Answer to Question #280365 in Marketing for Sumaya

Question

a) Differentiate between corporate vertical marketing system, administered vertical marketing system, and ccontractual vertical marketing system, give an example of real organization that used each of the systems

b) give an example of a company that implemented but failed to execute a horizontal marketing system. Explain the reason for the failure

c) discuss the two most widely used channel system by producers during the pandamic. Explain the advantages and disadvantages of the system

Answer 1

a)      

In the vertical marketing system, the distinct distribution channels, typically producers, wholesalers and retail outlets, work together as a unit to ensure the end users of the products get the supplies. The system helps reduce any kind of conflicts to the mutual benefit all parties.

Corporate Vertical Marketing System

It streamlines the process by bringing all of the elements of the distribution channel, from manufacturing to the stores, under the ownership of a single business. An example of such an organization is Firestone which manufactures tires and owns the service centers that sell the tires to customers.

Contractual Vertical Marketing System

Under this system, the pieces of the distribution channel continue to operate as individual entities. The businesses enter into contractual relationships with other elements in the distribution channel with their respective obligations and benefits spelled out ahead of time. This approach allows all of the participants to leverage economies of scale that enable more competitive pricing.

For example, if 15 independently owned restaurants enter into an agreement with a produce wholesaler, the total costs go down for everyone thanks to bulk ordering and shipping.

Administered Vertical Marketing System

This system employs neither formal contractual obligation nor corporate ownership of the distribution channel. Instead, one member of the distribution channel wields enough power, generally though sheer size, to effectively control the activities of the other members of the distribution channel. Massive retail chain stores, such as Walmart, often preside over this system.

b)     Apple partnered with Starbucks, to connect iTunes music to consumers having their coffee drinks.

c)      

i)                  Ecommerce marketing

ii)                Mobile phone access and ownership