61  Place and Promotion Decisions

61.1 Place — Distribution and Channels

Place — the third P — covers all activities involved in making the product available to target consumers. Louis Stern, Adel El-Ansary and Anne Coughlan’s Marketing Channels is the canonical text.

61.1.1 What is a Marketing Channel?

A marketing channel (distribution channel) = a set of interdependent organisations involved in the process of making a product or service available for use or consumption — Kotler.

TipChannel functions (Kotler)
  • Information gathering and dissemination.
  • Promotion of the offering.
  • Contact with prospective buyers.
  • Matching product to buyer needs.
  • Negotiation of price and terms.
  • Physical distribution — transport, storage.
  • Financing — credit, working capital.
  • Risk-taking.

61.2 Channel Levels

TipChannel levels (Kotler)
Channel Path Length
Zero-level (Direct) Manufacturer → Consumer Direct
One-level M → Retailer → Consumer 1 intermediary
Two-level M → Wholesaler → Retailer → Consumer 2 intermediaries
Three-level M → Agent → Wholesaler → Retailer → Consumer 3 intermediaries

61.3 Types of Intermediaries

TipChannel intermediaries
  • Merchant wholesalers — take title.
  • Brokers and agents — facilitate, don’t take title.
  • Retailers — sell to end consumers.
  • C&F agents — Carry and Forward.
  • Distributors / Stockists.
  • Franchisees.
  • E-commerce platforms — Amazon, Flipkart.
  • Marketplaces.

61.4 Channel Design Decisions

TipChannel design decisions
  • Channel objectives — service-output levels.
  • Channel alternatives — direct vs intermediaries.
  • Number of intermediaries:
    • Intensive distribution — wide coverage (FMCG).
    • Selective distribution — chosen outlets (autos, appliances).
    • Exclusive distribution — sole right (luxury).
  • Terms and responsibilities.
  • Evaluation of alternatives — economic, control, adaptive.

61.5 Channel Conflict

TipTypes of channel conflict (Stern-El Ansary)
  • Horizontal conflict — between same-level members.
  • Vertical conflict — between different levels (manufacturer-distributor).
  • Multi-channel conflict — between channels selling to same market.
  • Online-offline conflict — modern channel issue.
TipCauses and resolution

Causes: goal incompatibility · unclear roles · differing perceptions · dependence. Resolution: super-ordinate goals · employee exchange · cooptation · diplomacy · mediation · arbitration · legal.

61.6 Vertical Marketing Systems (VMS)

TipThree types of VMS (Kotler)
Type Description Example
Corporate VMS Single firm owns multiple levels Reliance (refining → retail)
Contractual VMS Franchise / cooperative agreement McDonald’s franchise
Administered VMS One member dominates by size/power P&G, Walmart

61.7 Physical Distribution and Logistics

TipComponents of physical distribution
  • Order processing — speed, accuracy.
  • Warehousing — storage decisions.
  • Inventory management — levels, replenishment.
  • Transportation — rail, road, air, sea, pipeline.
  • Material handling.
  • Packaging for logistics.

(Supply Chain Management in Topic 63.)

61.8 Retail Formats

TipRetail formats
  • Department Stores — Shoppers Stop, Pantaloons.
  • Speciality Stores — Tanishq, Croma.
  • Supermarkets — Big Bazaar, Reliance Smart.
  • Convenience Stores — 24/7, neighbourhood.
  • Discount Stores — D-Mart, Vishal Mega Mart.
  • Hypermarkets.
  • Category Killers — Toys R Us, Decathlon.
  • Cash & Carry — Walmart Best Price, Metro.
  • Off-price retailers — TJ Maxx, India’s Brand Factory.
  • E-tailers — Amazon, Flipkart, Myntra.
  • Quick Commerce — Blinkit, Zepto, Instamart.
  • Direct selling — Amway, Tupperware, Avon.

