In today's world, adopting a horizontal marketing system (HMS) is increasingly popular. In a situation where the competition is fierce, this is an effective way for businesses to adapt to the changing market scenario and stay competitive. In this article by Viindoo, we will delve deep into the concept of HMS, its types, advantages, and horizontal marketing system examples.
What is a Horizontal Marketing System?
A horizontal marketing system is a collaboration between two or more companies in the same industry or market. The companies involved in the HMS share their expertise, resources, and capabilities to achieve a common marketing objective. Employing a horizontal approach that involves collaborating across business verticals to target mutual audiences can help companies in any industry expand their customer base.
Knowing what is HMS
For instance, businesses that specialize in nutrition supplements, exercise equipment, or workout apparel cater to distinct markets, but all fall under the same vertical market of health and fitness. Although these businesses may share the same customer base, they offer unique products and operate independently.
Nevertheless, if two or more of these fitness-oriented companies partnered to combine their products and share manufacturing, marketing, and sales operations, they could potentially reach a much larger audience and increase their profits by marketing and distributing their products together.
HMS is beneficial for all parties
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Types of HMS with Advantages
There are three main types of HMS:
Contractual HMS
A contractual HMS is where two or more companies collaborate on a specific project. The arrangement is based on a contract that outlines the project scope, responsibilities, and other details. Some benefits of a contractual HMS include:
- Increased Efficiency: Combining the expertise and resources of multiple companies allows for efficient project completion.
- Shared Costs: Sharing project costs can reduce the financial burden on each company.
- Risk Sharing: Companies can share the risks associated with the project in a contractual HMS.
- Access to New Markets: A contractual HMS can help companies enter new markets or expand their reach in existing markets.
A contractual HMS means two or more companies collaborate on a specific project
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Cooperative HMS
A cooperative HMS is where companies form a cooperative venture. In this type of HMS, companies share the profits, risks, and losses of the venture. Some advantages of a cooperative HMS are:
- Shared Profits: Companies share the profits of the venture, resulting in a greater return on investment.
- Risk Sharing: The risks associated with the venture are shared among the companies involved in a cooperative HMS.
- Attract More Customers: A cooperative HMS can help companies attract new customers.
- Joint Resource Sharing: Pooling resources to develop new products or services can result in more efficient use of resources.
Cooperative HMS is about companies forming a cooperative venture
Coordinated HMS
A coordinated HMS is where companies coordinate their marketing efforts without forming a legal entity. In this type of HMS, companies collaborate to achieve a common marketing goal. Several benefits of a coordinated HMS include:
- Increased Efficiency: Coordinating marketing efforts can result in reaching a broader audience, increasing efficiency.
- Shared Costs: Sharing marketing costs can reduce the financial burden on each company.
- Access to New Opportunities: A coordinated HMS can help companies increase brand awareness and improve the brand image in customers’ minds.
- Resource Sharing: Sharing marketing resources like advertising channels, social media handles, and customer data can help businesses achieve their marketing objectives.
Companies adopting Coordinated HMS do not form a legal entity with each other
Horizontal Marketing System Examples
Let’s examine the latest examples of the HMS and how they are benefiting the companies involved.
Horizontal marketing system examples
Google and Salesforce
The collaboration between Google and Salesforce is a typical horizontal marketing system example. In 2020, Google and Salesforce announced a partnership to integrate their platforms, allowing users to access Google's cloud-based services through Salesforce.
This collaboration benefits both companies, as it allows Google to expand its reach in the business market while Salesforce benefits from the added functionality of Google's services. The partnership is expected to enhance the user experience for both companies' customers.
Unilever and Alibaba
In 2021, Unilever and Alibaba announced a partnership to collaborate on e-commerce initiatives in China. This collaboration allows Unilever to expand its presence in the Chinese market while Alibaba benefits from increased access to Unilever's popular consumer goods. The partnership is expected to yield significant benefits for both companies as they work together to improve their market position in China.
Adidas and Peloton
In 2021, Adidas and Peloton announced a partnership to collaborate on workout apparel and accessories for Peloton users. This partnership allows Adidas to tap into Peloton's growing user base while Peloton benefits from the added functionality of Adidas's apparel and accessories. The partnership is ongoing and is expected to yield significant benefits for both companies as they work together to enhance the Peloton user experience.
Many corporations have successfully adopted HMS
A horizontal marketing system is an effective way for companies to collaborate and achieve a common goal. When adopting the system, businesses must carefully consider the type of HMS that is suitable for their needs and ensure that the partnership is mutually beneficial. By doing so, companies can leverage the strengths of their partners and achieve success in a highly competitive market. Hopefully, this article by Viindoo helps readers better understand this effective marketing system.
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