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Definition

Administered VMS

Definition (1):

Administered VMS is a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties. 

Definition (2):

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

Under this type of VMS, leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members. Manufacturers of a top brand can obtain strong trade cooperation and support from resellers regarding displays, shelf space, promotions, and price policies. In turn, large retailers such as Wal-Mart, Home Depot, and Barnes & Noble can exert a strong influence on the many manufacturers that supply the products they sell.

Administered VMS allows a marketing channel in which independent organizations use informal coordination, generally dominated by one large and powerful channel organization.

Use of the term in Sentences:

  • The professor is discussing administered VMS in the marketing class.
  • The company is thinking of following the administered VMS for improved profitability and working in a cost-effective way.

 

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