61.9 Modern Indian Distribution

TipIndian distribution landscape
  • Kirana stores — 12 mn neighbourhood stores; ~80 % of FMCG.
  • HUL’s distribution depth — 8 mn+ outlets; Shakti Ammas (rural).
  • ITC’s E-Choupal — direct procurement from farmers.
  • Modern trade — Reliance Retail (15,000+ stores), DMart, More.
  • E-commerce — Amazon, Flipkart, Myntra, Nykaa, BigBasket.
  • Quick Commerce — Blinkit, Zepto, Swiggy Instamart.
  • ONDC — Open Network for Digital Commerce (govt 2022).
  • D2C brands — boAt, Mamaearth, SUGAR, Lenskart.

61.10 Promotion / Marketing Communications

Promotion = all activities through which the firm communicates with target audiences to inform, persuade and remind. Modern terminology: Marketing Communications (MarComm). Integrated Marketing Communications (IMC) was developed by Don Schultz (Northwestern, 1993).

61.11 The Promotion Mix — Five Elements

TipPromotion mix — five tools (Kotler-Keller)
Tool Description Examples
Advertising Paid, non-personal mass communication TV, print, digital ads
Sales Promotion Short-term incentives Coupons, contests, discounts, sampling
Personal Selling One-to-one sales Direct, retail, B2B sales
Public Relations (PR) Earned media, reputation Press releases, events, sponsorships
Direct & Digital Marketing Direct contact, online Email, SMS, WhatsApp, social media

A sixth — Word-of-Mouth (WoM) — is increasingly recognised as distinct.

61.12 Communication Process — Lasswell Model

Harold Lasswell (1948): Who says What to Whom in which Channel with what Effect?

TipSchramm’s communication model elements
  • Sender / Source.
  • Encoding — words, symbols.
  • Message — content.
  • Media / Channel.
  • Decoding — receiver’s interpretation.
  • Receiver.
  • Response.
  • Feedback.
  • Noise — distortion.

61.13 Hierarchy-of-Effects Models

TipMajor hierarchy-of-effects models
Model Stages Author
AIDA Attention → Interest → Desire → Action Elias St. Elmo Lewis (1898)
AIDAS + Satisfaction Strong (1925)
DAGMAR Awareness → Comprehension → Conviction → Action Russell Colley (1961)
Lavidge-Steiner Hierarchy Awareness → Knowledge → Liking → Preference → Conviction → Purchase Lavidge & Steiner (1961)
Innovation-Adoption Model Awareness → Interest → Evaluation → Trial → Adoption Rogers (1962)

61.14 Advertising

TipFive M’s of advertising — Kotler
  • Mission — objectives.
  • Money — budget.
  • Message — what to say.
  • Media — channel and reach.
  • Measurement — effectiveness.

61.14.1 Budget Methods

TipBudget-setting methods
  • Affordable method — what we can spare.
  • Percentage of sales.
  • Competitive parity — match competitors.
  • Objective-and-task — work back from goals.
  • Marginal-analysis.
  • Share-of-voice / Share-of-market ratio.

61.14.2 Media Types

TipMajor advertising media
Medium Characteristics
Television Mass reach, audio-visual, expensive
Print (newspaper, magazine) Targeted, credible
Radio Local, cheap, audio only
Outdoor Hoardings, billboards, transit
Digital Search, display, social, mobile, video
Direct Mail Targeted
Cinema Captive audience

61.14.3 Media Selection Metrics

TipMedia metrics
  • Reach — % of target audience reached.
  • Frequency — average exposures per audience member.
  • GRP (Gross Rating Points) = Reach × Frequency.
  • CPM (Cost per Thousand) = Cost / (impressions / 1000).
  • CPC (Cost per Click) — digital.
  • CPA (Cost per Acquisition).
  • ROAS (Return on Ad Spend).

61.14.4 Famous Advertising Agencies and Pioneers

TipAdvertising pioneers
  • David Ogilvy — Ogilvy & Mather; “The customer is not a moron.”
  • Bill Bernbach — DDB; Volkswagen “Think Small”.
  • Leo Burnett — Marlboro Man.
  • Rosser Reeves — USP; Ted Bates.
  • Indian: Mohammed Khan, Piyush Pandey, R. Balki, Prahlad Kakar, Alyque Padamsee — Lalitaji (Surf), Hamara Bajaj, Cadbury “Asli Swad Zindagi Ka”.

