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Describe the three types of vertical marketing systems.
On Jul 05, 2024
There are three types of vertical marketing systems: administered, contractual, and corporate. In an administered vertical marketing system, there is no common ownership or contractual relationship, but the dominant channel member controls or holds the balance of power. In a contractual vertical marketing system, independent firms at different levels of the marketing channel join through contracts to obtain economies of scale and coordination to reduce conflict. Finally, in a corporate vertical marketing system, the parent company has complete control and can dictate the priorities and objectives of the marketing channel because it owns multiple segments of the channel, such as manufacturing plants, warehouse facilities, and retail outlets.