Push vs. Pull Marketing in Hi-Fi Audio

“Push” vs. “pull” is an important marketing concept, especially in hard goods like consumer electronics.  Briefly stated, a “pull” strategy is one where the brand’s appeal is built and strengthened to the point where customers seek it out on their own. In yesterday’s more traditional era of physical brick-and-mortar stores, a strong brand with well-known products would figuratively “pull” customers into the store.

Conversely, a “push” strategy is one where the store or service provider “pushes” their favored product on the customer. An example could be a department store favoring their own in-house mattress brand (say, for example, Macy’s) over a national brand like Sealy, perhaps for reasons of greater profitability for the store, better value to the customer, legitimately superior performance compared to an expensive, overly-hyped national brand or another reason.

Neither a push nor pull strategy implies either superior or inferior products; the company simply needs to understand the dynamics of their market, the competitive landscape populated by similar companies, the newness or maturity of their market and how receptive that market is to a new suppler before deciding whether push or pull is more appropriate for them.

But deciding on push vs. pull is not the first thing. The first thing any consumer products company has to do in order to be successful is to decide who their customer is. Whether you’re making cars or computer software or consumer electronics or perfume or refrigerators, you have to decide for whom you’re really making your products. This is much harder than it looks on the surface.

• Expensive perfume?    Style- and fashion-conscious women 18-59, right?
• 24 cu. ft. refrigerators?    Upper middle-class homeowners, right?
• 61-key controller/keyboards?    Advanced amateur to professional musicians, right?
  

Not so fast.

There are several “customers” for any given product, and the company needs to get them straight in their mind, and orient their products and policies accordingly.

Here are examples of the different layers of customers for electronics products, as seen through an experienced marketing person’s eyes:

1. The Buyer

The Buyer’s concerns are typically centered around issues that the actual end user has no idea about:

• Profitability (dealer cost-to-retail markup)
• Payment terms (does the manufacturer give 30 day terms? 60 day? A 3% cash discount if paid within 15 days?)
• Distribution (does the manufacturer sell to mass-merchant discounters, the big online resellers or just the independent mom-and-pop specialty stores? Buyers care about this, because too-wide distribution leads to price/profit erosion in the marketplace as the dealers try to out-do each other. Too selective or overly-narrow distribution can lead to the brand not getting sufficient exposure, so customers have little awareness of the brand.)

• Advertising allowances (how much will the manufacturer kick in to help the dealer pay for those fancy, expensive on-line ads and digital catalogs?)
• Freight policy (how large does the order have to be in order to qualify for pre-paid freight?)
• Return policy (can defects go back for credit, or for repair and return only? Will the manufacturer take back slow-selling goods?)

These things don’t matter a hoot to the customer that walks into the store or buys on-line, but they can and do greatly influence whether a buyer takes on a line of goods.

2. The Floor or Online Salesperson
The salesperson has a different set of needs than the buyer. Some of their interests overlap, and some don’t at all. Salespeople, whether in-store or online, whether they’re selling cameras, skis, perfume, appliances, electronics, anything, want the following:

• The product should have a great reputation from customer and professional reviews
• It should be easy to demo convincingly (in a brick-and-mortar store) for a quick, easy sale
• Be reliable (so they don’t have the hassle of returns)
• Pay well (high commission or spiff)
• Be readily available, in stock. Salespeople don’t want to waste their time with products they can’t deliver.

Advertising allowances, freight and payment terms, etc. are important to the Buyer, but are not the Salesperson’s concern. Not one bit.

3. The End User
This is who outsiders traditionally think of as the company’s “customer.”

• Is the product appropriate to the way the customer intends to use it? The world’s best 22-inch TV won’t be satisfying in a huge 20 x 28-ft room, from a viewing distance of 15 feet.
• Does it satisfy a need (whether that need is based on actual use-- like good sound, or enough freezer space—or whether that need is based on social/psychological needs, like status)?
• Is it a value?
• Does it fit where it’s intended to be used in the customer’s home (or car or boat, etc.)?
• Is it compatible with what they already have or will it necessitate the buying of additional gear in order to use it?

4. Peripheral target market groups

There are also the peripheral target market groups, like critics and reviewers. Many times, manufacturers will include a feature (like gold-plated bi-amp binding posts or XLR inputs on self-powered monitor speakers, for example) that increases a product’s cost just for the sake of impressing a reviewer, even if the customer doesn’t really benefit from it, will likely never use it and has to pay a higher cost as a result of that feature being included. However, a reviewer might be central to a product’s success, so there are circumstances when orienting features towards reviewers makes perfect sense.

