Overview

vertical market


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A market with a distribution channel structure in which producers, wholesalers, and retailers act as a unified system; either one channel member owns the others, or has contracts with them, or has so much power that they all cooperate.

There are three major types of vertical market system (VMS).Corporate VMS: a VMS combining successive stages of production and distribution under single ownership.Administered VMS: a VMS that coordinates successive stages of production and distribution, not through common ownership, but through the size and power of one of the parties.Contractual VMS: a VMS in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales than they could achieve alone.

Corporate VMS: a VMS combining successive stages of production and distribution under single ownership.

Administered VMS: a VMS that coordinates successive stages of production and distribution, not through common ownership, but through the size and power of one of the parties.

Contractual VMS: a VMS in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales than they could achieve alone.

There are three types of Contractual VMS.Wholesaler-Sponsored Voluntary Chain: one in which wholesalers organize a voluntary chain of independent retailers to help them compete with large corporate chain organizations.Retailer Cooperative: one in which retailers organize a new jointly-owned business to carry on wholesaling and possibly production.Franchise organization: one in which a channel member, called a franchiser, links several stages in the production distribution process. These are yet again of three types:a) manufacturer-sponsored retailer franchise system;b) manufacturer-sponsored wholesaler franchise system; andc) service-firm sponsored franchise system.

Wholesaler-Sponsored Voluntary Chain: one in which wholesalers organize a voluntary chain of independent retailers to help them compete with large corporate chain organizations.

Retailer Cooperative: one in which retailers organize a new jointly-owned business to carry on wholesaling and possibly production.

Franchise organization: one in which a channel member, called a franchiser, links several stages in the production distribution process. These are yet again of three types:

a) manufacturer-sponsored retailer franchise system;

b) manufacturer-sponsored wholesaler franchise system; and

c) service-firm sponsored franchise system.

Subjects: Marketing.


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