I am trying to determine the meaning of "Vertical Sales" and/or "Vertical Markets".

Is there a common definition for either of these?


juliahhavener's picture
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I'm pretty sure it was in a recent marketing class. I'm also fairly certain that book is packed...and with my luck I'd get it backwards!

That being said, I want to say that a vertical market is one with a fairly clearly designed consumer. If I sold bread, I might sell it direct to the consumer, to different grocery chains, and to convenience stores. If I sold a particular widget needed for a specific product's manufacture, I have a vertical market - a single consumer. I believe this may expand as much as to a single industry, but still very narrow in comparison to the bread example.

asteriskrntt1's picture

You can google vertical or horizontal markets and get a bunch of definitions.

However, it is also an "it depends" definition".

For example, Magna makes car parts. But it doesn't make them for one company (Ford, GM, Nissan etc). It has a very horizontal market (ie, broad) and provides product and services to a broad range of customers.

GM, on the other hand, provides cars, parts and accessories to mostly its franchise dealers. The dealer sell the cars, service the cars and sell after market parts and accessories to people owning GM cars. This is more of a vertical market.

tomas's picture

A Vertical market generally refers to a very specific market niche where customers have very specific and similar needs..

The opposite of a vertical market is a horizontal market, where you try to sell your product to a wide range of customers with very different needs.

Example:- you try to sell your services to every business, no matter what they do. That would a horizontal market. Alternatively, a vertical market might be if you only sell your services to real estate offices, especially where something about your product is tailored to address the specific needs of real estate agents.

kklogic's picture

If you sell widgets to the broad market - that is a horizontal.

If you target government agencies and grocery stores, those are both verticals.

TomW's picture
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I hear it once in a while in the CAD (computer aided drafting) industry.

Basic drawing programs are horizontal products. Almost anyone can use them to draw whatever they want. They are kind of generic and can be widely used.

Programs specialized for architecture, structural engineering, or manufacturing are vertical. What's the real difference? The basic drawing program lets you draw lines representing a steel beam, them place text saying how big it is. The vertical product places a 3D representation of the beam into the building and tells you whether it is strong enough and what kind of connections it needs to hold it in place. It's also about 8X as much to buy...

jhack's picture

Vertical means a specific industry: oil and gas exploration; retail banking; telecommunications equipment.


WillDuke's picture
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There seems to be a couple of different definitions going on. :) For me, when I think about the direction of my company and target markets, a vertical market is a specific industry. For instance, community banking, or medical. A horizontal market would be something more general, like small business, 5-25 employees.

The reason I care is knowing how to train my people. We do IT, so if I go into a vertical market I can get a lot more specialized knowledge about banking applications, or medical applications. In a horizontal market I can't do it. I have to stay out at Windows and Office.

With a vertical market you can be better at what you do, a specialist if you will, but with fewer potential clients.

FlatFeeKing's picture

Duke, thank you for your reply, real world examples are better than theory examples for me.

Mark's picture
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Vertical market just means one industry. Generally it means NOT selling to consumers. It means business to business sales, to one industry, like publishing, or automobiles.

A turbine engine company wouldn't compete in a vertical market, because lots of companies in many different industries buy turbine engines. But if you sell software that maximizes profits for the insurance business, you sell to a vertical market (the insurance market).