Why You Need a Vertical Marketing System for Your Business?

Published on October 28, 2022

A Vertical Marketing System (VMS) can help you solve many of the problems facing businesses these days, from limited time to rising competition in various industries.

You’ve probably heard the term Vertical Marketing System (VMS) used before, but what exactly does it mean?

If you’re still wondering, don’t worry; that’s why we’re here to clear things up for you.

Here are key points about vertical marketing systems and how they can benefit your business and the way you market your products and services.

 

What is a Vertical Marketing System?

A Vertical Marketing System (VMS) is an organized approach to marketing where the company and its partners work together to market and sell a product or service.

Vertical Marketing Systems are highly recommended because they provide benefits such as cost savings, improved efficiency, higher return on investment, and better customer satisfaction.

The primary benefit of a Vertical Marketing System is that it provides visibility across all channels which helps customers find what they are looking for more easily.

 

Reasons why you need Vertical Marketing System.

If you're not familiar with the term, a vertical marketing system is a coordination of marketing activities across different levels of the distribution channel to produce efficiencies and economies of scale (The Balance Small Business, 2019).

 In other words, it's a way to streamline your marketing efforts by working with other businesses in your industry.

Here are five reasons why you should consider implementing a vertical marketing system for your business

       1. It gives your business a competitive edge:

By working with other companies in your industry, you can have access to more customer data than if you were going at it alone.

      2. It makes customer service easier:

A vertical marketing system ensures that customers will always be able to get answers from someone who knows their product or service better than anyone else.

       3. It saves time:

By coordinating marketing efforts between all the different levels of distribution, everything runs much more smoothly and efficiently. Customers feel confident about where they're buying from because they know there are lots of people just like them available to answer any questions they might have. Overall, this vertical marketing system is worth considering for any business looking to grow!

      4. It helps increase sales and customer loyalty:

A vertical marketing system gives you access to many more resources than you would on your own. This means that when a customer has an issue or concern, it can be dealt with quickly. And by communicating across channels using consistent messaging, customers can rest assured that they will get quality products or services every single time (The Balance Small Business).

      5. Vertical Marketing Systems help simplify the process:

Vertical marketing systems make things easy. They make life easier for your company and they also make life easier for customers. With one phone call, email, or text message you can speak to someone who understands your needs as well as anyone else in the world could.

Read also: Marketing Tools For Small Business

 

3 Types of Vertical Marketing System:

Three types of vertical marketing systems exist: corporate, contractual, and administered. Let's explore how each system could benefit a business.

 

1. The corporate system.

All business is conducted in-house, so the corporate system eliminates the middleman. The corporate system involves consolidating all elements of the distribution channel under one company.

The ability to make the most of a corporate system allows companies to completely choose their products and direction.

For example, Apple Inc. designs and manufactures its own products. These products are sold in retail outlets of the company itself. They do not need to depend on any people for the purpose of production or product selling.

 

2. The contractual system.

Every party in a contractual system works independently on formal agreements and integrates their operations so they can become more efficient. By working together, they can leverage economies of scale to enable more competitive pricing.

Value-added partnerships coordinate their strategies through contractual arrangements to eliminate channel conflicts caused by individual objectives.

Franchise is a contract where one party grants another party the right to produce and market its product according to specifications set out by the franchiser.

McDonald's, Domino's, Pizza Hut, etc. are all forms of franchising that operate on a contractual basis.

 

3. The administered system.

The parties in an administered vertical marketing system do not have formal contractual relations or corporate ownership of the distribution channel, but rather their activities are influenced by the size and status of one party.

The activities of any strong and influential channel member are influenced by the activities of others.

Walmart would be a perfect example of this type. The retailer is large and powerful enough to carry out an administrated system.

Though small businesses can't take on the stress and responsibility of running such a system, they still need to interact with one, who is probably their supplier.

 

When to start using Vertical Marketing System?

As your business grows, you'll need to start thinking about how to scale your operations. That's where a Vertical Marketing System (VMS) can come in handy.

A Vertical Marketing System is a way of organizing your business so that it can more easily expand. For example, if you have a retail store and want to open another location, you could use the same Vertical Marketing System at both locations.

Using the same system also helps prevent any problems from spreading across stores and minimizes customer confusion. Customers know what they're getting and when they buy something, they know exactly what they're paying for.

They don't have to worry about discrepancies or unfair pricing between stores because each store uses the same Vertical Marketing System.

Read also: The Ultimate Guide To Email Marketing: A Simple And Step-By-Step Guide.

 

How to use your Vertical Marketing System?

1. Determine what type of business you have.

2. Look at your customer base and target market.

3. Find similar businesses to yours and study their marketing strategies.

4. Identify the benefits of using a Vertical Marketing System.

5. Understand how to use a Vertical Marketing System within your business model.

6. Develop a Vertical Marketing System that is unique to your company.

7. Implement your Vertical Marketing System and track the results over time

 

A Vertical Marketing System is an important tool for businesses of all sizes. It can help you develop and execute a marketing plan, track your progress, and make adjustments along the way.

Plus, it can save you time and money by streamlining your marketing efforts. If you're not using a Vertical Marketing System, now is the time to start!

Read also: 10 Digital Marketing Strategies Every Startup Should Know

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