Mobile Market Research

VMS

Advantages:

One of the key benefits of a vertical marketing system is that it reduces conflict and eliminates competition from the business’s distribution channel. This means that, rather than each player working as an independent business to increase its own profits, often at the direct expense of those further along the chain, all the components of the distribution channel operate together, which works to the advantage of all parties.

Finding the vertical marketing system that works for you

There are three main types of vertical marketing system:

* Corporate system: In this form of vertical marketing system, one member of the distribution channel owns all the others, effectively bringing together all the elements of the distribution channel under the leadership of a single business. This vertical marketing system may pivot around any element of the chain – a successful producer may look to increase market share and cut out the middle man by opening its own retail outlets and wholesaler network; equally, a retailer may decide to streamline its logistics by taking ownership of production facilities.

* Contractual system: This is a vertical marketing system under which all parties retain their independence and operate as individual entities, but enter into a mutually beneficial contractual agreement, removing a lot of the risk from their relationship. Contractual vertical marketing systems take various forms. In some cases, a retail cooperative, comprising a group of similar retailers, will buy jointly from a single wholesaler, thus benefiting from economies of scale. Elsewhere, a producer will enter into a franchise organisation, exclusively licensing a particular wholesaler to distribute its products.

* Administered system: Under this format, a vertical marketing system is run not by formal contract or agreement, but via the dominance of a particular part of the distribution channel. It relies on one company in the chain being sufficiently...