61.15 Sales Promotion

TipConsumer-oriented sales promotion tools
  • Samples · Coupons · Refunds / Rebates · Price packs · Premiums · Loyalty programmes · Contests / sweepstakes · POP displays · Demonstrations · Trade-in allowances.
TipTrade-oriented sales promotion
  • Discounts · Allowances · Free goods · Cooperative ads · Push money · Specialty advertising · Trade shows.

61.16 Personal Selling

TipPersonal selling — process (AIDAS)
  1. Prospecting and qualifying.
  2. Pre-approach — research the prospect.
  3. Approach — first contact.
  4. Presentation and demonstration.
  5. Handling objections.
  6. Closing the sale.
  7. Follow-up and maintenance.
TipSales-force management
  • Sales-force size — workload method (number of accounts × visits / time per visit).
  • Compensation — salary · commission · combination.
  • Territory design.
  • Training and motivation.
  • Performance evaluation.

61.17 Public Relations and Publicity

TipPR tools
  • Press releases · Press conferences · Speeches · Sponsorships · Events · Annual reports · Lobbying · Corporate philanthropy · Image management · Crisis communications.

61.18 Direct and Digital Marketing

TipDirect and Digital channels
  • Email, SMS, WhatsApp Business.
  • Search marketing (SEM) — Google Ads, Bing.
  • Display ads.
  • Social-media marketing — Facebook, Instagram, LinkedIn, X, YouTube.
  • Influencer marketing.
  • Content marketing — blogs, podcasts, video.
  • Programmatic advertising.
  • Mobile marketing.
  • Affiliate marketing.
  • Telemarketing.
  • Catalogue marketing.

61.19 Integrated Marketing Communications (IMC)

IMC — Don Schultz (Northwestern, 1993) — coordinates all promotional tools to deliver a single, consistent message to consumers across all touchpoints. Also called 360-degree marketing.

TipIMC characteristics
  • One voice across all media.
  • Customer-centric message.
  • Synergistic effect.
  • Continuous rather than campaign-by-campaign.
  • Behavioural and measurable focus.

61.20 Indian Promotion Landscape

TipIndian advertising and promotion
  • DAVP / CBC (Central Bureau of Communication) — govt advertising.
  • ASCI (1985) — self-regulation.
  • CCPA / Consumer Protection Act 2019 — misleading ads.
  • Cable TV Networks Act 1995.
  • Information Technology Rules 2021 — digital content.
  • Advertising spend ~₹85,000 cr (FY24), 11 % CAGR.
  • Indian agencies: O&M India, Mudra (now DDB Mudra), McCann, Lowe Lintas, Leo Burnett India.
  • Famous Indian ads: Hamara Bajaj, Surf (Lalitaji), Cadbury, Tata Tea Jaago Re, ICICI Pru, Asian Paints.

61.22 Practice Questions

Q 01ChannelEasy

A "zero-level" channel is also called:

  • AOne-step distribution
  • BDirect marketing channel
  • CMulti-channel
  • DHybrid channel
View solution
Correct Option: B
Manufacturer → Consumer; no intermediary.
Q 02IntensiveMedium

Intensive distribution is most suited for:

  • ALuxury goods
  • BFMCG / convenience goods
  • CIndustrial machinery
  • DSpeciality goods
View solution
Correct Option: B
Maximum outlets for fast-moving goods (HUL, ITC).
Q 03VMSMedium

McDonald's franchise system is an example of:

  • ACorporate VMS
  • BContractual VMS
  • CAdministered VMS
  • DHorizontal VMS
View solution
Correct Option: B
Franchise = contractual agreement.
Q 04AIDAMedium

The AIDA model was proposed in 1898 by:

  • AE. St. Elmo Lewis
  • BLavidge & Steiner
  • CRussell Colley
  • DDon Schultz
View solution
Correct Option: A
Elias St. Elmo Lewis (1898): Attention-Interest-Desire-Action.
Q 05DAGMARHard

