A marketing channel consists of a group of individuals and organizations that supervise the flow of products from producers and customers. Each member of the channel has different responsibilities within the whole distribution system.
A marketing system in which a single channel member works to fulfill the needs of the consumers is known as a Vertical Marketing System (VMS). In order to satisfy the needs of the target market customers, the channel member manages channel activities to attain a systematic and low-cost distribution. The three types of Vertical Marketing Systems are Corporate, Administered, and Contractual marketing systems.
1) Corporate VMS
This system of distribution channel organization wherein a single member owns and controls the entire distribution process is known as a Corporate Vertical Marketing System, like the processing plants owned by supermarket chains and large retailers that purchase wholesaling and production facilities. Some examples would be Sears, Sherwin Williams, Giant Foods, Banana Republic, Gallo, Oil Companies, and so on.
2) Administered VMS
The Administered Vertical Marketing System is a coordinated system of distribution channel organization wherein the distribution process is dominated by one channel member, also known as the channel leader. Uniform accounting policies and promotional activities are carried out. Some examples would be Wal-Mart, Pepsi, Coke, McKesson Corp, and so on.