Marketing strategies are an essential part of the growth of any business. And although it looks like an easy deal, it has many factors to consider. one has to make these strategies keep a lot of factors in mind such as the type of business, target audience, budget, etc. Marketing strategies are of two kinds, i.e., Vertical and Horizontal systems. Both of these systems have a very different way of approach. However, they give the same results.
Vertical Marketing System vs Horizontal Marketing System
The main difference between a vertical marketing system and a horizontal marketing system is that the horizontal system does not compete with each other, whereas in the vertical system, it competes. The horizontal system also focuses on a more significant audience, while the vertical system pays attention to a small audience.
A vertical marketing system is the type of marketing strategy where a team of people operates the businesses in the same industry. It generally comprises of three components, i.e., manufacturer, wholesaler, and the retailer. These three components work together to earn a significant profit.
Horizontal Marketing System is the type of marketing strategy where different businesses work on the same level. These various businesses join hands to produce the maximum profit. The horizontal system usually focuses on a greater audience.
Comparison Table Between Vertical Marketing System and Horizontal Marketing System
| Parameters of Comparison | Vertical Marketing System | Horizontal Marketing System |
| Definition | A vertical marketing system is the type of marketing strategy that operates the businesses that are in the same industry. | Horizontal Marketing System is the type of marketing strategy where all businesses work on the same level. |
| Components | Includes three components, i.e., manufacturer, wholesaler, and retailer. | It has either one of these components. |
| Audience | Vertical System focuses on the small audience. | Horizontal System focuses on a larger audience. |
| Competition | Compete among each other. | Do not compete among each other. |
| Examples | banking, real estate, hospitals, etc. | One example of the horizontal system is Johnson & Johnson and Google. |
What is Vertical Marketing System?
Marketing strategies play a crucial part in the growth of any business. Hence, it should be made to keep many factors in mind, such as the type of business, target audience, budget, etc. One such type is a vertical marketing system.
A vertical marketing system is the type of marketing strategy where a team of people operates the same industry. It generally comprises three components, i.e., manufacturer, wholesaler, and the retailer. These three components work together to earn a significant profit. And due to the factor of working together, these people establish good contact with each other.
A vertical marketing system is usually divided into three types:-
the first is the Corporate Vertical Marketing System. in this type of vertical system, only one person from the whole distribution team manages production, management, and distribution. It means that all the other members work under this particular member.
The second type is the Contractual Vertical Marketing system. in this type, all the team members work at an individual level and earn a personal profit.
And the thirds type is the Administered Vertical Marketing System. in this system, all the tasks and activities are distributed based on power and size. It means that the most potent member earns the highest profit.
What is Horizontal Marketing System?
Another type of marketing strategy is the Horizontal Marketing System that has a different approach. Horizontal Marketing System is the type of marketing strategy where the team of other businesses works on the same level. According to this system, these various businesses join hands to produce the maximum profit out of their businesses.
The Horizontal Marketing System has gained a lot of popularity these days. This strategy is mostly taken up by the businesses that lack resources, so they combine with other big companies. After which both of them work together to earn a profit.
The Horizontal Marketing System generally focuses on a broad audience. in this system, the businesses do not consider strategies to compete with each other. It orders to maximize their profits. These businesses combine all the resources such as the production resources, distribution, etc.
One example of this system is Johnson & Johnson and Google, two separate businesses that have joined hands for a robotic-assisted surgical program.
Difference Between Vertical Marketing System and Horizontal Marketing System
- Vertical Marketing System tends to operate the businesses in the same industry, whereas the Horizontal Marketing System operates the businesses that are at the same level.
- Vertical System includes three components, i.e., manufacturer, wholesaler, and retailer, whereas the Horizontal Marketing System has either one of these components.
- Vertical System focuses on the small audience while the Horizontal System focuses on the broader audience.
- Horizontal System does not support strategies to compete with one another; in contrast, the Vertical System has a small demographic due to which it competes among each other.
- Examples of Vertical systems are banking, real estate, hospitals, etc. One example of the horizontal system is Johnson & Johnson and Google. These two separate businesses have joined hands for a robotic-assisted surgical program.
Conclusion
Marketing strategies are an essential part of the growth of any business. These strategies should be made keeping a lot of factors in mind. a business gains good profits only when the strategy factors are appropriately considered like the target audience, related other companies, budget, etc.
One such type is a vertical marketing system. This system operates the businesses that are in the same industry. It generally focuses on a small audience. it consists of three components, i.e., manufacturer, wholesaler, and retailer. These components work together to gain profit.
A vertical marketing system is usually divided into three types:- Corporate Vertical Marketing System, Contractual Vertical Marketing system, and the Administered Vertical Marketing System.
Horizontal Marketing System is the type of marketing strategy where all the businesses work on the same level. The business that lack resources usually follow this system, they join hands with other businesses, and then these two work together to earn significant profits. Horizontal Marketing System pays attention to a broad audience, and this system has gained a lot of popularity in recent times.
References
- https://www.ingentaconnect.com/content/mcb/007/1989/00000023/00000007/art00004
- https://journals.sagepub.com/doi/abs/10.1177/0276146714550314