Directorate of distance education

Channel Arrangements: Dependent
Under this arrangement a channel member feels tied to one or more 
members of the distribution channel. Sometimes referred to as “vertical 
marketing systems” this approach makes it more difficult for an individual 
member to make changes to how products are distributed. However, the 
dependent approach provides much more stability and consistency since 
members are united in their goals. The dependent channel arrangement 
can be broken down into three types:

---

Notes
91
➢
Corporate
– Under this arrangement a supplier operates its own 
distribution system in a manner that produces an integrated 
channel. This occurs most frequently in the retail industry where 
a supplier operates a chain of retail stores. Starbucks is a company 
that does this. They import and process coffee and then sell it under 
their own brand name in their own stores. It should be mentioned 
that Starbucks also distributes their products in other ways, such as 
through grocery stores and mail order. As we will see in more detail 
later, Starbucks is using a multi-channel structure to market their 
products. 
➢
Contractual
– Under this arrangement a legal document obligates 
members to agree on how a product is distributed. Often times the 
agreement specifically spells out which activities each member is 
permitted to perform or not perform. This type of arrangement can 
occur in several formats including: 
➢
Wholesaler-sponsored
– where a wholesaler brings together and 
manages many independent retailers including having the retailers 
use the same name 
➢
Retailer-sponsored
– this format also brings together retailers but 
the retailers are responsible for managing the relationship 
➢