Vertical and Horizontal Marketing Systems: Examples and Differences

This article explains the concept of vertical and horizontal marketing systems. It highlights how companies join hands to exploit market opportunities. The article provides examples of both systems and discusses the differences between them.

MARKETING

Contents
Vertical Marketing Systems............................................................................................................1
Examples......................................................................................................................................1
Horizontal marketing systems.........................................................................................................1
Examples......................................................................................................................................2
References........................................................................................................................................2

Vertical Marketing Systems
The vertical marketing systems is a system where the members of a distribution channel,
producer or the wholesaler works on unified groups to meet the needs of consumer. The
conventional marketing systems highlights about focusing on different factors to maximize the
profits. The efforts of the one channel member is to maximize the profits when it comes at the
expense of the other members. Hence, there is a need to address the problem where the
companies are forming the vertical marketing system (Deng, Kahn, Unnava & lee, 2016). The
concept s related to the vertical integration where the company expands its operations through
assuming the activities of the next linkage in the distribution chain. The corporate contractual
and the administered marketing system highlights on the way where manufacturers wok on
product ranges and then sell the products through authorized stores only.
Examples
The example is when the auto part supplier might tend to practice about the forward integration
through purchasing the retail outlet for selling its products. In the same way, the auto parts
supplier need to practice about the backward integration by purchasing steel plan for obtaining
the raw materials which are important for the product manufacturing (Fang, Lee, Palmatier, & Guo,
2016) . The big brands like ITC, Procter & Gamble etc. that commands a higher level of
cooperation from the retailers which is related to the terms of display, shelf spacing and the
pricing policies and the promotional schemes.
Horizontal marketing systems
The horizontal marketing system is about the distribution channel arrangement where the
organizations at the same level join for marketing purposes to capitalize on new and different
opportunities. This is about the form of distributional channel where the companies at the same
level are unrelated to each other and tend to exploit the market opportunities (Crespo, Griffith &
Lages, 2014). The marketing system is followed by the companies which lack capital, human
resources and the techniques of production. They are afraid of the huge losses and they need to
overcome the limitations with joining hands with other companies who are big in size. This can
be either in the form of joint venture that might be temporary or permanent or the mergers need
to sustain in business (Shavitt & Cho, 2016). The system has been able to gain the popularity due
to the immense competition with striving a gain for good positioning with huge profits.

Examples
The example is where the bank and the supermarket have to agree that the bank is located at the
location of a supermarket. The example is Nike and Apple who have entered into a partnership
with the intent that Nike & Footwear can have a connection to iPod. The shoes will be playing
the music and display information about the time, and the distance that is covered. It will also
help in detecting the calories burned and analyzing the heart pace on the screen.
References
Crespo, C. F., Griffith, D. A., & Lages, L. F. (2014). The performance effects of vertical and
horizontal subsidiary knowledge outflows in multinational corporations. International
Business Review, 23(5), 993-1007.
Deng, X., Kahn, B. E., Unnava, H. R., & Lee, H. (2016). A “wide” variety: Effects of horizontal
versus vertical display on assortment processing, perceived variety, and choice. Journal
of Marketing Research, 53(5), 682-698.
Fang, E., Lee, J., Palmatier, R., & Guo, Z. (2016). Understanding the effects of plural marketing
structures on alliance performance. Journal of Marketing Research, 53(4), 628-645.
Shavitt, S., & Cho, H. (2016). Culture and consumer behavior: the role of horizontal and vertical
cultural factors. Current opinion in psychology, 8, 149-154.