Back to Basics: why go vertical?

Posted on March 3, 2006 by Dave J.


Remember Dr. Seuss’s The Lorax where the Once-ler invented the Thneed? “A Thneed’s a Fine-Something-That-All-People-Need!” he told the Lorax. And the Once-ler was lucky enough to be right (at the cost of the Truffula trees).

Unfortunately, we all don’t sell products that All-People-Need. B2B marketers especially are marketing vertically. Vertical marketing refers to targeting a specific industry or application with a specific solution. (Comparable to niche marketing in B2C.)

The Basic 101 lesson from Smart Marketing Blog: A great example of vertical marketing:
“Companies are now beginning to understand that when you vertically market to a population segment you improve the focus of your efforts and messaging. For example, I have seen the Segway transporters for a while now, and always wondered why I would need one.”

The 600 level discussion:
We all thought the Segway was cool when it came out, but who would use it? They did target postal carriers initially, which was vertical, but maybe a bit misplaced. Targeting golfers is a great second try, as it reaches for a demographic that is fussy about their game and is willing to spend money on it. (In a B2B sense, the Segways would be sold to golf courses, who then rent them out.)

Vertical doesn’t always make sense in every case, but it is an important strategic decision. Sometimes its smarter to start vertical and then expand. Yesterday’s local paper featured the Speed Stacker cup-stacking game that the inventor started by selling to phys-ed teachers. This fall, Wal-mart will be carrying his cups.

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  • John McDougall

    Many of the products found on the shelves of the big box movers start out with a vertical approach, with the niche market (early adopters) creating early revenues at higher margins through a viral process (buzz). In fact most shoestring upstarts would be well served to begin their business this way. It can give smaller companies a chance to grow into the larger distributors and retailers through that demand. They can control their ad expenditure and reinvest some of the profit from the higher margin sales into the infrastructural efficiencies needed to support the larger businesses. Depending on the product, big budget operations can be better served by investing in systems that hit multiple market segments at once, but only after they have identified the need or desire from across those channels, hence the need to test the waters.

  • John McDougall

    Many of the products found on the shelves of the big box movers start out with a vertical approach, with the niche market (early adopters) creating early revenues at higher margins through a viral process (buzz). In fact most shoestring upstarts would be well served to begin their business this way. It can give smaller companies a chance to grow into the larger distributors and retailers through that demand. They can control their ad expenditure and reinvest some of the profit from the higher margin sales into the infrastructural efficiencies needed to support the larger businesses. Depending on the product, big budget operations can be better served by investing in systems that hit multiple market segments at once, but only after they have identified the need or desire from across those channels, hence the need to test the waters.