MKTG5561 Marketing Management | Types of Marketing System

Answer:

Vertical Marketing System

In this system, producers, wholesalers, and retailers are the main distribution channels which are working together to satisfy consumer needs. In a vertical marketing system, each member performance is joint with the other member performance. In a firm, each department is depending on the other department activities. In the market, the independent firms are joined together to earn the mutual benefits and earn high profit. These firms are relative with each other such as a group of retailers buys the commodity from the wholesalers. The vertical marketing system is divided into three parts such as corporate VMS, administered VMS, and contractual VMS. The concept of vertical marketing system is similar to the vertical integration because a company can expand its business (Davcik, and Sharma, 2016).

For example- Apple is a company which design and make their products own. Products are made by the company and it sold in the retailer shop. The company made the products but sell to the retailer which further sells their products. The company did not have to depend on anyone for the production of the product but it depends on retailing shops for selling the product (Watson ,Worm, Palmatier, and Ganesan, 2015).

Horizontal marketing system

It is a distribution channel, where the two or more organization at the same level working together to earn the maximum profit. In this system, the two unrelated companies grab the market opportunities by work together. These types of marketing system are followed by those companies who have a lack of capital, marketing programs, human resources, and production techniques. The companies come with each other in the form of the joint venture which can be temporary or permanent. The companies combine their resources to earn or to achieve a specific goal such as production capabilities, and distribution. The companies complete the requirement of each other and satisfy the consumer needs. In recent days, this system is gained popularity due to enormous competition in the market where everyone is running to gain the good position in the market to earn the high profit. In this system, more than two manufacturers, wholesalers, and retailers can be collaborating to achieve the objectives. Two or more manufacturers are combine together to achieve the objective of optimization utilization of scarce resources, More than two wholesalers combine each other to achieve the objective of covering a large area of distribution of good and services, and retailers come together to achieve the objective of providing bulk quantities (Layton, 2015).

For example- Apple and Nike come together in partnership with the purpose of grabbing the market opportunity with advanced technology. Nike connected the iPod with their shoes that will play music and it also displays the information about calories burned, time, distance covered and heart pace on the screen. This partnership helps in the integration of advanced technologies and also improving health care services. The example states that both companies are unrelated companies but it comes together to grab the market opportunity (George, et al., 2017).

References

Davcik, N.S. and Sharma, P., 2016. Marketing resources, performance, and competitive advantage: A review and future research directions. Journal of Business Research, 69(12), pp.5547-5552.

George, B., Setayesh, M., McCandless, T.P., Pichardo, P., Wolfe, K.A., Parang, R., Diaz-Arscott, M.F., Condit, J., Culler, B., Horton, N. and Strutton, M.J., 2017. Method and system for implementing a cloud-based social media marketing method and system. U.S. Patent 9,633,399.

Layton, R.A., 2015. Formation, growth, and adaptive change in marketing systems. Journal of Macromarketing, 35(3), pp.302-319.

Watson , G.F., Worm, S., Palmatier, R.W. and Ganesan, S., 2015. The evolution of marketing channels: Trends and research directions. Journal of Retailing, 91(4), pp.546-568.