Explore the Strategy of Horizontal Marketing
Five years ago, it might not have seemed like technology giant Apple and international coffee super-chain Starbucks had much in common. Besides occasionally seeing a few Starbucks patrons cozied in a corner with their Apple laptops, piping hot coffee and emerging technology weren't associations in the minds of most consumers. But in 2007, the two juggernaut companies formed a partnership that would mutually benefit them both, introducing new products and services into an exciting, non-caffeine-induced stratosphere of possibilities.
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What was the common ground between the two? Music. In order to maximize the reach of some of Apple’s new offerings, the company allowed Starbucks customers a unique opportunity.
The coffee chain’s customers could wirelessly browse, search for, preview, purchase, and download music files from iTunes Music Store. The music could then be uploaded onto a variety of Apple platforms that were new to market: iPod touch, iPhone, personal computers, or Mac running iTunes. By combining Apple’s leadership in digital music with the familiar Starbucks experience, the two corporations synergized a partnership to offer customers a world class digital music experience.
The benefits of the relationship were clear: Starbucks’ loyal coffee drinkers moonlit as online music consumers, helping lead to higher sales, stronger brand identification, and an increase in market share. Apple saw increases in iTunes sales thanks to the hordes of Starbucks’ loyal customers who took the time to visit, relax and enjoy a cup of coffee or two.
There is no doubt Starbucks’s tech-savvy customer base played a pivotal role in the growth of the music service. This partnership is an example of a successful horizontal marketing effort – how two companies can join forces to seek new market opportunities.. Together, Starbucks and Apple gained something greater than would have otherwise been possible if they somehow attempted this strategy independently.
While it might not have seemed practical at first, the Apple/Starbucks relationship now seems synonymous with online music sales. This approach of working across business verticals to focus on mutual audiences – a horizontal approach – can help companies in any industry reach broader audiences.
For example, companies that sell nutrition supplements, exercise equipment, or workout apparel offer very different products and yet are in the same vertical market because they target customers within the health and fitness industry. These businesses may focus on the same customers, but their products or services are unique to them and offered independently.
However, what if two or more of these fitness-based companies joined together to offer their products and share manufacturing, marketing, and sales operations? Chances are they might be able to reach a much broader audience and maximize their rewards by marketing and distributing their products together.
Cross-endorsement: Often, when two companies partner to market new products, one – or perhaps both – of the companies already have recognized names you can build on. Small companies without much brand identity can ride the coattails of a stronger brand by offering them some type of promotion for their customers, whether that is a product, coupon, etc. If the partnership involves larger companies, it might be impressive for one company to endorse the product created by the other partnering company.
Spread out the cost. Businesses located in the same areas might consider drawing customers into one location as opposed to two separate business fronts, perhaps saving overhead costs. Or perhaps a large group of businesses could chip in on a promotional brochure advertising all of the various companies’ offerings.
All it takes to form a horizontal marketing bond are two or more companies hoping to increase their customer base without increasing their marketing budget. These businesses typically offer different products that are aimed at similar clientele. In some cases, a partnering business might be a competitor whose products overlap another company’s but doesn't duplicate their offering exactly. Both companies should benefit by being able to offer a wider range of services and by pleasing clients who might otherwise have felt a need to go elsewhere. (See also Alliance Marketing)
In the 1990’s, McDonald’s and Subway began opening “express” versions of their restaurants in Wal-Mart stores. The strategy allowed the restaurants to draw customers from Wal-Mart’s store traffic while the department store was able to keep hungry customers from going elsewhere to buy food. Together, the companies formed a perfect horizontal marketing strategy that translated to greater sales for both.
The “clients” or target audience create the spark for a horizontal marketing effort. The target audience shares similar interests and demographic characteristics that the companies in the horizontal marketing partnership want to reach.
Using the Starbucks/Apple example, the type of consumer who spends a portion of their time at a Starbucks coffee shop was also a prime candidate for music downloads. In this particular instance, the audience is somewhat captive. They are technologically adept. The overwhelming majority are music fans. They have the time to invest in investigating the purchase of additional items online while they sip their coffee. Horizontal marketing efforts benefit customers by exposing them to new products they aren’t aware of and that fit their personal interests. They can make the discovery of something new while being presented with a convenient way to buy the new product.
Nearly all horizontal marketing campaigns begin with a realization. One company recognizes there is an opportunity to partner with another company in order to bring a new product to market. The companies that form the partnership must each bring an enhancement in some way to the process of marketing the product and presenting it to a larger audience, such as in the areas of production, distribution, or marketing.
