Vertical Marketing System

Introduction

In an organization, effective marketing strategies play an important role in boosting the performance of the business. In the integration of the corporate leaders in pursuit of their financial objectives, the creation of marketing system has been established. The creation of vertical marketing system is introduced and defined as a distributing channel in which the manufacturer, wholesaler, and retailer act as a single system. An organization that can control the product and services until it reached to the end consumers is the plain example of vertical marketing system. Apparently only few of the businesses around the world successfully managed this type of system. It may define as a difficult approach to maintain the sales and effectiveness but it serves as the strongest point of the organization to boost the various areas within the organization.

Zara System

One of the successful organizations that use the vertical marketing system (VMS) is Zara which have a distinctive feature of business model. With the aid of the vertical integration, the company is allowed to develop the strong merchandising strategy that continuously led the Zara to create the opportunities particularly in the fast-fashion system. Because of the lack of flexibility found in traditional retailing, the organization is obliged to produce the products in varieties, amount, and frequency of the new styles. This type of system begins in the corporate areas, wherein the leaders plan the changes that will create an impact in the organization. All the plans are administered to the stores that are mostly visited by the customers. In this way the regular customers will know that the new products are already available for merchandise (Craig, Jones, & Nieto, 2004). The quick response of Zara in the fast-fashion system places the emphasis on using the VMS to be very quick fashion follower than to achieve manufacturing efficiencies. The continuous product development in the retail environment enables the organization to facilitate the chain f competitive advantage.

The very advantage of VMS is that the organization can control all the elements and gives the leaders the overview on what is happening or problems in one area. This will lead to the adjustments (if necessary) and the leaders can picture on the products or places where they need to produce more or less. The use of technologies, warehouses and other shipping goods as part of the organization’s ownership delivers the great advantage to control the products in terms of shipping. The most critical thing that the organization should monitor is to keep the communication alive. Since Zara is managing the products, they should maintain the track of all the products at the same time. This makes an emphasis on the roles and responsibilities of the people within the organization. It important in the vertical integration of Zara which assures that the expansion of the company is successful by moving back and forth within the vertical market or industry (Egelhoff, 2002).

Although, the vertical integration of Zara creates some weaknesses, it still has more benefits than the drawbacks. The organization is aware on its limitations which support the high capital investments of the organizations on their chains and to financially aid the technology and skills needed in the performance of the organization (Craig, Jones, & Nieto, 2004).

References:

Craig, A., Jones, C., & Nieto, M., (2004) Zara: Fashion Follower, Industry Leader; Business of Fashion Case Study Competition [Online] Available at: http://www.philau.edu/SBA/News/ZaraReport.pdf [Accessed 20 July 2010]

Egelhoff, T., (2002) How to Use Vertical Marketing Systems [Online] Available at: http://www.smalltownmarketing.com/vertical.html [Accessed 20 July 2010]