Definition: A Horizontal Marketing system is a form of distribution channel wherein two or more companies at the same level unrelated to each other come together to gain the economies of scale.
In other words, Horizontal marketing system is the merger of two unrelated companies who have come together to exploit the market opportunities.
Generally, this type of marketing system is followed by companies who lack in capital, human resources, production techniques, marketing programs and are afraid of incurring the huge losses. In order to overcome these limitations, the companies join hands with other companies who are big in size either in the form of joint venture –that can be temporary or permanent, or mergers to sustain in the business.
Horizontal marketing system has gained popularity in the recent times due to an immense competition in the market where everybody is striving to gain a good position in the market along with huge profits.
In this marketing system, the collaboration can be between:
- Two or more Manufacturers- With an objective of making optimum utilization of scarce resources.
- Two or more Wholesalers-With the objective of covering a larger area of the distribution of goods and services.
- Two or more Retailers- With the objective of providing bulk quantities in a particular area.
Examples of Horizontal Marketing:
- Nike and Apple have entered into a partnership, with the intent to have a Nike+ footwear in which the iPod can be connected with these shoes that will play music along with the display of information about time, distance covered, calories burned and heart pace on the screen.
- Johnson & Johnson, a health care company, have joined hands with Google, with an objective of having a robotic-assisted surgical platform. That will help in the integration of advanced technologies, thereby improving the healthcare services.
Thus, two or more companies join hands to capitalize on the expertise of each and capture a greater market share.