Vertical Marketing System

It is not an easy process for a product to be manufactured to get delivered and to reach the customers. There are a lot of processes and procedure to go through. Among them, marketing is one such factor. When a product is manufactured that has to reach the customers and a customer should know when they need the product and then they need to choose them. Among such marketing, there is a type of marketing called Vertical marketing system (VMS).

What is Vertical Marketing System?

VMS is the combination of certain distribution channel partners like the producer, the wholesaler, and the retailer. These are the people who need to work together to a unified group and need to take the product to the customers.

Vertical Marketing System

What is the necessity of VMS?

When you take traditional marketing the producer, the wholesaler and the retailer will work separately to make a profit and no think that each of them has certain expenses. This will only increase the conflicts among them but not the profit at a higher level.

The main aim of vertical Marketing System was to overcome this situation, certain organization starting to follow a strategy called vertical Marketing System. This involving the working of the producer, the wholesalers, and retailers together, they will set and goal and join hands to work for them. as a result, they found that the profit was increased and involved various channels of distribution.

Types of Vertical Marketing System

This type of marketing and can be further classified into three types:

Corporate Vertical Marketing System

In this type one of the member, it can be producer, wholesalers or retailer will have all the members of the channel and he will be responsible for the complete channel. He is the only person to have control over all the factors like production or distribution as the single owner.

Contractual Vertical Marketing System

In this type, all the members will work as an individual and after completing they will integrate them on a contractual basis in order to earn the profit. The most common type franchising, that is the producer will give authority to the distributors to sell the products under the name of the producer.

Administered Vertical Marketing System

Under this type, there will not be any connection between the members of the team in production and distribution. All of them will work as an individual but they will be influenced by the factor size and power of any of the member. To be simpler it completely lies in the hands of the person who has high influence and power. They will just dominate the activities of the other people on the channel.

This method was used in most of the companies because that was efficient and this was an efficient manner to take the product to the customers easily thus it gained more profit in an easy manner.

Advantages of VMS

The world is becoming more competitive with a number of new entrepreneurs and new business. it is always necessary to be engaging and having new techniques in the business to shine in it. So, to cover the risks and disadvantages in the traditional marketing the strategy of VMS was introduced and there are certain advantages of a VMS.

Efficient Marketing

When compared to have efficient working in each section, it was felt easy to work efficiently and to rectify any problem if all of them are connected to each other. Since all the process right from production to the product delivery is connected it was also easy to monitor them. The resources required also became less.

Cost efficient based on the combining resources

When there is a certain understanding among between the producer, wholesaler, and the retailer there is no need to have different factors for transporting. For example, when the producer produces the product he can shift them to the wholesaler and they don’t need to pay again. This can be applied for the retailers as well. In these cases, a huge amount can be saved.

Contact with different companies

Each one will have certain connections with different companies, when they have connected in the network the other parties like the producer, retailer or the wholesaler also will get in touch with new people and that may help to enhance the business.

The purpose of a vertical marketing system is to have a better way to convey the product to the people but it is always necessary to be engaged in the process and to be responsive to the customers to have higher benefits and also have good strategies have them as us permanent customers.