3 Types of Vertical Marketing Systems

Vertical marketing systems is a kind of cooperation that exists between the distribution channels that are available in various levels with different members working together for promoting the efficiency and also the scale of economies in way that the products can be promoted towards customers, products get inspected, credit can be provided to the customers and also can be delivered to the customers.

 

There are various marketing systems available in the vertical type. According to the category of the VMS, you should be able to do the various things that are related with the marketing.

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The vertical marketing system comprises of mainly three components. Producer, wholesaler and retailer are the three major components included in this kind of marketing system. Producer can be considered as the manufacturer who is involved in the making of the product.

 

The wholesaler usually purchases the products from these producers and then they manage the distribution to the retailers. The retailers are the people who markup the price of the products depending on wholesaler and also can sell the products to the final users or the customers.

 

Corporate

A corporate vertical marketing system can be involved with the ownership that of the levels of distribution or production chain that is associated with a single company. An example for the corporate is Apple who is responsible for doing everything related with their products.

 

Apple Company has place for the designing and also the making of the products. These products that are made by the company are sold in the retailer shops of the company itself. They need not have to depend on any of the other people for the purpose of production or even selling of the products.

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Contractual

This is a kind of vertical marketing system that has formal agreement involved in it that exists between various levels that of the production or it can be between the levels of distribution channel. This is done for coordinating the overall process that is related with the particular company. A common form of contractual VMS is franchising.

 

Administered

This is a kind of VMS that has one member from the production as well as the distribution chain has more dominance and they organize the whole nature that is associated with the vertical marketing system in an informal manner. This is due to the sheer size that is associated with the company.

 

This is a kind of the vertical marketing system that is similar to that of wal mart which is the huge kind of retailer available in the market. They usually dictate their terms and conditions to the companies that are small and are involved in a kind of making some products who come under the category of producers a base component of the VMS.

 

It is not a possible thing for the smaller companies to exert such a kind of influence for running that kind of system but there are chances for them to find it necessary for dealing with producer or wholesaler who is functioning under such a kind of system.

James Mello
James is the Lead Author & Editor Product2Market of Blog. James writes for the Product2Market blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Product Marketing.
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