Once the partnership is formed, the focus becomes the marketing effort itself. Is it best for one company to merely endorse the product offered by another company, or should the new product be presented as a joint venture? What marketing tactics are appropriate for the new product? Is social media a critical component or will in-store signage clearly communicate the reason for the partnership and the strength of what each company brings to the new offering? Those answers will vary depending on the product that is being introduced, the reputations of the companies involved, and what the goals of the campaign are.
Well-known company brands, for example, do not need to expend as much effort in educating customers about the quality of their products or the intentions of their partnership. For example, a department store chain such as Target can introduce a line of Barnes & Noble-themed gift cards with very little explanation to customers. Both brands are so widely known – and highly regarded – that the intentions of each company should be clear.
Consider that a number of Target customers shop at Barnes & Noble, and yet often can’t find the time to make a special trip to specifically hunt for new books. The ease and convenience of placing those gift cards at check-out aisles makes it the perfect horizontal marketing effort in that both companies gain from the purchase of the gift cards. Target receives a percentage of sales, and Barnes & Noble is granted access to millions of customers passing daily through Target stores.
While the strategies of horizontal marketing efforts vary depending on the products and company relationships, the background of the individuals involved in executing the strategies are consistent.
The execution of a well-thought out horizontal marketing strategy depends heavily on the details. The Marketing Coordinator employed at one of the companies involved is essentially the behind-the-scenes contact that conducts pertinent research and handles the schedule of important discussions. Typically the Marketing Coordinator sets up and handles the technical side of conference calls, provides email updates, and post-meeting summaries, and handles the distribution of any materials vital to the progression of the project to the parties involved.
At minimum, a bachelor’s degree is required for entry into the marketing field and this position in particular is required. In most advertising and marketing agencies, this is an entry-level position that is likely to require an internship at a similar company.
Still tactical in nature and yet somewhat big-picture focused, the Marketing Communications Specialist is seen as an important component to any horizontal marketing strategy. This individual possesses a number of skills critical to actually executing the tactics involved with marketing strategies. In many cases, this person is responsible for the writing and development of creative marketing strategies and communicating those concepts to team members as clearly as possible. A Marketing Communications Specialist should possess the ability to lead brainstorm meetings and get the most effort possible from other team members.
This position requires a bachelor’s degree and typically 2-3 years of professional experience in an advertising or marketing agency. Most Marketing Communications Specialists have an established track record of successfully developing effective communication strategies and managing the day-to-day execution of various marketing tactics.
Every successful marketing venture has a project or team leader. In many cases, the Marketing Communications Director steers the direction of the project. From assembling the team members and strategizing to setting a vision for the project and making the final decision on marketing tactics, the Marketing Communications Director helps guide marketing ventures to success. The individual in this position interfaces with clients regularly, and has to be a clear visionary and sharp decision-maker. The strength of a horizontal marketing initiative often lies on the vision and ability of the Marketing Communications Director to carry out the objectives put forth by the marketing team.
This position requires a bachelor’s degree and typically 3-5 years of professional experience in an advertising or marketing agency. The background of any Marketing Communications Director should include significant examples of effective marketing strategies and tactics, clear communication to clients and team members, and successful products in the market place.
No matter what aspect of a marketing career you are hoping to pursue, it’s likely to involve social media in some capacity. Social media websites such as LinkedIn are ideal forums in which to establish business relationships with possible business partners. Other venues, such as Facebook and Twitter, can help you promote your new products or even announce the partnerships that will lead to the unleashing of innovative new products to the world. This graph shows the growing reach of social media and how it can impact your horizontal marketing efforts.
A decade ago, horizontal marketing strategies were occasionally used in the market place, but they were nowhere near as common as they’ve become in today’s world of business innovation of partnership. Technology has brought the global business communities closer, and the precepts and principles that once made businesses successful change much more frequently than in the past. Only graduates well-versed in general marketing strategies and horizontal marketing efforts can establish a life-long career in this field.
Horizontal marketing approaches require a keen business eye to identify how these partnerships can be struck with other companies and what benefits can be brought to the table in the areas of manufacturing, marketing, sales, and even distribution. A school that offers programs in horizontal marketing concepts can provide students with the knowledge and the experience they need to think critically, seek out these partnerships, and assemble strategies that work in rolling out a new product created jointly.
To follow this career path, graduates must possess strong business knowledge and principles, the ability to think critically and creatively, strong organizational skills, leadership abilities, strong writing, and communication skills. At minimum, a graduate seeking to enter this field should possess a bachelor’s degree from an accredited college or university. (See also Bachelor's Degrees in Marketing)