Drawbacks of Vertical Marketing System
Besides its benefits, the following are some of the disadvantages of a Vertical Marketing System:
1. Conflicts: Using the vertical marketing system can create conflicts between the parties based on their interest. Intermediaries can have different goals and wants which can clash with the interest of others.
2. Risk Factor: Under a vertical marketing system, producers have to rely on intermediaries in order to make their products available to customers. There exists a risk on the part of wholesalers or retailers regarding what if they decide not to carry out the distribution process of any particular product.
3. Limited Perspective: As in a vertical marketing system, the entities focus on only one goal; i.e., promoting the brand; uniqueness and innovation generally never get introduced in the system as all the activities keep going according to the pre-determined plan.
Vertical Marketing System | Types, Benefits and Drawbacks
Every product and service needs a proper path to reach customers from producers. Mainly, intermediaries help the product reach the customers. As more and more entities get introduced in the distribution channel, there arises a need to have a proper plan which needs to be followed. Vertical Marketing System is an important marketing strategy that involves the collaboration of all the entities of the distribution channel to focus on the efficiency of the distribution channel along with economies of scale.