DAGMAR model (1961) was developed by:

  • ARussell Colley
  • BRosser Reeves
  • CLavidge & Steiner
  • DKotler
View solution
Correct Option: A
Russell Colley (1961) — Defining Advertising Goals for Measured Advertising Results.
Q 06IMCMedium

IMC was articulated in 1993 by:

  • ADon Schultz
  • BKotler
  • CLevitt
  • DOgilvy
View solution
Correct Option: A
Don Schultz — Northwestern, 1993.
Q 075 MsMedium

Kotler's 5 Ms of advertising include all EXCEPT:

  • AMission
  • BMoney
  • CMood
  • DMeasurement
View solution
Correct Option: C
Mission · Money · Message · Media · Measurement.
Q 08GRPHard

GRP equals:

  • AReach × Frequency
  • BReach + Frequency
  • CReach / Frequency
  • DReach − Frequency
View solution
Correct Option: A
Gross Rating Points = Reach × Frequency.
Q 09OgilvyMedium

"The customer is not a moron — she is your wife" was said by:

  • ADavid Ogilvy
  • BBill Bernbach
  • CLeo Burnett
  • DRosser Reeves
View solution
Correct Option: A
David Ogilvy — *Confessions of an Advertising Man*.
Q 10PadamseeMedium

"Lalitaji" Surf ad was created by:

  • AAlyque Padamsee
  • BPiyush Pandey
  • CPrahlad Kakar
  • DR. Balki
View solution
Correct Option: A
Alyque Padamsee — Lalitaji is iconic value-conscious Indian housewife.
Q 11Promotion mixEasy

Which is NOT a promotion-mix element?

  • AAdvertising
  • BSales Promotion
  • CPricing
  • DPersonal Selling
View solution
Correct Option: C
Promotion mix: Advertising, Sales Promotion, Personal Selling, PR, Direct/Digital.
Q 12ExclusiveMedium

Exclusive distribution is best suited for:

  • AFMCG
  • BLuxury cars
  • CNewspapers
  • DBread
View solution
Correct Option: B
Exclusive — sole right to one outlet per area; luxury, autos.
Q 13LasswellHard

The "Who says what to whom in which channel with what effect" communication model is by:

  • ALasswell (1948)
  • BSchramm
  • CShannon-Weaver
  • DBerlo
View solution
Correct Option: A
Harold Lasswell (1948).
Q 14Channel conflictMedium

Conflict between manufacturer and distributor is:

  • AHorizontal
  • BVertical
  • CMulti-channel
  • DDiagonal
View solution
Correct Option: B
Different levels in same channel → vertical.
Q 15Quick commerceEasy

Blinkit and Zepto are examples of:

  • ADepartment stores
  • BQuick commerce
  • CCash & carry
  • DHypermarkets
View solution
Correct Option: B
10-30 min delivery via dark stores.
Q 16ASCIMedium

Indian advertising self-regulation is done by:

  • AASCI
  • BSEBI
  • CCCI
  • DMIB
View solution
Correct Option: A
ASCI — 1985.
Q 17CPMMedium

CPM in advertising stands for:

  • ACost per minute
  • BCost per thousand impressions
  • CCost per million
  • DCost per market
View solution
Correct Option: B
Mille = thousand; Cost per Thousand impressions.
Q 18ONDCHard

ONDC (Open Network for Digital Commerce) was launched by Government of India in:

  • A2020
  • B2021
  • C2022
  • D2024
View solution
Correct Option: C
DPIIT launched ONDC pilot in 2022.
Q 19Direct sellingEasy

Amway and Tupperware operate through:

  • ARetail stores
  • BDirect selling / MLM
  • CE-commerce only
  • DCash & carry
View solution
Correct Option: B
Direct selling / multi-level marketing.
Q 20Match modelsHard

Match:

(i) AIDA (a) Schultz
(ii) DAGMAR (b) Colley
(iii) IMC (c) St. Elmo Lewis
(iv) Hierarchy of effects (d) Lavidge & Steiner
  • A(i)-(c), (ii)-(b), (iii)-(a), (iv)-(d)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(b), (ii)-(d), (iii)-(c), (iv)-(a)
  • D(i)-(d), (ii)-(c), (iii)-(b), (iv)-(a)
View solution
Correct Option: A
AIDA — Lewis; DAGMAR — Colley; IMC — Schultz; Hierarchy — Lavidge-Steiner.

