Vertical and Horizontal Marketing System - Definition and Examples

This article explains the concept of vertical and horizontal marketing systems. It describes how these systems work and how they help companies to achieve their objectives. The article provides examples of both systems and their benefits. It also discusses the differences between the two systems.

Marketing and Management

MARKET SYSTEM 1
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

MARKET SYSTEM 2
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).

MARKET SYSTEM 3
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.