Vertical Marketing Systems (VMS) align manufacturers, wholesalers, and retailers to work as a coordinated system rather than independent competing entities.
Three types exist: Corporate VMS (single ownership), Contractual VMS (agreements like franchises), and Administered VMS (one dominant member leads). Zara owns its production and retail (Corporate). McDonald's uses franchising (Contractual). Procter & Gamble coordinates retailers through market power (Administered).
VMS eliminates channel conflicts, reduces costs through coordination, and ensures consistent customer experiences throughout the distribution chain.