VERTICAL MARKETING SYSTEM
If we compare the two main types of distribution channels, conventional and vertical, we find that the conventional consists of one or more independent producers,wholesalers and retailers who independently seek to maximize their own profits, regardless the benefits that system would have in its set. No member of the channel has control over another.
By contrast, thevertical marketing system is composed of producers, wholesalers and retailers who act as a unified system. Some of these channel members have any of the other two, or have contracts with them or hasa power by which all others must collaborate.
Therefore, our company, Colgate Palmolive, use the latter, the vertical marketing system, because producers, wholesalers and retailers act as onlyone to bring the product to final consumers.
There are three types of vertical marketing system:
* Corporate marketing system: Colgate Palmolive combined various stages of production anddistribution of its products (oral care, personal hygiene, home care) under a only ownership. For example, Colgate Palmolive controls the product design, production and distribution of these productsthroughout the world.
* Contractual marketing system: this vertical marketing system consists of independent organizations at different levels of production and distribution who join through contracts.Colgate Palmolive, for example, has contracts with certain transport companies to bring their products at the consumers. There are three types of contractual marketing system: wholesaler-sponsoredvoluntary chains, retailer cooperatives and franchise organizations.
* Administered marketing system: Colgate Palmolive coordinates various stages of production and distribution through the size ofthis great company and the power of any member who dominate the channel. For example, Colgate Palmolive may influence the decision to place products on the shelves of a supermarket, on pricing and...
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