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  1. (retailing definition) A form of vertical marketing system in which independent firms at different levels in the channel operate contractually to obtain the economies and market impacts that could not be obtained by unilateral action. Under this system, the identity of the individual firm and its autonomy of operation remain intact.
  2. (channels of distribution definition) A marketing channel that achieves vertical coordination between independent firms at different channel levels through the use of contractual agreements. The three principal types of contractual systems are franchise system, retailer sponsored cooperative, and wholesaler-sponsored cooperative.[1]


  1. ^ American Marketing Association. AMA Dictionary.

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