A Horizontal Marketing System (HMS) involves a strategic collaboration between companies operating at the same level within a marketing channel. This cooperative approach allows firms to pool resources, share information, and combine strengths to achieve objectives that might be difficult or impossible to achieve independently.
Definition
A Horizontal Marketing System is defined as:
“A system where companies at the same level of the marketing channel collaborate to pursue common goals, such as sharing resources or entering new markets.”
Characteristics of Horizontal Marketing Systems
- Collaboration: Firms work together instead of competing directly.
- Resource Sharing: Companies share technological, financial, and human resources.
- Common Goals: The collective effort focuses on a mutual goal such as market expansion or innovation.
- Operational Efficiency: By pooling resources, companies can reduce operational costs and increase efficiency.
Types of Horizontal Marketing Systems
Strategic Alliance
Companies form an agreement to share resources and expertise without creating a new entity. This type often involves non-binding contracts.
Joint Venture
Two or more companies create a new legal entity, sharing ownership, risks, and profits in a more formalized structure.
Co-Branding
Two brands collaborate to offer a combined product or service, leveraging each other’s strengths to enhance market appeal and competitive edge.
Examples of Horizontal Marketing Systems
Google and Samsung
Google collaborates with Samsung to enhance the Android operating system, benefiting from Samsung’s hardware expertise and market reach.
Starbucks and Barnes & Noble
Starbucks cafes located in Barnes & Noble stores provide customers with a pleasant reading and coffee-drinking environment, driving traffic and sales for both companies.
Historical Context
The evolution of the Horizontal Marketing System can be traced back to the increased globalization and technological advancements of the late 20th and early 21st centuries. Companies recognized the potential of leveraging each other’s strengths to navigate the complexities of modern markets.
Applicability in Modern Business
- Market Entry: Facilitates easier entry into new geographic or demographic markets.
- Innovation: Companies can pool research and development efforts.
- Competitive Edge: Combining unique strengths to outmaneuver competitors.
Comparisons to Other Marketing Systems
Horizontal vs. Vertical Marketing Systems
- Horizontal: Collaboration occurs at the same level of the supply chain.
- Vertical: Involves collaboration between different levels of the supply chain (manufacturers, wholesalers, retailers).
Horizontal vs. Multichannel Marketing Systems
- Horizontal: Focuses on collaboration at the same level.
- Multichannel: Involves selling products through multiple, often independent, channels.
Related Terms and Definitions
- Strategic Alliance: An agreement between companies to undertake joint ventures or collaborative projects.
- Joint Venture: A business entity created by two or more parties, sharing ownership and responsibilities.
- Co-Branding: A marketing strategy that involves the use of two or more brand names to promote a single product or service.
FAQs
What are the benefits of a Horizontal Marketing System?
Are there any risks associated with Horizontal Marketing Systems?
How do companies choose partners for a Horizontal Marketing System?
References
- Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson.
- Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
Summary
The Horizontal Marketing System represents a powerful strategy where companies at the same operational level collaborate to achieve common goals. This system leverages shared resources and combined strengths to enhance market presence, drive innovation, and improve operational efficiencies. It is a versatile approach that can yield significant benefits, although it requires careful management to mitigate inherent risks.
