What Is a Vertical Market?

What Is a Vertical Market?

A vertical market is a niche market where a company offers a product or service to a very specific type of customer. It is a marketplace in which sellers provide products and services specific to an industry, trade, profession, or other groups of customers with special needs. Vertical market companies are tied to the specific needs of that market and generally do not serve a broad market. As such, vertical markets generally have their own set of business values. This is differentiated from a horizontal market, where sellers provide a wide range of essential customers, such as an entire business, male, female, family, or a certain specific product and service or, in the broader horizontal market, everyone. There may be high barriers to entering their new company.

The global business market offers enormous opportunities for all types of businesses. This market providers focus on specific products and services that meet the needs of niche customer groups. Participants in activities within a given vertical market are usually the same or the same in order to solve a national problem. Vertical market operators may target a specific segment where they have comparative advantages. As these operators grow within specific vertical market environments, they also gain expertise in their market trends, terminology, regulations and competition levels. Healthcare is such a highly regulated industry. Health care organizations must ensure that they comply with law enforcement requirements, including health insurance portability and accountability legislation (HIPA) and health and information technology related to economic and clinical health laws, otherwise they are sometimes at risk of fat penalties. Overall, a company that specializes in a vertical field can provide targeted insights and specialized services to clients over the long term, becoming an integral component of their business. The only defining feature of participants in the vertical market is competition within a well-defined category.

A company operating or looking to work in the vertical market generally has to adopt a slightly different strategy than a horizontal market company. Horizontal market participants often try to adequately meet the diverse needs of vertical markets in order to have a presence in the vertical market. Their similar products/services are less expensive than a fit but less expensive than specialized, vertical participant solutions. Regardless, they want to target a narrow market that has its own idiosyncrasy. Vertical Market Software is software that addresses the needs of a given business within the target vertical market.

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