Channel Integration - Vertical Marketing System and Horizontal Marketing System (Marketing video 74)

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Channel Integration and Systems refers to the strategies for consolidating customer information and its use to offer a complete view of the customer.

Channel Integration and Systems is the integration of marketing channels through multi-channel retailing.

Vertical Marketing Systems

Vertical Marketing Systems refers to a system where the retailer, wholesaler, and producer from the distribution channel work together as a unified group to boost economies of scale and meet consumer needs.

Example -

1. Domino’s Franchise Model
2. Coca Cola India Operations
3. Apple

Types of VMS

Corporate VMS

In Corporate VMS, every element of the distribution channel is streamlined under a single business.  There is no middleman and all activities are in-house. This gives the company absolute control over the products.

Example -

1. Nike owned stores

Administered VMS

In Administered VMS, the activities of the distribution channel parties get influenced by the power of one influential member who dominates the activities of other members.

Example -

1. Unilever

Contractual VMS

In Contractual VMS, every element of the distribution channel has to work independently and later integrate all the activities on a formal agreement. It achieves greater efficiency and more competitive pricing.

Horizontal Marketing System

The Horizontal Marketing System refers to a system where two or more organizations unrelated and at the same level align together to gain economies of scale and exploit market opportunities.

Example - Starbuck’s Partnership with Spotify

Combined food and beverage along with loyalty program from Starbucks with music streaming from Spotify.

Example - Shoppers Stop Partners with Citibank

There is an integrated partnership between Shoppers Stop and Citibank as both favors each other over other brands.

This video is on Channel Integration and Systems and it has the following sub-topics.


Time Stamps

0:00 What is Channel Integration?
00:35 Vertical Marketing Systems
01:11 Example Domino’s Franchise Model
02:09 Example Coca-Cola India Operations
02:51 Example Apple
03:14 Types of VMS
03:22 Corporate VMS
03:33 Administered VMS
03:44 Contractual VMS
03:59 Horizontal Marketing System
04:31 Example Starbuck’s Partnership with Spotify
05:09 Example Shoppers Stop Partners with Citibank