vertical market system (VMS)



Formally or informally coordinated distribution channel where its independent members work together to achieve greater efficiency and economies of scale, and to eliminate channel-conflict arising out of disparate individual objectives. Three common types of VMS are: (1) Administered: coordination between production and distribution firms is achieved by the size and influence of the dominant firm, without a formal agreement or ownership. (2) Contractual: independent production and distribution firms formally agree to integrate their resources.
Franchising is an example of this type. (3) Corporate: production firm owns a retail chain (forward integration) or a retail chain owns a production firm (backward integration).

Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z