Over time, members of the supply chain often formalize their relationship by entering into contracts that dictate various terms, such as how much walmart will buy from p& g each month and at what price, as well as the penalties for late deliveries. this contract is an example of a(n)

contractual vertical marketing system

Explanation:

In the supply chain management system there is this Contractual Vertical Marketing System under which there is this vertical relationship of marketing in between two positions of the supply chain.

Here also the Walmart is the one which shall supply goods at the last to consumers and that the company P&G shall supply goods to Walmart. This is the chain. Now this is a vertical chain, as from producer to seller to consumer.

And since it is a marketing chain with contractual clauses which include all the penalties also.

This contract is an example of a contractual vertical marketing system

A vertical marketing system is a system in which different levels of distribution channel come together to achieve better sales.

In a vertical marketing system, the various level of production team up to promote efficiency towards achieving greater sales than they would produce on their own.

However, the three components of vertical marketing include:

However, a contractual vertical marketing system is a marketing system in which the ownership of all the levels of production work together to promote efficiency and make greater sales. The contractual vertical marketing involves all the ownership of the levels of production, distribution, development, and marketing in a single firm.

The companies in contractual vertical marketing coordinate their strategies through a contractual agreement. This is done to prevent channel disputes that may likely come up out of individual objectives. In other words, there must be a formal agreement between the different levels of production or distributions to manage the entire process. The contractual vertical marketing enables firms to benefit from market reach and economics of scale.

However, some of the forms of contractual vertical marketing include:

Therefore, this contract is an example of a contractual vertical marketing system

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