Question

You are a sales manager for a regional electrical distributor. You just learned that one of your smaller, nonstrategic suppliers of copper wire has directly emailed your salespeople (without your knowledge) with details of an incentive plan that would provide your salespeople with bonuses, paid directly by the supplier, if they met certain sales requirements of their product over the next quarter.

• Is the supplier using a push or pull strategy?
• As the manager of the distributor, what actions would you take, if any, in response once you found out about this program? Explain your actions.

Answer 1

solution:

given data:

1.

Push and pull strategies are used by the marketers to increase the sales of their products. As a part of push strategy, the marketers target the third-party entities like distributor or retailers and encourage them to stock their products. Contrary to this, pull strategy is targeted to the end users i.e. customers so that they demand the product from the retailer.

In the given case, the supplier of copper wire was offering an incentive plan to the salespeople of the distributing firm. As per this plan, the salespeople would be paid direct bonuses from the supplier after meeting their sales requirement for the next quarter. As a result of this strategy, the salespeople would make extra efforts to push the product to the customers. Hence, the supplier is using a push strategy.

2.

Although push strategy is an effective method of promotion and distribution, but the approach used by the supplier in this case is unethical. Before sending direct email to the salespeople of the firm, the supplier was required to consult with the sales manager regarding their strategy. Only after getting approval from the management, supplier should have proceeded with the same. Therefore, being the manager of the ethical distributor, one needs to take adequate actions to discourage such unethical behavior in future.

For this, the manager should consult with the supplier regarding the mails sent to his salespeople and let them provide valid reasons to support their actions. If the supplier could not justify their behavior, the company should take necessary actions like terminating the supply contract and switch to other suppliers. The salespeople should be notified about the same and should not be allowed to receive any payments from the supplier. Whereas, if the supplier provides valid justification for their actions and wises to continue their work with the company, proper contract should be made with them regarding the promotional techniques, incentive plans and product quality.     

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