HORIZONTAL and VERTICAL MARKETING
HORIZONTAL & VERTICAL MARKETING models give us guidelines to help us to continually identify potential NEW targets to market our offering— ones we’d not considered during the TARGET MARKETING process. We utilize H & V modeling during the initial phases of product development to broaden our reach to as many as possible who may be interested in our product or service at launch. HORIZONTAL & VERTICAL MARKETING is also used as a plan B, C, D…etc., if our original offering has been developed and released by competition before we finish ours, or after launch. If our launch product, service or startup is not gaining traction— building brand awareness, and/or selling, we refer to our H & Vs for new product ideas.
Optimally, TARGET MARKETING begins wide and drills down to the individual. Similar to MARKET SEGMENTATION, H & V modeling is a technique for focusing on just two qualitatively different INDUSTRY segments to determine where our offering fits, and then identify the PEOPLE, through their job functions, who will benefit from our product or service within targeted industries.
HORIZONTAL MARKETING identifies many USERS across a wide range of industries. Consumer goods, like food, fashion, technology services, electronics, are considered Business-to-Consumer markets, because these offerings will benefit a large variety of people. Most of us have cellphones now, regardless of our job function or the industry in which we work.
HORIZONTAL MARKETING helps us to figure out what people, in which job functions, regardless of the industry they work, would benefit the MOST from our offering.
Most everyone, in any job function, likes cupcakes. But we can’t market effectively to ‘most everyone.’ To make an impact with our marketing efforts we must drill down as closely as possible to the individual. Event Planners for large corporations (considered a Business to Business market), to parents planning parties for their kids (a Business to Consumer market), anyone purchasing dessert treats en mass would be a good candidate for my cupcake bakery and delivery service.
There are only a select group of people who will be interested in my online video game, “Brain Games.” Software developers, maybe lawyers, accountants, C-level execs, will want to play, and reveal in feeling smart when they level-up. These target USERS are not industry specific— most can be found across a wide range of industries, which is why these groups are considered HORIZONTAL markets.
HORIZONTAL markets are generally business-to-consumer focused. A peer-to-peer tour guide matching system, for almost any place on Earth, like a combination of Airbnb and Uber, could be a great new FEATURE for PHP Advocates down the line. While I can market the app to travel agencies, and that would be a VERTICAL market, in this case, I’m going to market it to consumers, individual USERS from every industry, in order to populate this FEATURE with USERS, and tour guides worldwide.
VERTICAL MARKETING is specialized for a specific industry. Most consumers don’t need a $30,000 baking oven, but our cupcake maker does. In fact, the oven she has was built specifically for commercial bakeries.
Most people don’t require an expensive CAD design system, or complex image or video editing software to do their jobs. These tools are specialized for very specific job functions, in specific industries, such as Architecture and product development, to business services like marketing and graphic design.
VERTICAL markets are considered Business to Business markets— referring to people within a specific trade or industry who will benefit from our product or service, which was usually designed as a solution to meet a specific need. When projecting VERTICAL markets, consider if there are FEATURES and BENEFITS of your offering that can be focused to serve a specific industry. If so, for what industry sector, or job function, would the FEATURES of your offering serve?
Remember the three primary reasons startups fail?
1. No one productizes the offering.
2. Launch without brand and/or infrastructure to complete fulfillment.
3. Little to no R & D investment.
It is essential startup’s release upgrades, new products, services, features and benefits, every 6 months or so. Doing so keeps your offering relevant to the first adopters of your product, but also leads to additional HORIZONTAL and VERTICAL markets with each new benefit or solution released.
List 4A: Projecting HORIZONTAL markets helps us focus on finding new target markets— potential USERS our offering will benefit, across a wide range of businesses and industries.
Most Apple products can be used by everyone, in any of these market segments. Iphones to iPads, Apple devices are user-friendly technology that crosses all industries.
We’ll examine my factitious app, PHP Advocates, HORIZONTAL and VERTICAL markets in a minute. To project new targets for your offering, for launch and beyond, consider how the features of your product or service can solve a problem or add value to someone’s life or job tasks across a broad range of industries. An accountant, or IT administrator, is essential for most businesses today. How does your product serve these particular people across multiple industry sectors?
PRODUCTIZATION List 4B: Projecting VERTICAL markets, helps us find customers within specific industries and businesses. Generally products and services that solve a need for a specific industry or job task were conceived and developed for that purpose. When we consider VERTICAL markets for our offering, we have to identify how our product or service benefits a specific job function, or industry trade.
