Vertical marketing
This relatively recent development integrates the channel with the original supplier - producer, wholesalers and retailers working in one unified system. This may arise becauseone member of the chain owns the other elements (often called `corporate systemsintegration'); a supplier owning its own retail outlets, this being 'forward' integration. It is perhaps more likely that a retailer will own its own suppliers, this being 'backward'integration. (For example, MFI, the furniture retailer, owns Hygena which makes its kitchenand bedroom units.) The integration can also be by franchise (such as that offered byMcDonald's hamburgers and Benetton clothes) or simple co-operation (in the way thatMarks & Spencer co-operates with its suppliers).Alternative approaches are 'contractual systems', often led by a wholesale or retail co-operative, and `administered marketing systems' where one (dominant) member of thedistribution chain uses its position to co-ordinate the other members' activities. This hastraditionally been the form led by manufacturers.The intention of vertical marketing is to give all those involved (and particularly thesupplier at one end, and the retailer at the other) 'control' over the distribution chain. Thisremoves one set of variables from the marketing equations.Other research indicates that vertical integration is a strategy which is best pursued at themature stage of the market (or product). At earlier stages it can actually reduce profits. It isarguable that it also diverts attention from the real business of the organization. Suppliersrarely excel in retail operations and, in theory, retailers should focus on their sales outletsrather than on manufacturing facilities ( Marks & Spencer, for example, very deliberately provides considerable amounts of technical assistance to its suppliers, but does not ownthem).
Horizontal marketing