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Vertical Marketplace

What Is Vertical Marketplace?

Vertical marketplaces are special types of markets where all players, including businesses and customers, are unified around a specific niche. Sellers in this setting usually cater to the needs of clients within that niche and don’t branch out to serve broader target audiences.

What Is The Difference Between Vertical And Horizontal Marketplace?

Unlike a vertical market, horizontal marketplaces target a broader customer base in different segments of the economy. Typically, these market settings sell literally everything that is in demand, from software products to tangible items.

Here are the differences between these two marketplaces.

Vertical Marketplace

  • Businesses focus on one industry niche;
  • Minimal target audience;
  • Marketing strategies focus on one direction;
  • Specialization defines competition.

Horizontal Marketplace

  • Businesses target diverse industries;
  • Broader target audience;
  • Multifaceted marketing and advertising strategies;
  • Economies of scale define competition.

How Does Vertical Marketplace Work?

A vertical marketing system technically works to the benefit of the vendor in question, given that they target specific audiences with tailored campaigns. The fact that this system includes players with unifying characteristics doesn’t mean that there is a limited number of customers to serve.

In this approach, consumers usually have higher bargaining power, given that businesses typically rely on a narrow set of customers that they serve.

What Are The Advantages Of A Vertical Market?

For potential business owners that aren’t sure about adopting a vertical or horizontal marketplace, the first option comes with various benefits you wouldn’t want to overlook. These advantages include:

  • Greater profits at low operating costs when it comes to marketing and advertising;
  • In-depth insights into product performance to determine whether your marketing strategies are paying off;
  • The system works with all mainstream marketing channels, such as television and print media.

What Are Success Factors For Vertical Market?

Here are some of the factors that will help you create a successful company vertical marketplace:

  • Identification of a lucrative niche with unfulfilled customer needs;
  • Becoming an industry expert on a specific niche;
  • In-depth research on the competition to know how the market works;
  • Geographical expansion to diversify revenue streams.
RELATED TERMS

Frequently Asked Questions About Vertical Marketplace

What are 3 types of marketplaces?

They include:

  • Business-to-business (B2B);
  • Business-to-consumer (B2C);
  • Peer-to-peer (P2P).

What is an example of a successful vertical marketplace?

A successful vertical eCommerce marketplace is Uber, that solely targets online customers that want to move from one place to another across all leading cities in the world.

What are disadvantages of vertical marketplace?

The disadvantages of this marketplace system include:

  • Limited customer reach due to focus on a specific niche;
  • It takes longer to generate sufficient sales—new players may be out of business before they know it;
  • Some niche trends shift dramatically, alongside the clientele.

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