Voxx International Corp produces peripheral products for vehicles, exclusively for the automotive industry. Additional VERTICAL products could be rear-view, or side-mirror cameras, or a magnetic charging mount for your cellphone. Additional VERTICAL markets for these new products could be aftermarket auto parts and accessory stores, instead of just the car manufacturers Voxx has been targeting with their marketing efforts.
If Voxx wanted to expand into HORIZONTAL markets, they could develop a personal entertainment device, like a music player or video streaming service that can be used by many individuals across many industries, and sell it directly to consumers. For right now, however, Voxx is producing VERTICAL products, and marketing their offerings exclusively to the automotive industry.
These are some HORIZONTAL and VERTICAL markets for my factious application, PHP Advocates, that we began PRODUCTIZING in the last several videos.
A potential HORIZONTAL MARKET for PHP Advocates is tech-savvy students, looking for online classes, similar to Coursera or Udemy, that serves many people in many industries learn everything from HTML coding to marketing startups. My actual USERS will likely be 20 – 50 yrs old, gaining or updating their skills to get a job or better position. Where do I find job seekers to sell them on my e-learning platform? On LinkedIn, or Craigslist, or any job site out there.
Each of these broad HORIZONTAL markets drills down to somebody, somewhere who will benefit from using my application. PHP Advocates has legal experts, that will chat with mid-life couples considering divorce, live online, or join USERS at business meetings as a professional advocate or legal counsel, on everything from H1B Immigration visas, to assistance for entrepreneurs with NDAs, or contract negotiations.
Once I’ve identified some potential HORIZONTAL markets for my application, I’ll drill down on these broad targets, narrow them down to potential USERS, just as we did with PRODUCTIZATION Lists 2A and 2B—tranposing TARGET MARKETS into TARGETING USERS. I’ll do the same for my list of potential VERTICAL markets.
PHP Advocates can provide educators with online courses, tests and assignments that meet federal academic guidelines and standards for public education. A VERTICAL market for this particular feature of my application would be teachers. But I think I’ll start with my ‘lowest hanging fruit’ for launch, and market directly to public school district administrators, as they can supply all the teachers in their district with the benefits of academic material that meet federal standards that PHP Advocates provides.
Lawyers can use my application to hire teams of legal researchers, or paid expert witnesses for trials, like crime scientists, or psychologists. Angel investors looking to negotiate stock options, or small business owners needing NDA contracts to hire employees, are two more VERTICAL, B2B markets I can sell these particular features of my application to.
The HORIZONTAL and VERTICAL MARKETING process provides a framework to help us discover additional target markets for each particular FEATURE of our offering. Remember, DIFFERENTIATORS are the FEATURES of our product or service that provide a UNIQUE BENEFIT to the USER. Utilizing H & V modeling can help us identify our greatest DIFFERENTATOR, or Unique Value Proposition (UVP) of a particular FEATURE, and then tout that FEATURE to potential target MARKETS most likely to benefit from using it.
SLIDE (WE STARTED WITH IN H&VS)
HORIZONTAL and VERTICAL MARKETING are models to help us discover and create UNIQUE DIFFERENTIATORS— FEATURES and SOLUTIONS that will BENEFIT potential new markets. It really doesn’t matter how we label these new markets, so don’t get hung up on if a potential target audience is HORIZONTAL or VERTICAL. Use these models to help you streamline the process of targeting new MARKETS and USERS, for the launch of your offering, and beyond.
Still not sure what the difference is between H & V markets? Use these two simplified equations to discerns horizontal from vertical marketing and help you broadly identify WHO you are selling to:
HORIZONTAL targets are both B2B and B2C markets. VERTICAL targets are B2B markets.
While there are exceptions to these rules, use them as guides to understand how HORIZONTAL and VERTICAL MARKETING is generally applied in the real world.
Like all PRODUCTIZATION Lists, H & V lists, 4A and B, should be dynamic, ongoing, and added to continually throughout the life cycle of your offering.
SLIDE 4 (preview PROFITS slide)
We’ve PRODUCTIZED our IDEA into an OFFERING, by listing some of its FEATURES and BENEFITS. We’ve listed potential target MARKETS and USERS who will likely find value in our product or service. We’ve listed COMPETITORS producing similar products to ours, and DIFFERENTIATORS that make our offering great now, as well as NEW FEATURES that will keep it relevant to both HORIZONTAL and VERTICAL markets down the line. And we’ve developed an ELEVATOR PITCH to chat up our great new product or service everywhere we go, to everyone we meet.
STEP 1 of the RAF marketing method— Get Ready, and PRODUCTIZE your idea into an offering of value— is well underway. But LEAN STARTUP MARKETING is more than just actualizing ideas, it’s also marketing them for PROFIT. Video12_PROFIT MODELS is next…