Question

The potential for conflict among members is increased in a corporate vertical marketing system.

true - false

Answer 1

ANSWER :- It is False, that potential for conflict among members is increased in a corporate vertical marketing system.

First i will explain "What is Vertical Marketing System" then "Conventional Marketing System" after that "How to overcome conflicts of Conventional Marketing System using Vertical Marketing System" then "Parts of Vertical Marketing System" and last one is "Corporate Vertical Marketing System" and finish it with "Conclusion".

A Vertical Marketing system (VMS) comprises of the main distribution channel partners- the producer, the wholesaler and the retailer who work together as a unified group to serve the customer needs.

In conventional marketing system, the potential for conflict among members is increased as the producer, wholesaler and the retailer worked separately with the intention to maximize their profits even at the expense of one another. This led to the unending conflicts between the channel partners resulting in less profits for the business as a whole.

In order to overcome these conflicts, several firms have started using a vertical marketing system wherein producers, wholesalers and retailers have joined hands with each other and are working in unison towards the accomplishment of the business objective as a whole. This has led to the increased profits for each involved in the channel of distribution.

Vertical Marketing System is further divided into three parts :-

1. Corporate Vertical Marketing System

2. Contractual Vertical Marketing System

3. Administered Vertical Marketing System

Here, i only explain Corporate Vertical Marketing System :-

In Corporate Vertical Marketing System, one member of the distribution channel be it a producer, a wholesaler or a retailer Owns all the other Members of the Channel, thereby having all the elements of production and distribution channel under a single ownership. For example :- Amway is an American cosmetic company, which manufactures its own product range and sell these products only through its authorized Amway stores. Here the ownership of production and distribution is with the company itself.

• Conclusion :-

Thus, through a Vertical Marketing System, the channel partners establishes a close contact with each other and work in unison towards the accomplishment of common objectives thereby enjoying more profits which they would have been earning when working alone.