Vertical, Horizontal Or Lateral...
Which Way To Market?
by Phil Phillips, PhD
Contributing Editor
phillips@chemarkconsulting.net
“A vertical market is a market in which
vendors offer goods and services specific to an industry, trade, profession, or
other group of customers with specialized needs. It is distinguished from a
horizontal market, in which vendors offer a broad range of goods and services
to a large group of customers with wide
range of needs, such as businesses as a
whole, men, women, households, or, in
the broadest horizontal market, everyone.” -Wikipedia
The single defining characteristic of the participants in a vertical market is competition within a
well-defined segment. Coatings, paints,
adhesives and sealants would be defined
as vertical markets.
a living. Everyone needs spreadsheets,
so you sell them to all types of business.
Expensive spreadsheet solutions such as
“n” dimensional pivot tables will only
appeal to companies which do advanced
statistical analysis and visualization, but
as they could be in any manufacturing
or service sector, this is still a horizontal
market. The buyers occupy a niche in it!
Lateral marketing is a work process
which, when applied to existing products or services, produces innovative new
products and services that cover needs,
uses, situations or targets not currently
covered. As a result, lateral marketing
leads to new categories or markets.
What justifies lateral marketing?
Vertical Marketing, by itself, leads to markets that are fragmented and saturated.
The goal of Lateral Marketing is to create
an entirely new market. Lateral marketing lets marketers develop an entirely new
product that finds a much wider audience.
The evolution of markets and the dynamics of competition: The effective use
of Lateral Marketing creates customers
the real impression that needs are more
than satisfied, they are hypersatisfied*.
When companies continue to segment the
market, markets will be too small to serve
profitably. The challenge in marketing today is to fight against fragmentation and
saturation. The priority must be to find
new methods to create and launch more
successful products.
Traditional Marketing Thinking
Marketing starts by studying consumer
needs and figuring out how to satisfy
them, then determining who is the market. Markets are born with a first brand
that creates the category. The first two entrants in the category usually captures 75
percent of the market. Companies continue to segment the market so it becomes
more fragmented and saturated.
Innovations Originated from Inside a
Given Market: These innovations consist of continued variations on what the
product or service is but do not intend
to modify its essence. The innovations
occur within the category in which they
compete (they assume a fixed market).
The end result is still fragmentation and
a small share of the total market.
Lateral Marketing as Complement to
Vertical Marketing: Lateral Marketing
transforming products for satisfying new
needs and situations not considered before.
It creates a new market. Lateral marketing:
works best for mature markets, creates markets from scratch, is riskier, requires greater
resources, anticipates high volume, and may
redefine mission and business focus.
Lateral marketing creates new categories in one of four ways: A lateral product
can restructure markets by creating new
categories or subcategories. It can reduce
the volume of other products within the
given market. It can sometimes generate
volume without hurting other volume. It
may take volume from other categories.
How to Apply The Lateral Marketing
Process? Be prepared to generate a displacement. Choose a product or service
you market and make sure it is one you
have difficulty competing. Break the
product into pieces using the scheme of
vertical marketing, then look for the gap
with lateral thinking: substituting, inverting, combining, exaggerating, eliminating, or reordering the product or service.
Lateral Marketing at the Market
Level: A market level contains several
dimensions where a product or service
competes: need, target, and occasion
(combination of place, time, situation,
and experience). What we are doing is
substituting one of the dimensions of the
market for another that was discarded.
Lateral Marketing at the Product Level:
There are 6 techniques: Substitution (
removing one or several elements of the product and changing it). Combination (adding
one or several elements to the product and
maintaining the rest). Inversion (saying
the contrary or adding ‘no’ to an element
of the product). Elimination (removing
an element of the product). Exaggeration
