Horizontal marketing system
|Horizontal marketing system|
Horizontal marketing system relates to situation in which two or more companies acting in different market niches combine their resources to work together in marketing their products. Some examples are banks which cooperate with insurance companies or mobile carrier and mobile phone manufacturer, who prepare common marketing campaign to sell products of both companies. In this system different companies try to cooperate to get bigger profit, or they are working together because it is not possible for the to work alone without other company which for example produce an important part which is needed to produce a good product. Now, at present time, companies need to work especially hard to remain competitive and visible in consumers eyes.
This type of marketing system allows to:
- reduce cost- cooperating with other company helps to negotiate better prices of materials or any components which are needed in production process
- better utilize resources- using knowledge and solutions of our partner provide us to create better product and help us to avoid mistakes and problems
- avoid waste- there is possibility that our partner will use materials to product different goods and it help to reduce costs
- attain better profits from selling combined products/services of both companies, for example mobile carrier and mobile phone manufacturer.
- economies of scale is also very important in horizontal marketing system. It helps us to produce more in a lower price. Economies of scale refer to reduced costs per unit that arise from increased total output of a product (A. Stolle and others 2014).
- Synergy- probably the most important part of horizontal marketing system. It is a situation when the combined actions give a better results than the same actions but done single. In a simple way, that means that 2+2=5 or even more and this is the key to a successful marketing actions (J. R. Larson 2010).
Examples of companies using horizontal marketing system
- Apple and Starbucks
Apple and Starbucks in 2007 announced music partnership. The purpose of this partnership was to allow Starbucks customers to wirelessly browse, search for, preview, buy, and download music from iTunes Music Store onto their iPod touch, iPhone, or PC or Mac running iTunes. Apple benefits were higher iTunes sales because of Starbucks loyal customers. And in other way Starbucks benefits were higher sales, increase in market share, and stronger customer loyalty.
- Smallholder producers in Zambia's maize belt
The report "Maize Market Coordination in Zambia: An Analysis of the Incentives and Obstacle to Improved Vertical and Horizontal Marketing Arrangements" made by J. Chamberlin and other authors shows that in a districts where more producers cooperate there are better benefits of their work, because for example in a group they can negotiate a better sales prices than trying to do it alone (J. Chamberlin and others 2014, s 30-32).
These 2 cases shows that companies can cooperate in a different areas and in most cases it works really good and improve both sides.
- Chamberlin, J., & Sitko, N. J., & Kuteya, A., & Lubungu, M., & Tembo, S. (2014). Maize Market Coordination in Zambia: An Analysis of the Incentives and Obstacle to Improved Vertical and Horizontal Marketing Arrangements. Indaba Agricultural Policy Research Institute (IAPRI)
- Koplyay, T., & Lloyd, D., & Jazouli, A., & Mitchell, B. (2015).The strategic marketing function in dynamic markets Polish journal of management studies.
- Kumar, M. (2001). Marketing and Distribution Channels in Bancassurance. CEO Summit of banks and insurance companies of Asia Pacific countries.
- Larson, J. R. (2010). In search of synergy in small group performance Psychology Press.
- Stolle, A., & Schmidt, R., & Jacob, K. (2014). Scale-up of organic reactions in ball mills: Process intensification with regard to energy efficiency and economy of scale. Faraday Discussions
- von Friedrichs Grängsjö, Y., & Gummesson, E. (2006). Hotel networks and social capital in destination marketing. International Journal of Service Industry Management, 17(1), 58-75.
Author: Piotr Budz