What is vertical marketing? Statistics and Guide

Have you ever wondered how to optimize your business? Try vertical marketing to increase your business turnover. There are many inefficiencies in the normal mode of marketing. The producer, distributor, and retailer need to be in sync, which is rarely the case. Instead, you can focus on vertical marketing. In vertical marketing, you can control the entire supply chain and better yet, keep more profits.

What is vertical marketing?

what is vertical marketing

But, what is vertical marketing? To understand vertical marketing, let’s take an example; let’s assume that you’re in the garment industry and want to increase your sales but you as a manufacturer of garments are not able to attract new customers. So you offer your services to company A and in exchange, you get a contract for a certain sum of money. This was the old method of production.

In the more modern technique, you, the owner of the garment factory decide to specialize in a specific garment manufactured by company A. Instead of selling your services normally, you agree to sell your garments to company A exclusively and promise to maintain their standards of safety and quality. This is how a vertical market works.

In a sense, company A has all the control over the production of their garments, and at the same time, they don’t need to take the effort to establish their own factories. This is a win-win for both parties involved. Usually, a company will break down its supply chain into different parts and give out contracts for each of them separately, but in vertical marketing, the entire process is overseen by the company themselves while the parts of the process are carried out by third party companies.

A vertical market is basically marketing the product to a specific customer based on their purchase history for example google optimizes its website www.google.com  on the basis of buying history of the people to show relevant ads to them. 

Why vertical marketing?

what is vertical marketing

More Security

As a business model, vertical marketing makes more sense since this way you have more security. You will only manufacture if the manufacturers approve. You do not need to worry about inventory issues and problems relating to products not sold.

All you need to do is get a deal, if you get the deal you know for sure that everything that you make is going to get sold. You don’t need to think about all the logistics involved in setting the rest of the infrastructure up. You don’t need a storefront or any sort of investment required to market to the general public.

Instead, you’ll be marketing to executives from big firms and companies. This is much easier than marketing to the general public since you’ll most probably have a handful of companies that you can serve and they only have a handful of manufacturers who can work according to their specifications. This way you can almost guarantee yourself a contract with one of the companies.

Attention to detail

Instead of having to manage all the working and overhead of a company, you can focus on just one aspect of it, which means that you can get more hands-on and start optimizing the process down to the last cog.

Over time as you build a reputation for yourself, you get more and more experience in the field, making you somewhat of a guru in that field. Along with being a guru in the topic, you start figuring out the ins and outs of the business and are in a much better position to leverage your skills.

Specialization

You can realize how specialized you have to be to land one of these gigs. This allows you to reduce your time experimenting and researching. Since you are going to work in a more specialized manner, you can charge higher.

You can pick up a stream in which you are interested instead of doing everything that comes your way.

The scope for it is also way higher since there are just a handful of companies or services that would be competing with you.

Also, business to business aka B2B marketing is much easier and requires less effort since your customer is already educated about the profits of vertical marketing and knows the pitfalls in the industry.

Business-to-business marketing can be as simple as an email marketing campaign. As we’ve discussed in the email marketing article already, most professionals open about 75% of all emails received which means that people are more likely to notice you, and considering how cheap email marketing is, you won’t even need to spend much on marketing.

How to do vertical marketing

Now that you know why vertical marketing is important let’s explore how you can approach vertical marketing. Vertical marketing although cheaper can be a deviously difficult task to get right. You don’t want to waste people’s time which means, you’re going to have to figure out the golden zone between too much information and too little information.

After reading this if you have decided to go for this Marketing strategy then you must obviously be wondering where to start from? You cannot make a separate version of the product for different people according to their needs hence you must ask yourself two basic questions; they are

  • For which markets do I have to make special contents?
  • How different the contents must be for each of the markets?

Once, you have got answers to these questions you can approach the vertical marketing strategy in a step-wise manner. Some of the steps have been listed below;

Step 1- Research

As always, research is the first step in any process. You need to research all kinds of things like your customer base, the companies you can apply to, the skills and portfolio required to apply for the position.

Research available opportunities, research ways to get the tone of your email just right. You want to be especially careful about the language you end up using because even small things can make a huge impact and in a small tight-knit industry you want to maintain a good reputation.

