What is a Vertical Market?

Vertical markets refer to companies that specialize in selling specific products to targeted audiences. Rather than selling multiple items to different sectors, they focus on selling a unique product to their customer base. Companies operating within vertical markets are experts in their field and offer their customers precise, targeted products and experiences.

Vertical vs. Horizontal Markets

How can you tell the difference between a vertical market and a horizontal market? Look at what they offer and who they’re selling to.

Remember, vertical markets offer specific products that address the needs of their specific audience. They’re niche and hyper-focused on whatever they specialize in.

Horizontal markets are the opposite: they offer products and services that are in high demand and can be sold to multiple audiences. They may offer multiple product versions and market to different audience segments. Because their sales and marketing are more spread out, they often have larger teams and a higher overhead cost.

Benefits of Vertical Markets

Companies operating within vertical markets have many benefits and advantages over those in horizontal markets, from cost savings to targeted marketing.

• Expertise. Because vertical markets are specialized businesses, they’re experts in their field. Sales reps know exactly what they’re selling and can answer any and every question about their product. Focusing on a single vertical allows them to grow their knowledge and ensure customers are well-equipped to use their products.
• Specific target audience. Vertical markets sell to specific audiences. They know their customer base and use ideal customer profiles while prospecting. It’s easy to determine who’s a qualified lead, which speeds up the sales cycle.
• Lower overhead costs. Companies operating within a single vertical often have smaller teams, require less marketing, and can effectively sell utilizing fewer resources. This results in lower overhead costs.
• Hyper-focused sales team. A sales team dedicated to selling a single product has the time and resources to focus on specific, targeted goals without getting distracted by other products.
• Niche marketing. Specialized products for specific audiences allow for extremely targeted, niche marketing. Sales and marketing teams need to align on their messaging. They also have the advantage of knowing exactly what they’re selling and to who.

Tips for Succeeding in a Vertical Market

1. Targeted marketing. Vertical markets should have precise customer profiles they can utilize when marketing their products. Knowing exactly who will benefit from your product allows for targeted marketing efforts. When done right, you’ll attract qualified prospects and grow your pool of potential customers.
2. Virtual selling. Every company, regardless of their market, should utilize virtual selling. More companies are moving online, and video is an invaluable tool for making connections, conducting sales calls, answering inquiries, and demoing your product in real-time.
3. Effective communication. Every sales rep must practice effective communication; those selling in vertical markets are no exception. Answer every question a prospect asks, ensure they have the necessary information to make a decision about a sale, and always follow up to ensure customer satisfaction.