Your marketing budget will only stretch so far, so it makes sense to focus your advertising dollars toward customers who will buy your products or services. Think that’s everyone? Think again.
Vertical Markets and Horizontal Markets
In the world of marketing, businesses can be divided into two groups:
- Those whose customers are found in horizontal markets
- Those whose customers are found in narrow, vertical markets
It’s important to figure out where your business falls—before you start expensive marketing campaigns.
What do those two terms mean?
Horizontal Markets: Everyone or nearly everyone would be likely to patronize your business because your goods and services are widely used.
Vertical Markets: Not everyone or even the majority of people would be likely to patronize your business. Your customers fall into narrow, specialized categories.
Some Examples of Horizontal Markets
|Walmart is the perfect example of a business with a horizontal market. Its stores offer millions of products, ranging from food to auto supplies to fabric to houseware. Here are a few facts about Walmart:
|Another example is AT&T. In addition to home telephone service, they offer cell phones and plans and Internet service. AT&T has a big portion of the market share already, and most people in the U.S. are prospective customers.
Some Examples of Vertical Markets
Vertical markets are much more narrow. Only a small percentage of the population would need products or services from a business using vertical marketing. However, most small businesses and many online businesses use vertical marketing.
Some examples of businesses with vertical markets:
- Pet groomers
- Soccer equipment stores
- Metal recyclers
- Wedding boutiques
- Baby boutiques
- Funeral homes
Instead of marketing to everyone, small businesses benefit by choosing a few vertical markets and marketing directly to the potential customers in those markets. For instance:
A pet groomer would want to focus marketing efforts only on people who own pets. But not all people who own pets would use a grooming service. A pet groomer might do some research and find that:
- People with particular breeds of dogs use grooming services more than others. Someone who owns a Yorkie might use a groomer once a week; someone with a labrador may never patronize a groomer.
- People in specific income ranges use grooming services. Paying for professional services such as grooming may require a higher income than average.
- People who take pets in for weekly grooming might focus even more on their furry friends than the average pet owner.
A pet groomer, then, might benefit from choosing several breeds of dogs that most need regular grooming, then purchasing an email, or address list of people who own those breeds, and sending marketing directly to those folks.
Why Focus on Vertical Markets?
Sending your advertising message to vertical market customers instead of marketing to everyone saves you time and money, and gets your message delivered to people who are interested in your goods and services.