Journal o f the Academy of Marketing Science

Fall 1974, Vol. 2, No. 4, 567-581

Contractually Integrated Systems

for the Marketing of
Industrial Supplies
William J. Hannaford, Ph.D.
Bowling Green State University

In the marketing of both consumer and industrial products, channels of

distribution have been traditionally viewed as loose coalitions of
independent business firms, each of which has operated autonomously in
the performance of a well-defined set of marketing functions. More
recently, especially in consumer goods trade, channels of distribution have
been viewed as operating systems which are centrally coordinated and
programmed to achieve a variety of systemic economies. McCammon
(t 965) has identified at least three such vertical marketing systems:

Corporate Systems, or those combining successive stages of

production and distribution under a single ownership. Examples:
Singer, Sears, Sherwin-Williams.
Administered Systems, or those in which particular lines of
merchandise within stores are controlled (or administered)by
aggressive vendors who have developed comprehensive merchandis-
ing programs within the context of mutually beneficial joint
ventures. Examples: The programmed merchandising approaches of
Kraft Foods, O. M. Scott & Sons Co.
Contractual Systems, or those consisting of independent firms at
different channel levels who have pooled their resources to achieve
operating economies and maximum market impact. Examples:
franchising, wholesaler-sponsored voluntary groups, and retailer-
cooperatives.

In the industrial market, attempts such as these at integrated channel

management and control are much more recent and somewhat obscure,
both to practitioners and academicians. It is therefore the purpose of this
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