Vertical marketing system

A marketing channel in which manufacturing

and the successive stages of distribution are
operated as a unified system.

Vertical Marketing System

Control
maintained by:

Economic Power
Contract

Examples:

Amul dairy products

Proctor & gamble
products etc.

Administered
Contractual
Corporate

Vertical Marketing System

Administered
Contractual
Corporate

Control maintained
by:

Stock owned by wholesaler

Stock owned by retailers

Franchise system

Marketers of services

Examples:

Retail chain like Naaz in Delhi

Soft drink bottles

Vertical Marketing System

Administered
Contractual

Control maintained
by:

Ownership

Examples:

Singer (sewing machines)

Good year (tyers),

oil companies.

Corporate

HORIZONTAL MARKETING
In horizontal marketing system (HMS) two or more
organizations on the same level of distribution cooperate
to accomplish a common goal. This type of marketing
system recognizes that there is strength in numbers.

CHANNLE MANAGEMENT

Potential causes of channel

conflict

Factor :

Manufacturers Goal:

To establish final price consistent

with product image.

To ensure prompt, accurate

payments & minimize discount.

space

To obtain plentiful shelf space with

good visibility in order to maximize
brand sales.

Exclusivity

To hold down the no. of competing

brands. Each middleman stock
while selling through many
middleman.

Pricing
Purchase
Shelf

terms

Potential causes of channel

conflict

Factor :

Manufacturers Goal:

To receive adequate notice before

delivers are required.

To secure advertising support from

middleman.

Profitability

To maintain adequate profit margins.

Continuity

To receive order on a regular basis.

Order

To maximize order size.

To standardize production.

To have middleman assume risks.

To sell products under the

manufactures lable.

Delivery
Advertising

size
Assortment
Risk
Branding

support

Potential causes of channel

conflict

Factor :

Wholesalers/Retailers

Goal:

To establish final price consistent

with wholesalers/retailers image.

To defer payments as long as

possible & secure discounts.

space

To allocate shelf space among many

brands in order to maxi. Total
product sales.

Exclusivity

To hold down the no. of competing

wholesalers/retailers carrying the
same brands while selling different
brands itself.

Pricing
Purchase
Shelf

terms

Potential causes of channel

conflict

Wholesalers/Retailers Goal:

Factor :

To obtain quick service.

To secure advertising support from

manufacturers.

Profitability

To maintain adequate profit margins.

Continuity

To receive shipments on a regular basis.

Order

To have order size conform with

consumer demand to minimize
inventory investment.

Assortment

To secure a full variety.

Risk

To have manufacturers assume risks.

Branding

To sell products under dealer labels as

well as manufacturer label.

Delivery
Advertising

size

support