Introduction
As a new business owner, brainstorming and coming up with new business ideas is usually full of eagerness and so much anticipation. So many ideas and thoughts start gathering in your mind during the early stage. You are enthusiastic about the next stage, and that is bringing your new business idea to reality. But as you begin to come nearer to convert that great business idea into reality, you then have to modify and make improvements on your ideas.
You start to find a way to develop and evolve your idea into maturity. Come up with a plan of action and effective strategies to further advance and promote your business successfully. You may consider narrowing your business to a vertical market as part of that modifying process. In this article, we will take a broad look at what vertical markets mean. You will learn all about verticals as a beginner, regardless of your exact field.
Verticals Demystified
The term verticals is used to describe companies that cater to the specific needs of a specific customer or industry. A vertical market simply means businesses that share a similarity, naturally a tailored niche market. Any market that has a particular industry it is related to is known as a Vertical Market. The vertical industry is defined, fixed and concise.
Businesses that are operating in a vertical market might just sell a specific product or services. Their products may be one particular one or more than one. This means there are cases where a company operating in a vertical market sells on a broader basis. Verticals are specifically targeted and narrowed down to a particular group of customers. Any business under this umbrella is customarily appealing and attractive to a certain business niche.
Vertical Market Examples
Let us see a list of some vertical market examples.
- Insurance
- Fashion and luxury
- Hospitals
- Baby products
- Banking
- Children products- for example toys
- Health and Wellness
- Real estate
- Transportation
- Home appliances
- Government
- Fitness and sports
- Skincare and Beauty products
- Electronic products for consumers
A more specific market example
Outside the examples of broad vertical markets listed above, verticals can also be tailored more to a specific audience or niche. A typical case study for this is a grocery store. In a few cases, there could be a very specific market which results in a distinctive market in isolation under the verticals. In general, nonetheless, it is possible for different industries to include so many vertical markets with some parts intersecting.
Walmart may be categorized as a business under the horizontal market. Walmart attends to the needs of almost all market demographics. They also collaborate with different categories of retailers. Let us compare with Whole Foods. Whole Foods specializes in grocery products made from organic materials. In this case, Whole Food deals majorly with consumers and wholesalers who prefer buying groceries made from organic materials. This means Whole Foods has its market operating under the organic products verticals.
Businesses under the organic products verticals have their market standard placed on a particular point and also creates a fixed environment for their market. Walmart, on the other hand, serves a wider range of audience, including suppliers and wholesalers. This will in turn lead to a more broad and varied business activities in the market.
What is Niche Marketing?
Niche marketing can be described as a marketing strategy that is employed to target a particular segment of the market population. The term is used to explain when a business narrows all its marketing strategy towards a particular well defined group of the market population. It is important to note that the term “niche” is generated by smart and outstanding techniques used in product marketing. It also comes by knowing exactly what your audience or customers want and finding a way to satisfy their wants.
When as a business, you are able to identify the needs of your customers, then you will be able to come up with a means to satisfy them. You try to provide a better solution to the stated challenges, one that has not been done by other businesses.
Vertical vs Horizontal Market
Horizontal market describes a market that is found in a widespread industry. This means that all businesses that are in a position of selling to multiple industries are categorized under the horizontal market. Any business that runs in a horizontal market will be having its sellers and buyers from different sectors across the economy.
On the other hand, a vertical market describes a market with a specified industry. It simply means that any business that has a particular customer it sells to, is classified under the verticals. A vertical market targets the need of a specific set of customers in a specific niche. All businesses that are in a position of selling to a designated market are all classified under the vertical market.
All types of business which operate within the horizontal market will have a wide variety of different customers. This simply explains the versatility of their products since it is capable of meeting the different needs of a large group of audience or customers. While a vertical market specializes in the sale of certain products in a particular area or niche, a horizontal market focuses on a wide range of customer categories which cut across different platforms.
For Example
A typical example of a business in the horizontal market will be office supplies. The office supplies market sells its products to all kinds of offices in different industries. A medical laboratory equipment market will be categorized as being under the verticals because only medical laboratories purchase supplies from this market. The coffee market will also be another eminent example since various people from around the world take coffee. These people of course cut across different industries.
Now let us take another broader scenario example. Company A is a leather brand that sells shoes, belts, bags and other leather based products. This means company A sells its products in a vertical market. Now, on the other hand, there is company B, who not only sells leather based products, but also sells leather as part of its products. However, you can also get so many other products covering a wide variety of markets at company B while company A only sells leather based products.
The above scenario clearly shows that company B operates in a horizontal market. Coming from a customer’s perspective, company B may be preferred to offer a more suitable and arguably a more economical option where they can buy leather and leather based products. But if a customer wants the best leather based products produced with high quality materials, the customer is most likely to choose company A over company B.
Verticals and Horizontals combination
It is possible for companies to function under both the verticals and horizontal markets. They can carry out their operations under these two markets at the same time. Assume a business has a general product across a wide range of industries. It may then also have a personalized product specific to a particular industry. This specialized product may have some industry-specific components that are designed for the other industry. These added industry-specific components do not add any advantage to another business operating in another industry.
From the illustration given above, the general product spanning across a wide range of industries is performing in a horizontal market. On the other hand, the personalized product that is tailored to a particular industry is classified under verticals.