Presentation on theme: "From Push to Pull PSI/Rwanda – the Evolution of a Social Marketing Sales & Distribution Approach."— Presentation transcript:
1 From Push to PullPSI/Rwanda – the Evolution of a Social Marketing Sales & Distribution Approach
2 Terminology “Push” “Pull” Strategies where marketers “push” products in a top-down fashion through the distribution channel to create availability and stimulate demandMost often used for new products, builds awareness“Pull”Where end consumer demand “pulls” products through distribution channelsTraders stock based on degree of consumer demandUsually results in market equilibrium between supply and demand
3 Push vs. Pull: Why Should We Care? Cost implicationsManagement implicationsImpacts SustainabilityFinancialBehaviorMarket DevelopmentMarketing Mix Efficiency
4 Push vs. Pull: Developing World Context Condom social marketingAttempted to correct “market failure”Public and commercial sectors not “working”Push - oriented strategies used to:Counter condom stigma among traders and consumersProvide greater control over affordability & availabilityDrive availability ahead of demandResulted in very effective but parallel distribution systemsCost and capacity constraints
5 Rwanda Context HIV Prevalence: 3% (7% urban/2% rural) Total Fertility Rate: 5.5 (down from 6 in ‘05)Low condom use rates: 40% male, 20% femalePSI/Rwanda180 staff, $9m annual budget (increase of 30% in 3 years)4 products: condoms, nets, retreatment, safe water6 upcountry youth centersIntroduced Prudence Plus (“PP”) condoms in 1994
9 PSI/Rwanda self assessment “Any Sale is a Good Sale” AttributeOutcomeCondoms sold to all customers at any (lowest) priceIncentivized on per unit commission3,000 customersTop 10 customers-- > 70% of sales71 customers --> 95% of sales8 sales reps + 8 drivers = 4,000 travel days/year3 reps account for 75% of sales70% of sales in Kigali27% outlet penetrationWholesaler level undercutEconomies of scale not realizedReduced sales revenue7% ($340K) of operating budget supporting sales costSignificant wasted effort on small, temporary customersProduct not available in informal outlets
10 What was really going on… Condom market existed; PP available in spiteof PSI sales effortsWhere available, PP movedWhere available, traders re-stocked independentlyCondoms leaking from other countries into RwandaAvailability not sufficient; formal pharmacies only consistent outlet stockingconsumers had to search for PPSales targets met by cross-border, short term credit, public sector institutions (50%) of sales.
11 In sum…PP push distribution efforts working against the commercial sector it intended to leverage and developExpensiveIneffectiveLimited capacity for new products
12 Corrective Measures: the shift to Pull Retail Outlet Creation:Single dispensers uplifted to retailers at retailer price and mapped8,000 retailers mapped -> identified 60 key wholesalersReduce sales staff (8 1); eliminate commissionsSales personnel shifted to demand creation rolesDrain retail market, launch updated packaging & carton configurationUpcountry travel focused on demand and retail creation, not sales
13 Corrective Measure: Qualify the Customer Base Reduce direct customers from 3,000 to 32Only 2 customers located up countrystop institutional salesLonger term, mutually beneficial customer partnershipsClearly defined wholesalers based on MOU partnershipTargeted demand creation efforts at wholesale point of saleWholesaler criteria:Established business able to sell and repurchase at least 100 cartons every 3 monthsBuys and sells only in bulk quantitiesWholesaler customers evaluated quarterly and pruned when necessary
14 Results PP sales growth continued Total market growth PP retail penetration increased from 27% to 60%More balanced focus on all 4PsDistribution cost reduced from $350K to $140K per yearSavings reallocated to demand creation investment
17 Push vs. Pull: Evidence of Rwanda Success Cost implications: $210K/60% savingsProgram funds reallocated to demand creationManagement implications: less time consumingreduced sales force, smaller customer baseProvided room for product diversificationImpacts SustainabilityFinancial: reduced cost, greater cost recovery (margins)Behavior: committed customers become partnersMarket Development: sales growth, category segmentationMarketing Mix Efficiency: more balanced 4P approachUpdated positioning, pricing, more promotion
18 From Push to Pull: Lessons Learned Staying with “push” too long can breed bad behaviorSales figures a crude measure of “success” and can hide quality problemsMap the market to understand product flows, trade relationshipsMore focus on customer relationship buildingUnderstand channel margin structures; maintain pricing with inflationGood MIS is criticalNeed courage to risk sales
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