Meaning of Horizontal Marketing System
Horizontal Marketing System is a system in which two or more businesses that are at same level join hands to carry out activities together for attaining economies of scale. In simple terms, it is a merger or collaboration in between the companies that are unrelated to one another for exploiting the opportunities in market. Horizontal marketing system is more common to companies that have lack of capital, production techniques, human resources and marketing programmes and are afraid of incurring high losses. This marketing system enable companies in overcoming all such limitations by combining their resources that enables them in maximizing their profits. Companies generally join hands with big brands in the form of joint venture that may be temporary or permanent for surviving in extensive market competition. In recent times, horizontal market system has gained much popularity in market as every business want to attain a good image for generating large profits.
Types of Horizontal Marketing System
Collaboration under this market system takes place in following ways: –
- Two or more Manufacturers- This collaboration is made with the objective of efficient utilization of all scarce resources.
- Two or more Wholesalers- It is done with the motive of covering a wider area for distributing goods and services.
- Two or more Retailers- Retails collaborates with one another for providing products in a particular area in bulk quantities.
Example of Horizontal Marketing System
- Johnson and Johnson, a reputed healthcare company has joined hands with Google. The collaboration is done with the aim of having a robotic-assisted surgical platform. It will enable in enhancing the overall quality of health-care services by integration of advanced technologies.
- Nike and Apple, both of these big brand have associated with each other for producing such as advanced footwear of Nike+ in which apple iPod can be connected. Shoe will play music and along with it display all information such as calories burned, distance covered and heart pace on iPod screen.
Therefore, Horizontal marketing system enables two or more companies by joining with each other to capitalize on expertise of each other facilitating in capturing a greater share in market. It enables business in reducing their overall cost by attaining economies of scale which helps in maximizing profit.