Place and promotion: channels, VMS, IMC and sales promotion
Place moves offers through channels and value networks (levels, VMS, intensity); promotion blends advertising, sales promotion, PR, selling and direct marketing into one integrated (IMC) voice.
Channel levels
| Level | Chain | Indian example |
|---|---|---|
| Zero-level (direct) | Manufacturer → consumer | Direct sellers such as Eureka Forbes; a brand's own website |
| One-level | Manufacturer → retailer → consumer | Maruti → dealer → buyer |
| Two-level | Manufacturer → wholesaler → retailer → consumer | The usual FMCG route through stockists |
| Three-level | Manufacturer → wholesaler → jobber (sub-stockist) → retailer → consumer | Deep rural FMCG reach through sub-stockists |
Vertical and other marketing systems
| System | How it is coordinated | Example |
|---|---|---|
| Corporate VMS | Common ownership of successive stages | A manufacturer running its own stores |
| Contractual VMS | Contracts among independent firms: wholesaler-sponsored voluntary chains, retailer cooperatives, franchises | Maruti dealers; Coca-Cola bottlers; Domino's in India via Jubilant FoodWorks |
| Administered VMS | The size and power of one member | HUL securing shelf space and displays from retailers |
| Horizontal marketing system | Two or more unrelated firms pool resources | Banks placing ATMs inside retail stores and malls |
| Multichannel (hybrid) system | Several channels to reach different segments | Maruti's Arena and NEXA showrooms plus online booking |
Channels and value networks
- Value network (Kotler): the system of partnerships a firm builds to source, add to and deliver its offerings, from suppliers' suppliers to final buyers.
- Distribution intensity: intensive (soaps, biscuits), selective (Titan watches through chosen dealers), exclusive (premium car showrooms such as Maruti's NEXA).
- Channel flows: physical, title and promotion move forward; ordering and payment move backward; information, negotiation, finance and risk move both ways.
- Channel conflict: vertical (between levels), horizontal (within a level), multichannel (between channels).
- Push strategy uses the sales force and trade promotion to push goods through channels. Pull strategy uses advertising and consumer promotion so buyers ask for the product.
Response hierarchy models
| Model | Author and year | Stages |
|---|---|---|
| AIDA | E. St. Elmo Lewis, 1898 | Attention → interest → desire → action |
| Hierarchy of effects | Lavidge and Steiner, 1961 | Awareness → knowledge → liking → preference → conviction → purchase |
| Innovation-adoption | Everett Rogers, 1962 | Awareness → interest → evaluation → trial → adoption |
| DAGMAR | Russell Colley, 1961 | Awareness → comprehension → conviction → action |
Advertising and sales promotion
| Topic | Key points |
|---|---|
| Kotler's 5 Ms of advertising | Mission, money, message, media, measurement |
| Advertising objectives | Inform, persuade, remind, reinforce |
| Budget methods | Affordable, percentage-of-sales, competitive-parity, objective-and-task (the most logical) |
| Media terms | Reach (R), frequency (F), impact; GRP = R × F |
| Consumer promotion | Samples, coupons, cash refunds, price packs, premiums, contests, loyalty rewards, point-of-purchase displays |
| Trade promotion | Price-off (off-invoice), advertising and display allowances, free goods |
| Business promotion | Trade shows, sales contests, specialty advertising |
Worked example: GRP and CPM
A campaign reaches 60% of its target audience with an average frequency of 4. Separately, a newspaper ad costing ₹2,00,000 reaches 8,00,000 readers. Find the GRP and the cost per thousand (CPM).
- GRP = reach (in %) × average frequency = 60 × 4 = 240.
- CPM = cost × 1,000 ÷ audience = 2,00,000 × 1,000 ÷ 8,00,000.
- = 20,00,00,000 ÷ 8,00,000 = ₹250.
- Check: 8,00,000 readers = 800 thousands, and 2,00,000 ÷ 800 = ₹250.
GRP 240; CPM ₹250 per thousand readers.
Advertising vs sales promotion
IMC (4As, 1989) coordinates all communication tools so that the message has clarity, consistency and maximum impact.
NET asks you to classify VMS types (franchise = contractual), count channel levels, sequence AIDA, DAGMAR or Lavidge-Steiner, and compute GRP or CPM. Push vs pull comes as assertion-reason.
Typical MCQ: “A franchise system such as Domino's in India is which type of VMS?” Contractual VMS. Trap: a corporate VMS needs common ownership; an administered VMS relies on one member's power.
Typical MCQ: “Reach is 50% and average frequency is 3. What is the GRP?” 50 × 3 = 150. Trap: GRP multiplies reach by frequency; it does not divide.
Typical MCQ: “What does IMC aim to achieve, according to the 4As (1989)?” Clarity, consistency and maximum communication impact by combining all tools. Trap: IMC is not simply more advertising.
VMS: 'Corporate owns, Contractual signs, Administered dominates'. DAGMAR is ACCA: Awareness, Comprehension, Conviction, Action.