Educational program: What is vertical marketing?

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    Vertical marketing is a system of group efforts of the main members of distribution channels to meet the needs of consumers. Fast food is an example of a vertical marketing system where livestock producers, meat packers and retailers join forces to maximize the benefit for all. Vertical marketing can be very beneficial by promoting brand awareness and lowering customer value. Conversely, weaknesses in a vertical marketing system arise when executives across the vertical spectrum cannot work together effectively to promote a brand.

    вертикальный маркетинг

    Vertical Marketing Concept

    In a vertical marketing system, all participants in the production chain work together as a single group to advertise and sell the product to consumers. This usually includes the manufacturer, wholesaler and retailer, but may include many other players depending on the industry. In non-vertical marketing campaigns, each member of the network operates as an independent business seeking to maximize profits. The concept of vertical marketing excludes competition and unites all participants together with a single goal.

    Vertical Marketing Strategies

    Strategies for implementing a vertical marketing system depend in part on the nature of the industry and its consumers. Certain principles apply to all vertical marketing strategies, starting with consumer research and market analysis. Once the audience is understood, companies will be able to reach consumers directly through email, social media, and more. Vertical marketing covers many forms, including a managed marketing system where one company controls all participants. A contract marketing system is one in which each company has its own autonomy but is contractually required to contribute to marketing for the best interests of the group.

    вертикальная система маркетинга

    Advantages and disadvantages of vertical marketing

    Benefits of Vertical Marketing

    Brand recognition is one of the main benefits of vertical marketing as consumers see the same brand, image or logo being sold by multiple marketers, resulting in sustainable brand loyalty. Another advantage is that with all the participants involved in all stages of development, it is easier to identify and isolate problem areas, visualize the whole picture and improve the effectiveness of the marketing campaign.

    Disadvantages of Vertical Marketing

    In the concept of vertical marketing, all participants in production and sales work closely together with the ultimate goal of maximizing profits. This means that all participants must agree on a marketing strategy that often leads to conflict and clash of personalities. Many experts suggest building close relationships with members of the vertical chain prior to entering into a marketing agreement to ensure that all members can work together effectively to promote the brand.

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