Question

What is the difference between a vertical marketing system and a horizontal marketing system?

Please answer in paragraph form. Thank you!!

Answer 1

Vertical marketing system is consist of three components manufacturers, wholesalers and retailers. These three components are acting as a unified system which seek to maximize profit for whole channel. For example a plastic bag manufacturers sells the goods to wholesalers and then the wholesaler sold bags to retailers. Vertical marketing systems are not providing partnership environment.These three are working together with the intention of profit maximization. Vertical marketing system is divided into three parts:

1. Corporate vertical marketing system
2. Contractual vertical marketing system
3. Administered vertical marketing system

Horizontal marketing system are those systems which are working at same level and join together to gain a new marketing opportunities. The main benefit of this system is that the companies can combine their resources, capital, production, capabilities, to maximize their profit. Horizontal marketing systems provides partnership environment.