Vertical marketing systems are systems in which the entire marketing channel or process is controlled by a single entity. In this case, all of the parts of the marketing system are working together, unlike in a conventional marketing system where they are separate.
There are three main ways in which such a system can be set up. There are corporate systems in which one company simply owns the producer, the wholesaler, and the retail outlets. There are contractual systems where the various parts of the system have entered into contractual agreements to coordinate their actions. Finally, there are administered systems in which there are no formal contracts but one part of the system is strong enough to direct the others even without formal control.