Therefore, the end user may or may not be the predominant customer group for a company, and the point is this:

THE COMPANY BETTER DARN WELL KNOW WHO THEIR PRIMARY TARGET CUSTOMER GROUP IS, OR THEY’RE HEADED FOR DISASTER.

A company may produce a terrific product, generate great public awareness of it, get consistently terrific reviews, but if their re-selling partners don’t want to sell it, then the strength of the “pull” is really irrelevant, isn’t it?

For audio companies, it’s not enough to make great-sounding products with terrific features, rock-solid reliability at a competitive price. Their re-selling partners—whether online or in a physical store—are just as much their customer as the final end user. If Best Buy doesn’t want to sell Sony or Amazon decides that Panasonic is too much of a pain to deal with, then that’s it. They’re dead.

Here are some excellent examples of push and pull marketing, and how companies can be successful or unsuccessful with either one. It concerns three loudspeaker companies from back in the heyday of the “stereo” business.

Acoustic Research

The first is a company called Acoustic Research (AR). About 60 years ago, the so-called “hi-fi stereo” industry was very big. This was an area that attracted a large amount of discretionary household leisure spending, especially among middle-class suburbanites. Remember, back then there was no Internet for on-line ordering, no Fed Ex or UPS overnight delivery, no cell phones, no flatscreen TVs, no laptops or tablets, no social media, no texting etc.

But there were lots and lots of stereo stores. They were all over the place, selling lots and lots of amplifiers, receivers, speakers, turntables, tape recorders and everything else that went with them. AR was a leading speaker company of that time and they introduced several engineering innovations that made their speakers markedly superior to anything else then on the market. AR coupled their engineering achievements with a high-powered national advertising campaign that featured testimonials from the best-known musicians, performers and professional organizations of the day, each one extolling AR’s virtues and telling the reader that they’d chosen AR speakers for themselves.

     

AR magazine ads, quoting glowing reviews and celebrity endorsements

In addition, in the early 1960’s, AR conducted a series of “live vs. recorded” presentations where the world’s best musicians were recorded under tightly-controlled conditions and the recordings were played back through AR speakers. The musicians were on stage with the speakers and the sound would be switched back and forth between the musicians actually playing live and the recorded sound as played by the AR speakers, while the musicians “pretended” to continue playing. Virtually no one could detect the switchover from live playing to recorded sound. Granted, these were primarily just non-demanding string quartets, without a lot of dynamics or bass power, and audiences in those days were less accustomed to the wide-frequency-range performance that stereo components in the ‘70s and ‘80s routinely displayed. Nonetheless, these demonstrations received widespread publicity in all the major newspapers and magazines of the day and they were a huge PR coup for AR, adding greatly to their “pull” appeal.”

AR brochure with logical, convincing copy and image of Live vs. Recorded test

Finally, AR catered to the needs of the end user like no consumer product company ever had. They had an unprecedented 5–year warranty, not only on operation, but also that AR speakers would meet their very tight performance specifications for 5 years (not that the customer in his living room would have any way of knowing that the speaker’s output had dropped by 2 dB at 14kHz four years after he bought it, but the performance warranty gave the end user great confidence and peace-of-mind). If the customer needed new packaging to send the speaker back to the factory for service, the packaging was free for the asking. AR paid the freight on warranty repairs for the customer both ways, to and from the factory. These company policies were also touted in their ads, so everyone knew of them.

The best products. The most credible endorsements from professional users. The most customer-friendly policies of any company.

The sum total of all this was that AR commanded a dominating and unheard of 32% market share in the company’s heyday in the mid-1960s. This was the textbook example of “pull” marketing: everyone went into the stereo stores seeking out AR speakers, and at one point, out of all the dozens and dozens of speaker companies in the U.S market, an astonishing 1 out of every 3 customers bought an AR speaker.

But nothing stays the same for that long. There’s an old axiom that goes, “Military secrets are the most fleeting of all,” but the same can be said for technological advantages in consumer products. Today, Samsung phones are the equal of Apple. In the 1980’s-90’s, Honda caught up to Ford and surpassed them in quality and performance. Now Ford has caught back up to Honda and easily matches their quality and performance. Companies are continually leapfrogging one another.

And so it was in the U.S. hi-fi market. AR’s vaunted technological advantages were neutralized as other speaker companies came out with greatly improved products. One company in particular knocked AR off its perch: That company was called Advent.

