Write short notes on Horizontal and vertical marketing systems.
Answers
Horizontal Marketing
Businesses that operate in a horizontal marketing system seek to appeal to a wide demographic that’s not really niche. For example, a reseller of general office furniture is probably not going to target (sell to) other companies that specialize in office furniture. Rather, they’re going to target businesses despite the industry – whether they’re accounting firms, travel agencies, insurance agencies, etc. In other words, they’re really going after anyone who needs office furniture.
Vertical Marketing
On the other hand, businesses that operate in a vertical marketing system seek to appeal to a very niche demographic – usually, other businesses that operate within the same industry. For example, this could include a manufacturer of solar panel technology. Such a firm will likely sell their goods to solar contractors and installers. In other words, those they sell to are usually businesses that compete against one another.
What These Differences Mean
Because businesses operating in horizontal markets aren’t as likely to compete against one another, there are usually more opportunities for partnerships. However, operating in vertical markets does allow businesses to focus on appealing to specific demographics in ways that can be advantageous.
No Matter What Market You’re In, Always Expand Your Company’s Vertical
The Professional Association of Small Business Accountants recommends a number of ways to expand your company’s vertical, including the following suggestions:
Get more specific. If you’re operating horizontally, “increase focus in a specific niche of your existing customer base.”
Provide a more meaningful customer experience. This means understanding specific demographics and customizing your service to appeal to them specifically.
Look at supply chain efficiencies. Even if you’re a reseller, understanding the supply chain should give you an advantage.
By understanding vertical markets, you learn the ins and outs of your industry, therefore making yourself a respected authority. In the long run, this can only help you expand your appeal. For more information on both vertical and horizontal markets, we recommend reading PASBA’s article, Ready to change your business’s perspective?