You should also search for ways to branch out of your initial goal. Your initial goal might help you land your first gig or might help drive sales initially but eventually you need to branch out to different avenues so that you can reduce your risk and also increase profits.

You should research more about your competition, and try to market yourself in the exact areas where the other companies fail to do so.

Try getting as much information as you can about the company, try making the pitch as personal as possible while bringing professional. Knowing your numbers also helps a ton. Don’t fudge your numbers and state what you have actually achieved.

Step 2- Pitch

Once you gather the necessary information you should move on to the pitch, you cannot do vertical marketing without pitches, your audience is the corporate staff sitting in the offices all across the world, you need to be able to connect with them on one on one basis.

There might be a lot of people who can do the same thing as you, so adding a personal flair to it really helps out in the longer run. Make the pitches as personal as possible and try using numbers, not too many of them but just enough to convince the person sitting across the table.

Play your trump cards strategically and make sure that you have a watertight presentation, don’t use over-the-top, time-consuming slides, and use minimal text and graphics to relay the information.

The pitch is essentially the entire campaign for you. Your presentation is what really seals the deal. In case you’re reusing presentations, don’t forget to erase the names off of the slides, this has cost a lot of companies a fortune.

Step 3- Marketing

The reason why we put marketing, in the end, is because it is one of the most preliminary steps in vertical marketing and no matter how many companies approach you, you need to continue marketing.

Marketing can increase your brand value. You can use targeted ads to target the exact demographic that you know can use these services. These targeted ads will mostly include email advertisements, these will work wonders for you in this field.

You should really work towards giving nothing more than informational content, most of the people who can use your services are going to most probably either find you through emails or word of mouth. The latter cannot be trusted upon, which is why you need to run email ads.

You can even hire a specialized marketing team to help you with marketing. This although might eat into your profits in case you’re a small company.

Be careful to not incite anyone and always keep an eye on the future of the industry since most industries are right now undergoing huge changes in the new digital world, you might want to even get stalls at various seminars and meetings.

Disadvantages of vertical marketing

what is vertical marketing

After reading about why we need vertical marketing, this idea sounds great and compelling but depending upon your business situation vertical marketing can sometimes be frustrating as well

  • If it actually works, then every stakeholder that is a part of the chain will want things to turn in his way, which means they will always be wanting their own and that is just not going to last.
  • The truth is that there is not much difference between general content marketing and vertical marketing in terms of time, money and efforts.
  • The biggest disadvantage in vertical marketing is that there are high chances of content clashing.
  • It can make the content distribution complex, this is quite understandable as you have to make different versions of the contents and manage them and a lot them for different audiences.

So these are some prominent cons of vertical marketing that can also insist you drop the idea down if you are not ready for such obstacles.

Things to remember while doing vertical marketing!

Let’s look at some of the key takeaways and points that one must remember while going for vertical marketing.

  • Try not to specialize too much. If in case the company fails, you need to diversify and pitch new companies. Vertical marketing in ways is very similar to niche marketing.
  • In most cases, you end up being underpaid since the main contractor send the work down to a smaller contractor and so on and so forth until the point where people might be running sweatshops on your behalf.
  • Consider the work ethic of the companies as well when considering which companies to pitch to, toxic workplaces usually mean lower pay and higher load which is not ideal.
  • Maintain your contacts from the industry, this is what comes in handy at the end of the day.

Conclusion

The vertical marketing business model is no doubt a secure and more enhanced business model especially when it comes to B2B Marketing. If well researched, and initiated it can actually provide benefit to your business, also you must know what your target audience is and how to decide the target audience.

Vertical marketing strategy has some cons as well. You must be ready to face obstacles and deal with them if you have decided to go for them. Initially, the task is complex but once done it gets manageable and benefits your company.

FAQs

What is the difference between traditional marketing and vertical marketing

In traditional marketing, the companies have relatively low control over their supply chain since the different parts of the chain are under different companies whereas, in vertical marketing, the companies have the most control over the supply chain since they issue contracts to the middlemen.

Can I follow traditional as well as vertical marketing?

Yes, you can follow both, make sure that both the products are different.

What are the advantages of vertical marketing?

You can reduce operational costs and risk as well while centralizing the command chain.

How many companies can I target with vertical marketing?

For most cases, the number varies between one and five.

What kind of marketing do I need to use to market my product vertically?

You might end up using email marketing very frequently.

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