DECADECA Travel and Tourism Practice Exam

What is a Contractual VMS?

1. A type of vertical marketing system with independent manufacturers

2. A system where different stakeholders engage in production contracts

3. A type of vertical marketing system established by common ownership

4. A system of supermarket chains coordinating their retail efforts

The correct answer is: A type of vertical marketing system with independent manufacturers

A Contractual Vertical Marketing System (VMS) is characterized by formal agreements between independently owned and operated entities at different levels of the distribution channel. In this context, manufacturers, wholesalers, and retailers cooperate through legally binding contracts to achieve marketing goals. This cooperation enables the stakeholders to benefit from economies of scale, improved efficiency, and a well-coordinated marketing strategy, which is essential in industries like retail and manufacturing. The focus on independent manufacturers within this system emphasizes that, although the parties involved collaborate closely, they retain their independence. This is a significant distinction from other types of vertical marketing systems, such as those based on common ownership or complete integration. The other answer choices touch on different types of marketing systems or arrangements. For instance, systems established by common ownership would imply a corporate control model rather than the independent nature highlighted in the correct answer. Options relating to production contracts or coordination among supermarket chains refer to different operational structures that do not fit the definition of a Contractual VMS.