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What is Vertical Marketing System?

Time:2012-08-17Hits:

A vertical marketing system consists of all the levels of independently owned businesses along a channel of distribution. Goods and services are normally distributed through one of

these systems: independent, partially integrated, and fully integrated. A vertical marketing system consists of all the levels of independently owned businesses along a channel of distribution

In an independent vertical marketing system, there are three levels of independently owned firms: manufacturers, wholesalers, and retailers. Such a system is most often used if

manufacturers or retailers are small, intensive distribution is sought, customers are widely dispersed, unit sales are high, company resources are low, channel members seek to share

costs and risks, and task specialization is desirable. Independent vertical marketing systems are used by much stationery stores, gift shops, hardware stores, food stores, drugstores,

and many other firms. They are the leading form of vertical marketing system. The vertical marketing system should be managed by strong ERP system with pos equipment.

With a partially integrated system, two independently owned businesses along a channel perform all production and distribution functions. It is most common when a manufacturer and

a retailer complete transactions and shipping, storing, and other distribution functions in the absence of a wholesaler. This system is most apt if manufacturers and retailers are large,

selective or exclusive distribution is sought, unit sales are moderate, company resources are high, greater channel control is desired, and existing wholesalers are too expensive or

unavailable. Partially integrated systems are often used by furniture stores, appliance stores, restaurants, computer retailers, and mail-order firms.


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