Vertical vs. Horizontal Marketing
When it comes to marketing for your business, there are two fundamentally different approaches, and focusing on one may be better suited to your business plan. Find out how vertical markets and horizontal markets differ, learn which aspects are similar, and determine which approach to marketing may be the right focus for your business’s marketing plan.
What Is a Vertical Market?
A vertical market is a set of goods or services focused on meeting the needs of one niche, service, or industry. For example, a business selling textbooks and supplies for classrooms has focused completely on the education industry and its associated range of schools. Another example is a business that produces professional grade table saws. That business has chosen to focus exclusively on the construction and home handyman niches.
Often, businesses focusing on vertical marketing appeal to other businesses in that industry. They can choose to widen their vertical target by offering more items in their industry of focus, or building control over steps in the production process. This may mean producing some of the components required to manufacture their original product as well.
What Is a Horizontal Market?
By contrast a horizontal market is a set of goods or services focused on meeting the needs of numerous individuals across several industries or markets. For example, a paper goods supplier can sell to a number of different industries as well as local consumers needing paper for home printers. Another example is a business providing security services; stores, schools, banks, and many more business types across several industries have a need for security officers, and a business that provides them would have a horizontal market.
Horizontal market businesses would not be likely to sell vertically to other businesses of the same type, since other paper suppliers do not typically have a need for outside product and other security firms do not typically have a need for security. However, they may choose to expand horizontally and offer services to more types of industries.
Which Approach Is Right for Your Company’s Growth?
Both markets offer room for expansion. As mentioned, you can expand your business vertically by increasing focus into a specific niche or looking to see how you can offer services or products to other businesses in the same industry. A common theme in expansion seems to be: “always expand your vertical.” Your business is already in that particular niche, has made connections, and built clientele, so without spending more marketing dollars, you may be able to increase revenue.
Vertical expansion is digging deeper into the niche market by offering more services to that market and gaining a greater market share. This is often done by building new products, or acquiring part of the supply chain, as Salesforce did with ExactTarget (the email marketing software that recently acquired Pardot, thus also being absorbed into the Salesforce suite). [Learn more about Salesforce acquisitions here.]
Horizontal expansion, however, is purported to be easier. Offering the same set of products to new industries requires no new manufacturing expenses and may lead to dominating the market for your product or service. Your business may also be able to partner with other businesses to reduce competition or seek joint opportunities. In addition, you can market your product or service to a general audience, increasing the types of products you can offer existing customers.
Example: You offer a writing service to fishing and fishing-related businesses. Horizontal expansion would be to offer your service to related industries, such as hunting, conservation, wildlife and traditions, as this Outdoor writer has.
Chances are your business has potential to grow in both horizontal and vertical markets. Reflect on the products or services you offer and compare the potential of offering them to businesses or individuals within your industry or more products across a wider range of industries.
Whether you’re looking to expand your marketing horizontally or vertically, Master Web Creations can help you gain visibility and increase your conversion rate. Contact us for more information.