What are Push Theory and Pull Theory?
In economics, the demand-pull theory is the theory that inflation occurs when demand for goods and services exceed existing supplies. According to the demand pull theory, there is a range of effects on innovative activity driven by changes in expected demand, the competitive structure of markets, and factors which affect the valuation of new products or the ability of firms to realize economic benefits. In a marketing "pull" system, the consumer requests the product and "pulls" it through the delivery channel. An example of this is the car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by the customers. •
Applied to that portion of the supply chain where demand uncertainty is high •
Production and distribution are demand driven
No inventory, response to specific orders
Point of sale (POS) data comes in handy when shared with supply chain partners •
Decrease in lead time
Difficult to implement
What I understand with Push theory is, it’s something that we don’t want to buy it or take it but people push us to buy it. Another meaning of the push strategy in marketing can be found in the communication between seller and buyer. Depending on the medium used, the communication can be either interactive or non-interactive. For example, if the seller makes his promotion by television or radio, it's not possible for the buyer to interact with. On the other hand, if the communication is made by phone or internet, the buyer has possibilities to interact with the seller. In the first case information is just "pushed" toward the buyer, while in the second case it is possible for the buyer to demand the needed information according to their requirements. •
Applied to that portion of the supply chain where demand uncertainty is relatively small •
Production and distribution decisions are based on long term forecasts •
Based on past orders...
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