What best describes a corporate vertical marketing system?

• A. Firms coordinate through shared contracts only
• B. There is no ownership by any firm
• C. A firm owns and controls all of its supply chain
• D. All segments are franchised

Answer: (C)

A corporate vertical marketing system occurs when a single company owns and controls multiple levels of its distribution channel, from production through distribution to retailing. This ownership across stages allows unified planning and close coordination of manufacturing, pricing, branding, and inventory, leading to smoother operations and often lower costs by reducing double margins and channel conflicts. The firm can align incentives and respond quickly to market changes because it directly controls the key parts of the supply chain. This differs from a contractual system, where agreements bind channel members without ownership, or from franchising, where independent operators run units under a brand under contract rather than being owned and controlled by the same company.