Horizontal Marketing Systems
In a horizontal marketing system, two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity. Each company lacks the capital, know-how, production, or marketing resources to venture alone, or it is afraid of the risk. The companies might work together on a temporary or permanent basis or create a joint venture company. For example, many supermarket chains have arrangements with local banks to offer in-store banking.
TABLE 12.2 Contractual Vertical Marketing Systems
|
Type of Contractual VMS |
Description |
|
Wholesaler-sponsored voluntary chains |
Wholesalers organize voluntary chains of independent retailers to help standardize their selling practices and achieve buying economies in competing with large chain organizations. |
|
Retailer cooperatives |
Retailers organize a new business entity to carry on wholesaling and possibly some production. Members concentrate their purchases through the retailer co-op and plan their advertising jointly, sharing in profits in proportion to their purchases. |
|
Franchise organizations |
A franchisor links several successive stages in the production-distribution process. Such arrangements include: manufacturer-sponsored retailer franchises (Ford and its dealers), manufacturer-sponsored wholesaler franchises (Coca-Cola and its bottlers), and service-firm-sponsored retailer franchises (McDonald’s). |
E-Commerce and M-Commerce Marketing Practices
As noted earlier, the digital channels revolution is affecting distribution strategies. E-commerce uses a Web site to transact or facilitate the sale of products and services online; m-commerce is selling via mobile devices such as smart phones and tablets. Online retailers can predictably provide convenient, informative, and personalized experiences for vastly different types of consumers and businesses. By saving the cost of retail floor space, staff, and inventory, e-commerce marketers can profitably sell low-volume products to niche markets. While consumers often go online to try to find lower prices,24 online retailers in fact compete in three key aspects of a transaction: (1) customer interaction with the Web site, (2) delivery, and (3) ability to address problems when they occur.25
Pure-click companies have launched a Web site without any previous existence as a firm, whereas brick-and-click companies are existing companies that have added an online site for information or e-commerce.
