Difference between Vertical Marketing System and Horizontal Marketing System

Many companies fall short when it comes to effective marketing strategies. Although marketing may seem like a straightforward concept on the surface, it really requires careful adaptation to fit the needs of each individual business and its intended customer base. A wide variety of approaches can be taken in an attempt to draw the most lucrative clientele. The term "marketing" here encompasses both horizontal and vertical strategies. These are all forms of marketing, yet they all approach the industry in very different ways.

What is Vertical Marketing System?

This type of marketing aims to connect with and draw in businesses operating in the same industry. The vertical marketing system consists of the producer, the wholesaler, and the retailer. The wholesaler's job is to purchase goods from the manufacturer and then sell them to retailers. They work together to maximize each other's earnings. Manufacturers of water pumps, for instance, will sell their products to both plumbing companies and individual pump installations.

The components of the vertical marketing system are as follows −

The corporate vertical marketing system is a type of supply chain management in which one company controls and oversees all stages of production and retail.
Franchises frequently use the contractual vertical marketing approach. Each component in this system functions independently while being legally integrated. Profits can be accumulated by individual effort alone.
A type of managed vertical marketing in which the influence and size of the participating companies determine how the marketing is carried out. Therefore, the dominating member dictates the behavior of the subordinate members.

What is Horizontal Marketing System?

This is a form of marketing in which businesses of a similar size and standing work together to cut costs. The businesses pool their advertising, distribution, production, and even personnel in an effort to increase profits. In spite of the increased rivalry in the sector, this advertising approach has recently gained popularity.

Participants in a horizontal marketing system may include distributors, retailers, and even the manufacturers themselves. Common examples of companies engaging in the horizontal marketing system are Johnson & Johnson and Google. These two businesses have joined forces to create a system for use in robotic surgery.

The aim of the horizontal marketing approach is to reach a wider audience than that of the more niche-focused vertical approach. One of the benefits of the approach is this. Not only does the lack of customization reduce the time needed to generate the information, but it also reduces the time needed to analyze and use the information after it has been generated.

Differences − Vertical and Horizontal Marketing System

Both are very conducive to the growth and development of enterprises. The following table highlights how a Vertical Marketing System is different from a Horizontal Marketing System −

Characteristics	Vertical Marketing System	Horizontal Marketing System
Definition	A vertical marketing system is an approach to advertising that is focused on reaching and communicating with businesses in the same industry.	In a horizontal marketing system, businesses competing on the same level as one another form an alliance to take advantage of economies of scale.
Players	There are three sorts of companies involved in a vertical marketing system: manufacturers, wholesalers, and retailers. The system's goal is to optimize earnings for the three distinct business kinds.	Distributors, retailers, and/or manufacturers might all play a role in a horizontal marketing structure.
Demographic	Companies that employ vertical marketing strategies do so because they want to focus on a certain subset of the population.	Companies that employ horizontal marketing to their advantage seek a big, general audience.
Partnership opportunities	An environment receptive to collaborations is not provided by vertical marketing systems.	More opportunities for collaboration are made available through horizontal marketing platforms.

Conclusion

A vertical marketing system is a kind of marketing that focuses on reaching other firms in the same industry or that cater to the same demographic. Alternatively, a horizontal marketing system is one in which companies operating at the same level collaborate to take advantage of economies of scale and reach out to a broad, generalized customer base.