Administered VMS

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Definition: Administered VMS

VMS stands for Vertical Marketing System. In this concept, all the significant members of the product supply chain, i.e. the producer, the wholesaler and the retailer – work in unity to satisfy customer demand in a more profitable and cost beneficial manner. Usually, the channel members are dispersed and each one tries to maximizes his profit at the expense of the other and ultimately this results in either of the following-

a. Poor quality product reaching the customer

b. Unsatisfactory service system

c. Passing the incremental costs to consumer

Example- HLL, GE or P&G can obtain strong cooperation from resellers regarding displays, shelf space, promotions and price policies.

Vertical marketing systems can take several forms which can be-

Corporate VMS

one member of the distribution channel owns the other members but each continues to perform a separate task.

Administered VMS

One member of the channel is large and powerful enough to coordinate the activities of the other members without an ownership stake.

Contractual VMS

Independent firms are joined together by contract for their mutual benefit. An example can be a retailer cooperative or a franchise organization.

Hence, this concludes the definition of Administered VMS along with its overview.

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