Posted in Finance, Accounting and Economics Terms, Total Reads: 401
Definition: Horizontal Market
A market which is so diversified that the products are able to fulfil the needs of more than one industry.From the point of view of customers a horizontal market is one where all the consumers of the product regardless of the industry they are in use the product for the same purpose. The good/service in the horizontal market is in great demand across industries; hence although the risk for the product as such is low, however the competition within the industry for the product is high.
To make the definition of horizontal market , it is important to understand the difference between horizontal and vertical market :
• Vertical Market
o In a vertical market all the customers of the product lie in the same industry; yet they might be at various levels of the value chain.
o Example: Noodle.com is an educational search engine which caters to the needs of all the levels of the educational value chain from kindergarten, to secondary education to professional courses and Ivy League colleges. Hence one industry many users.
• Horizontal Market
o In a Horizontal market the users of the product are spread across industries who use the product for the same thing across industries.
o Example: Google.com is a generic search engine which can be used across industries be it education, healthcare, manufacturing pharmaceuticals etc.
The strategy of Google is to get maximum customers as a generic search engine while noodle argues that they can perform better than Google in the education sector.
Another Example of Horizontal market product is: Spreadsheets and word processors; on the other hand construction industry calculators and scriptwriting programs are vertically-focused.