61.22.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Channel intensity ranges from intensive to exclusive.
R: Exclusive distribution restricts to selected outlets.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: A
S 1Statement-basedMedium

Promotion mix: (i) Advertising. (ii) Personal selling. (iii) Sales promotion. (iv) PR.

  • AAll four (+ direct mktg)
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i) only
View solution
Correct Option: A
S 2Statement-basedHard

Channel types: (i) Direct. (ii) One-level. (iii) Two-level. (iv) Three-level.

  • AAll four (by intermediary count)
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i), (ii), (iii) only
View solution
Correct Option: A

61.23 Quick Recall

ImportantQuick recall
  • Place — distribution channels; Stern-El Ansary-Coughlan Marketing Channels.
  • Channel functions: Information · Promotion · Contact · Matching · Negotiation · Physical · Financing · Risk.
  • Channel levels: Zero (direct) · One · Two · Three.
  • Intermediaries: Merchant wholesalers · Brokers/Agents · Retailers · C&F · Distributors · Franchisees · E-commerce platforms.
  • Coverage: Intensive (FMCG) · Selective (autos) · Exclusive (luxury).
  • Conflict: Horizontal · Vertical · Multi-channel · Online-offline.
  • VMS (Kotler): Corporate · Contractual (franchise) · Administered.
  • Retail formats: Dept · Specialty · Super · Convenience · Discount (DMart) · Hyper · Category Killer · Cash & Carry · Off-price · E-tail · Quick Commerce (Blinkit, Zepto) · Direct selling.
  • India: Kirana 12 mn · HUL Shakti · ITC E-Choupal · Modern trade · D2C · ONDC (2022).
  • Promotion mix (5 + WoM): Advertising · Sales Promotion · Personal Selling · PR · Direct/Digital.
  • Communication models: Lasswell (1948) · Schramm · Shannon-Weaver · Berlo.
  • Hierarchy of effects: AIDA (Lewis 1898) · AIDAS (Strong) · DAGMAR (Colley 1961) · Lavidge-Steiner (1961) · Innovation-Adoption (Rogers 1962).
  • 5 Ms of advertising (Kotler): Mission · Money · Message · Media · Measurement.
  • Budget methods: Affordable · % of sales · Competitive parity · Objective-and-task.
  • Media metrics: Reach · Frequency · GRP = R × F · CPM · CPC · CPA · ROAS.
  • Advertising pioneers: Ogilvy · Bernbach (VW Think Small) · Leo Burnett (Marlboro) · Reeves (USP).
  • Indian advertising legends: Padamsee (Lalitaji) · Pandey · Khan · Balki · Kakar.
  • Sales promotion: Coupons · Samples · Premiums · Loyalty · Contests · POP · Demos · Trade allowances.
  • Personal selling 7 steps: Prospecting · Pre-approach · Approach · Presentation · Handle objections · Close · Follow-up.
  • PR tools: Press releases · Sponsorships · Events · Crisis comms · Philanthropy.
  • Digital marketing: Email · SMS · WhatsApp · SEM · Display · Social · Influencer · Content · Programmatic · Mobile · Affiliate.
  • IMC — Don Schultz (1993): one voice across all touchpoints.
  • India regulation: DAVP · ASCI (1985) · CCPA · CPA 2019 · Cable TV Networks Act 1995 · IT Rules 2021.
  • Modern trends: Omnichannel · D2C · Quick Commerce · ONDC · Influencer · Programmatic AI · AR/VR · Voice · Generative AI · Privacy-first · Sustainability messaging · Performance marketing.