Vertical Marketing Systems at Starbucks Starbucks' preferred type of vertical marketing system in the United States is a corporate VMS. However, in international markets, Starbucks prefers to engage in licensing agreements, which are a specific form of franchising. "Service-sponsored franchise systems" exist when franchisors license individuals or firms to dispense a service under a trade name and specific guidelines. A franchise agreement is a contractual VMS. Further international expansion must consider the pros and cons of each strategic approach. Traditional marketing channels represent a loosely knit network of independent producers and intermediaries brought together to distribute goods and services. However, other channel arrangements exist for the purpose of improving efficiency in performing channel functions and achieving greater marketing effectiveness. These arrangements are called vertical marketing systems and channel partnerships. Vertical marketing systems are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. Read the case below and answer the questions that follow. Starbucks' preferred type of vertical marketing system (VMS) in North America is company-operated known as a corporate VMS. While Starbucks emphatically states that it does not "franchise," the license agreements it enters into can be classified as "service-sponsored franchise systems," where a company licenses individuals or firms such as Target or Kroger to dispense a service under a trade name and specific guidelines. These license agreements exist primarily for Starbucks in grocery stores, airports, hospitals, and on college campuses. In international markets, Starbucks often takes a different approach in order to expand more rapidly. The majority of the company's over 29,000 international stores are operated under license agreements (contractual VMS). In the South American country of Chile, however, all of Starbucks' initial 30 stores are company operated. Suppose that Starbucks wants to expand further in Chile. To make this strategic decision, suppose that Starbucks has concerns about keeping channel conflict to a minimum. It wants to ensure that all coffee used in every one of its stores is imported, roasted coffee from Starbucks. Also, the company wants to make all the decisions about store dcor, paper goods used, pastries sold, and equipment and furnishings used to ensure that the Starbucks experience is delivered intact. This activity is important because firms must balance the goal of expanding more rapidly with the desire to maintain control over its brand and offerings. The goal of this activity is to determine whether a Starbucks should use a contractual VMS or a corporate VMS as it expands its presence in Chile. Using the information from the case above, answer the following questions to analyze whether Starbucks use licensing (contractual VMSs) to expand more rapidly or continue to focus on company-operated stores (corporate VMSs).

Starbucks wants to make sure that ________ has/have the most brand control.

Multiple Choice

licensed Starbucks owners

the Starbucks corporation

franchisees