Advent

Advent went about marketing their products quite differently than AR did. Where AR concentrated on customer category no. 3—The End User—and forged a “pull” strategy to generate customer demand, Advent concentrated their efforts on categories no. 1 and 2: The Buyer and The Floor Salesperson.

AR products were not that profitable for dealers to sell, because AR sold to pretty much any store that wanted to carry the line. The stores would all discount the speakers in order to try to entice customers into their store (not their competitor down the street) with low pricing on those hugely popular AR speakers. So AR made out great, because so many stores were selling so many AR speakers to so many customers.

But the stores hated AR, because the stores had to discount the selling price in order to win the customer away from the competing store around the block, so the dealer was making a very minimal percentage markup on AR speakers.

Advent (founded by former AR employees) had technology in their speakers that closely matched AR’s. But Advent concentrated on the needs of The Buyer and The Floor Salesperson by not selling to too many dealers. So, Advent dealers didn’t have to worry about nearby competing dealers discounting Advent products. Everybody’s profitability was protected. Advent did some national advertising, but nowhere near as much as AR—just enough to get their name out there a bit. Their speakers were profitable to the store, sounded good, demo’d well, got good reviews in the enthusiast magazines (not as good as AR, but good). Where AR had the best end-user policies ever, Advent had the best dealer policies ever. They really held their dealers’ hands and treated them like business partners, with shipping, return and distribution policies that all but guaranteed that dealers—and therefore the dealer’s salespeople—would make good money selling Advent speakers.

The result? Dealers “pushed” Advent speakers, because they made good money on them and Advent was a great company for the store to deal with. The end customer got a good product (plus or minus, the rough equivalent of an AR speaker), but stores liked dealing with Advent, whereas stores dealt with AR because they had to, because of the great customer demand.

Advent page in local audio dealer catalog—this dealer “pushed” Advent speakers with favorable text

AR and Advent were perfect examples of how companies either recognized or ignored certain customer categories and how they created push or pull marketing strategies based on their choices. Granted, some customers would only buy AR speakers, because of AR’s great product reviews, celebrity endorsements and customer-friendly policies, and wouldn’t even consider another brand. But Advent took a huge chunk out of AR’s retail sales by concentrating on different customer categories and creating a push strategy, as opposed to AR’s pull strategy.

Once again, it’s proof that a company really has to know all about the different customer categories and has to choose who they’re going to go after, on purpose. Simply “building a better mouse trap and hoping the world will beat a path to your door,” as the old saying goes, will not work. Not for long.

There is a third way, but only some companies can pull it off. Staying in the high-fidelity speaker realm, the company that embodies the Third Way is Bose.

Bose

Bose started off a bit like AR, with very innovative products that garnered great reviews. In 1968, they introduced an expensive, high-end speaker called the 901. The 901 was unlike any speaker that had come before, in that it was designed around the acoustic principle of delivering its sound indirectly to the listeners by aiming its drivers away from the seating area and essentially “bouncing” the sound off the wall. That “reflected” sound would then be the predominant sound reaching the listener’s ears. The theory, according to Bose, was that this reflected sound most closely resembled the way that live sound reflected and bounced off the walls, ceiling and floor of a concert hall or nightclub. According to Bose, their design achieved a lifelike spaciousness and three-dimensionality that conventional “forward-facing” speakers couldn’t match.

The 901 speaker got great reviews from all the major enthusiast magazines and the company’s sales took off. As their sales and profits grew, Bose introduced less expensive models using the 901’s design approach and coupled that with a very aggressive and effective national advertising campaign.

In perfect candor, a lot of hard-core audio aficionados didn’t care for Bose’s design philosophy or the sound of their speakers. Nonetheless, before long, Bose was a very major player in the U.S. speaker market and they achieved great brand recognition and a favorable word-of-mouth reputation.

From a marketing standpoint, Bose was careful to take steps to ensure their dealers’ profitability and avoid AR’s mistake of over-distribution. Bose established a policy they called “unilateral pricing,” which meant that before Bose allowed a dealer to carry the Bose line, that dealer would have to agree to sell Bose products at retail prices that Bose dictated. This meant that all Bose dealers would earn the same profit margin on their products so they’d be enthusiastic about selling Bose speakers.

Sometimes, however, theory and reality do not coincide as neatly as hoped for.

