Comparison between vertical and horizontal
August 12, 2009
Comparison with horizontal markets
A vertical market is a market which meets the needs of a particular industry: for example, a piece of equipment used only by semiconductormanufacturers. It is also known as a niche market.
A horizontal market is a market which meets a given need of a wide variety of industries, rather than a specific one: for example, word processingsoftware.
Vertical market software is aimed at addressing the needs of any given business within a discernable vertical market(specific industry or market). While horizontal marketsoftwarecan be useful to a wide array of industries (such as word processors or spreadsheet programs), vertical market software is developed for and customized to a specific industry’s needs.
Vertical market software is readily identifiable by the application specific graphical userinterfacewhich defines it. One example of vertical market software is point-of-salesoftware, which uses a touch screeninterface.
The activities of participants within any given vertical market are typically similar in that they aim at solving the same or similar problems. These markets are typically competitive, due to the overlapping focuses of the products and services that are provided to the customers.
The single defining characteristic of the participants in a vertical market is competition within a well-defined segment.
Horizontal marketparticipants often attempt to meet enough of the different needs of vertical markets to gain a presence in the vertical market. Their similar products/services tend to be less of a fit but also less expensive than specialized, vertical participant solutions.
Vertical market softwareis softwareaimed at addressing the needs of any given business within a discernible vertical market. An example could be software that manages services in hotels – amenities solutions.
In computer software, horizontal market software is application softwarethat is usefulness to a wide range of industries. This is the opposite of vertical market software, which has a scope of usefulness limited to few industries. Horizontal market software is also known as “productivity software.”
Examples of horizontal market software include word processors, web browsers, spreadsheet applications and generic bookkeeping applications. Since horizontal market software is developed to be used by a broad audience, is generally lacks any market-specific customizations.
In Horizontal markets two markets are horizontally related if the two goods in question are substitutes or complements in production or consumption.
Another definition of horizontal markets originated in the technology world, where horizontal markets consist of customers that share a common need that exists in many or all (vertical) industries. For example, customers that need to purchase computer security services or software exist in many (vertical) industries such as finance, healthcare, government, etc. Together, these customers constitute the security horizontal market. Other examples of horizontal markets include computer storage, accounting, desktop graphics, computer-aided design (CAD), sales force automation, and human resources. Often specialized distribution channels emerge to serve these unique horizontal markets. Customers that require computer security software or services might seek out a computer security integrator, for example.
Some common examples of vertical markets:
Food and beverage
Fast-Moving Consumer Goods (FMCG)
Mass media | Media
Oil and Gas