands they offer on the market. This represented 50% of the entire approaches used by the vehicle manufacturers. Lastly, only 16. 7% of the vehicles found within the vehicles industry were found to use both the push and pull strategy.

266 N of Valid Cases 6 a. 18 cells (100. 0%) have expected count less than 5. The minimum expected count is. The chi-square value was 12. 58 0667 Trade show Promotions 3. 87 Consultations with subsidiary offices to stock several car designs 4. 67 Strategic points of display 4. 59 Provision of sales incentives to sales personnel 0. 32 Establishment of efficient supply chain 4. 2 Advantages of Using the Push Strategies to achieve the targeted Objectives The respondents were requested to indicate the advantages they receive from using the push strategies. The obtained findings are indicated in the table below: Table 4. 7 Advantages of Using Push Strategies to achieve the targeted objectives Perceived Benefits Mean Standard Deviation It enhances product awareness 4. 87 Creates demand 4. 93 Motivates the subsidiary offices to stock the firm’s products 4. Consequently, some firms within the automotive firms prefer this type of strategy.

3 Challenges Associated with the use Push Strategies The sampled firms were requested to indicate the challenges they face when using push strategies. The following are the findings that were obtained: Table 4. 8 Challenges of Using Push Strategies Challenges Mean Standard Deviation Requires a dedicated sales force which is not easy to establish 4. 89 The approach is very costly 4. 39 Sales promotion 4. 40 Word of mouth recommendations 4. 40 Use of mass media platforms 4. 72 035 Offering brand tokens 4. 49 Offering discounts 4. 2 Advantages of using the Pull Strategies to achieve the targeted Objectives Various automobile firms were requested to indicate the benefits associated with the use of pull strategies. The following table depict the findings obtained: Table 4. 10 Advantages of Pull Strategies Strategies Mean Standard Deviation It enhances product awareness 4. 80 The demand of the products increases 4.

70 Encourages the supply chain agents to stock the firms’ products 4. The benefits scored a mean value of 4. Lastly, pull strategies raises the demand for the offered products (mean 4. The analysis of the findings revealed that most of the automobile firms to a great extent employ the pull strategies to increase significantly consumers' loyalty as well as the sales volume of the company. 3 Challenges of using the Pull Strategies After exploring the advantages associated with the use of the pull strategies, the firms were requested to indicate the challenges that confront them when using pull strategies. The following are the findings: Table 4. The following are the findings of the analyzed data between Pull and Push Strategies. Table 4. 12 Comparative Table for Push and Pull Strategies Push Method Mean Pull Method Mean Use of exhibitions rooms and face to face to increase sales volume 4.

55 Use of the mass media platforms 4. 65 Use of trade show promotions 4. 69 Organizing consumer awareness events 4. 54 Average 4. 74 The analysis of the data about the comparison between the push and pull strategies revealed that pull strategies were more active over the push strategies. The pull strategies attained an average mean score of 4. 74 as opposed to pushing policies that had an average value of 4. The main weakness of push strategies was that the demand might be insignificant within the established outlets or even the targeted consumers. Consequently, it reduces the targeted operating income of the firm ultimately hindering the investment needs of the affected company. Secondly, the study established that push strategy is ideal when the vehicles can be easily customized based on the tastes and preferences of the customers (Cavusgil & Zou, 2013 p.

Most of the automobile companies face the challenge of producing vehicles that are generic and ensure customization of the cars can be done in a timely fashion that will result in economies of scale specifically in production. (Cetinkaya, 2012 p. , 2012 p. 76) pull strategies exert an enormous amount of pressure of fulfilling a high level of quality as per the requirements of the market. This demands the production firms employ a high degree of creativity and innovative marketing strategies, which can lead to an increase in the market share. Pull plans are associated with the ability to increase the sales of products significantly especially when the firms can supply the products that are in harmony with the demands of the market. Decision Elements of using either Push or Pull Strategies The study established the various decisional factors that determine the type of sales and marketing strategy to be used to promote product sales.

For those firms that depend on materials that come from distant locations, it requires the company to have a buffer stocked in warehouses to ensure there is a steady supply. The essence of the buffer stock is to avoid the firm to experience a shortage of products in the market due to the prolonged delay of raw materials experienced. This will indicate that a motor company needs to safeguard its business operations by separating a foreign push delivery from the pull supply to the business operations. iii. Customer preferences and tastes: Most of the motor companies base their production schedules on the sales forecasts. This raises the administration costs of the company. v. Stage of the product's life: Most of the various brands of cars produced by the motor companies have the different life cycle.

Consequently, this necessitates the firm to use different sales and marketing approaches as the car product moves along its life cycle. According to Di et al 2012 (p. To a large extent, personal selling, as well as trade promotion, are the main approaches used to convince prospective customers. On the other hand, for those firms that use the pull strategy, the potential customers request the delivery of the product. Pull strategy employs advertising ad customer promotion as the main approaches to raise the profitability of the firm. Therefore, the study discovered that the accepted promotional strategy significantly determines the sales and marketing strategy used by different firms within the motor industry. CHAPTER FIVE: SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 5. Firms also exploit the economies of scale especially in the production of vehicles which makes the companies have sound planning and regulation of resources.

2 Pull Strategies It was noted that a substantial number of firms use pull strategies to sell and market their various brands of vehicles. Some of the main strategies employed to execute pull strategies were the use of social media sources such as Televisions and advertisement. The study established that the main objective why most of the companies preferred pull strategies was to raise the company's sales. It was noted that pull strategies compared to push strategies were effective in various ways such as improving consumers' relations management and eventually resulting to customer's satisfaction. This limitation hinders automobile firms to make good use of the rising demand of the various brands of vehicles within the automotive industry. Nonetheless, pull strategies achieves customers' satisfaction since the products are designed and produced in consideration of the needs of the customers and hence it increases customers' loyalty.

Customer's loyalty acts as a precursor to the success of any firm since the operating will rise substantially. RECOMMENDATIONS Based on the above discussion and study findings, the following suggestions will be helpful to all the firms within the automotive industry as they strive to market and deliver quality brands of vehicles to their targeted customers. With the efficient sales and marketing strategies, high profits margins will be achieved which can be used to meet other business needs. This will aid the firms to enjoy the benefits of both approaches to increase the profitability of their companies. However, if the blend of both the push and pull strategies is not viable within the firm, then the company should use the pull strategies since it was found to have the effect of increasing the customers' loyalty.

The presence of customers' loyalty boosts the income of the company consequently, helping the firm to achieve its business needs. 5 Recommendations for Further Studies The researcher recommended further research should be carried out in the following crucial areas: The analysis should be carried out on the push and pull strategies all on the industries such as healthcare so that to evaluate if the similar results will be obtained. This will help to assess whether the limitations associated with the push and pull strategies are only limited to the automotive industry. Moreover, the type of information revealed by respective potential respondents was kept highly confidential. This measure helped to assure the prospective firms used as respondents that information disclosed will not be used for economic benefits.

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