Manchester Brand Transition Strategy

Analysis of the differences in push/pull strategies between PLFD and MH

In order to analyze the data on marketing expenditures of each company in last two years and the present year (2005) we constructed the following chart.

From this chart we see following facts:

* Both companies spend more on pull strategies than on push strategies, which is normal, because in a nut shell pull strategies help to create demand, whereas push strategies help to make sure there is supply in the stores to meet the demand as well as have the stores promote our products to the consumers. Without proper demand many retailers would refuse to carry the product in the first place.

* In last two years PLFD put more emphasis on push programs than did MH. It seems that for a company that big and successful, maintaining great relationship with their suppliers was very important. It is evident from the fact that PLFD’s Purchase allowances were the largest expenditure second only to Co-op advertising.

* In 2003 both companies spent almost same percentage of sales on pull strategies, but in 2004 MH started expanding their marketing budget much more aggressively than PLFD. We see 4% increase for MH from 2003 to 2004 in marketing expenditures much of which was in pull programs, compared to 1.5% increase for PLFD. That can be explained by the fact that PLFD already had a large market share, whereas MH was trying to aggressively expand theirs.

* In 2005 new management plans to completely drop PLFD’s Purchase allowances, – a manufacturer’s deal to retailers and wholesalers to lower the case price if an order is received during a promotional time period, - resulting in a huge cut in push programs’ spending. Such a cut is then compensated by increase in spending on pull programs. National advertising expenditures would more than double from 3.3% to 6.8% (106% up) making up roughly the third of all marketing expenditures for the current year. Co-op advertising would be increased...