Because Bose speakers delivered their sound in such an unconventional manner, they couldn’t be displayed and demonstrated in the same way as other speakers. They required more space, literally more physical “breathing room” around them to let their reflected sound billow out and envelop the listener. Soon, Bose was dictating to their dealers that they set up a separate Bose section of the store away from the other brands of speakers in order to give Bose speakers a proper demonstration. Bose felt they were dealing from a position of strength, since customer demand for Bose was very high and dealer profitability on the line was quite good.

If the dealer didn’t comply with Bose’s demand for a separate Bose-only section, Bose would pull the line away from that dealer. Some dealers went along with Bose, but others willingly gave up the line.

By now, it was the mid- to late-1990’s and Bose was well-established as a household name. Bose had branched off from just speakers and had come out with very successful, high-performance radios, headphones and complete music systems, all backed by Bose’s very distinct and highly-effective advertising.

Everyone knew Bose because Bose did a very smart thing: Instead of concentrating their marketing efforts towards the audio enthusiast—the so-called “audiophile,” the way that all the other audio companies did—Bose targeted the casual audio consumer, the average person who just wanted good sound without a lot of complication and fuss. This was brilliant marketing, of course, since the audiophile enthusiast slice of the audio pie is probably about 10% of the total audio market, while the casual audio user is probably around 90% of the total market. The fact that the small 10% audiophile segment of the market didn’t care for Bose ended up not mattering at all. Bose has become a giant in the consumer electronics market because they’ve concentrated on the 90% segment, not the 10% segment. There’s a well-known saying among audiophiles that goes, “People who don’t know audio, know Bose.” There’s another one that goes, “No highs, no lows, must be Bose.” Nevertheless, Bose hits their target market squarely, and Bose owners love their equipment.

Bose ad targeting the “casual” audio customer, not the audiophile

Then Bose took two further steps that were perfect for them:
1) They established company-run Bose retail stores that only displayed, demonstrated and sold Bose products. Now instead of fighting with dealers so they could get one display wall of their store and trying to make sure the store’s salespeople knew enough about Bose to sell it effectively (in addition to the 20 or 30 other major brands that the store’s salesperson had to know about), Bose now had their own expert, dedicated sales force selling only Bose products in a Bose store.

2) The other thing Bose did was to establish a very strong, high-profile online sales presence. All Bose products are available online direct from Bose, as well as through Bose stores.

Bose products continue to be available through select 3rd-party online and brick-and-mortar retailers, but those retailers have agreed to Bose’s very strict pricing and display requirements. Bose controls the puppet strings. It’s Bose’s game.

When you think of it, the way Bose markets and sells is not unlike the way Apple does—though their own company stores with their own salespeople, through select retail partners—both physical and online—and directly from the company through their own e-commerce sites.

Both Bose and Apple are able to do this and be highly successful because both companies created a very strong “pull” demand for their products, through legitimately innovative, high-performance products, effective national advertising/marketing campaigns that raised the company’s visibility, and establishing a solid reputation for customer service and support with the End Customer. They’ve largely stepped around The Buyer and The Floor Salesperson because they control so much of their own selling process.

On the other side of the coin, there are certainly many successful examples of “push” marketing. We saw an example of that earlier with store-brand mattresses and the same is true with many online companies as well. In the audio industry, an online speaker company like HSU Research or SVS might do some targeted advertising towards a select market segment, then extol the virtues of their product in comparison to the better-known national brands with very convincing, point-by-point ad copy. Finally, they entice the customer to give them a try with a “no-lose” proposition that includes a low asking price and very generous return and refund policies. This is a classic “push” strategy, where the customer knows very little about the company going into the purchase process but is wooed throughout the course of the transaction by being presented with tempting performance promises and no-risk return polices. Both of these companies happen to offer excellent products, showing once again that the caliber of the product itself is largely independent of the “push” or “pull” strategy: The worth of any given company’s product is more a function of their ability to read their market, their engineering skill and their attention to product quality.

Classic “Push” marketing: Little-known SVS writes convincing ad introducing product, cites credible reviews

Conclusion

Whether it’s 1966 or 2017, speakers, mattresses, phones or keyboards, the basics of push vs. pull marketing remain true to this day. First, you must know who your customer is from the four categories we laid out at the beginning of this article, and then orient your marketing approach accordingly, whether it’s push or pull, or some variant thereof. There is no question that the chief marketing strategists at the most successful companies know precisely who their primary customer group is, they know the order of importance of each of the customer groups and they know exactly whether a push or pull strategy will be most effective for them, under the market conditions they face now.....and the market conditions they’ll face in the future.