What is a vertical marketing system primarily characterized by?

A vertical marketing system is primarily characterized by the coordination of production and distribution processes among various stages within the supply chain, which is most effectively reflected in the option that discusses coordinated production and distribution through contractual ties.

In a vertical marketing system, manufacturers, wholesalers, and retailers work together to optimize their operations and achieve common goals. This often entails formal agreements or contracts that facilitate communication and strengthen the relationships among the parties involved. Such systems can enhance efficiency, reduce costs, and provide better services to consumers by ensuring that each stage of production and distribution is aligned.

While the size and power of one of the parties can influence the dynamics within a distribution channel, the essence of a vertical marketing system lies in the cooperation and partnership among all participants to streamline operations. This contrasts with the independent operation of different stages, where there may be more competition and less coordination, leading to inefficiencies. Common ownership, which may occur in some cases, is not a defining feature of all vertical marketing systems, as many operate through contracts or strategic alliances. Therefore, the description of a coordinated effort through contractual ties captures the fundamental nature of a vertical marketing system effectively.