Definition of vertical marketing system: The traditional marketing channel of vertical marketing system (VMS) consists of independent manufacturers, wholesalers and retailers. The relationship between them is loose, each serving its own interests. Vertical marketing system consists of manufacturers, wholesalers and retailers. One of the members has the ownership or franchise of other members, or it has enough strength to make other members willing to cooperate. The system is designed and managed by professionals and is a centralized sales network. Vertical marketing systems may be controlled by manufacturers, wholesalers or retailers. The system can effectively control channel behavior and eliminate channel conflicts. Members of each channel benefit from economies of scale, bargaining power and reducing duplication of services. Vertical marketing system can be divided into three types: 1. Vertical marketing system of ownership The vertical marketing system of ownership is a series of production and distribution institutions under single ownership. 2. Managerial vertical marketing system The managerial vertical marketing system is a marketing system in which large-scale and powerful members unite production and distribution enterprises that are not under the same ownership. 3. Contractual vertical marketing system Contractual vertical marketing system refers to the combination of different production and marketing organizations on the basis of contracts, expecting to produce greater benefits than when operating alone. The main forms of contractual vertical marketing system are: (1) voluntary chain system supported by wholesalers. This is a chain organization initiated by wholesalers to protect their retailers from other bigger competitors. The way is that wholesalers draw up a plan first and then persuade independent retailers to join the system. In addition to using standardized names and pursuing the economy of commodity procurement, we can also unite to resist the invasion of other chain organizations. (2) The voluntary chain system of retailer cooperation is usually to prevent the invasion of ownership chain organizations, and retailers organize an organization to carry out wholesale work and even production work. Organize members to buy collectively, and return and share profits according to the number of members to buy. (3) Franchise organization Franchise organization, that is, the organization in the continuous process of "production-distribution", is integrated under the contract of * * *, and each member becomes a franchise unit. It can be divided into three forms: the retail franchise system supported by manufacturers is generally the most popular in the automobile industry. Wholesale licensing system supported by manufacturers, which is very common in the soft drink industry. Retail franchise system supported by service organizations is common in catering, hotel management and taxi industry.