This post is to help my readers, clients and students to get a better understanding of techniques used by large corporations to identify their markets. Here’s a simple explanation of Horizontal & Vertical marketing.

Horizontal Markets

If you use a chart (sample below) to list in across a horizontal chart a possible market niche (or ‘market segment’) that is called your ‘horizontal market’. The sample below shows horizontal markets of ‘Teachers’, ‘Small business owners’, ‘Attorneys’ and ‘Realtors’. If you had a CPA firm that offered special tax law knowledge that benefited these markets, for example,  you could then establish these categories as your horizontal markets:

Teachers  l   Small business owners  l     Attorneys   l         Realtors

Over time, the CPA firm in this example would outreach to all of these categories to develop their clientele. This example presumes the CPA aquired special knowledge to help these market segments because they had an interest in doing so – that’s when marketing becomes blissful: helping those we care about.

Vertical Markets

Using the horizontal layout, we look at narrowing the markets to create niche groups of people underneath each ‘horizontal market’. This niche marketing makes it easier to focus marketing efforts on just a few specific categories of people.

Why is that important?

With limited resources, a growing business hasn’t time or funds to outreach to everyone who might ever use  their offerings, but can develop business more quickly by narrowing their focus. The purpose of targeting a niche market is to get known to that group faster, identify the people who need your product or services, learn about the issues they face so you can better help them, build a relationship to engender the trust for them to purchase your offerings – and then to do a great job helping them! Then word will get around to others in their niche that your firm is the one qualified to help them, so you’ll build business more quickly with those referrals.

As a CPA firm in this example, the valuable offering might be that the firm has special tax training that help teachers plan for retirement, or save taxes because that firm knows some unique write offs for their vertical markets. So, for the horizontal market of “teachers” this example might define these vertical markets:

Teachers

• Local K-6 teachers
• Preschool teachers within 10 miles of your office
• Business training teachers
• Special Ed teachers

Can you see how each ‘vertical’ is a specially defined group of people you can easily target: by renting a list of their names, by conducting internet or twitter research to find them, by networking with PTA’s or school organizations to identify the names and email addresses of your target group? Once you have this specific information, you can start to communicate with them, letting them know your firm’s unique capabilities to help them.

You’ll build your vertical market list for each of your horizontal categories, over time. Depending on your resources, it is generally easier and more cost effective to outreach to your primary targeted market first, and then increase outreach to other ‘verticals’ when you have more staff, time, money or resources to expand.

Here’s an example of a vertical/horizontal plan for a CPA firm: