A vertical or vertical market usually refers to a business that services a specific niche or group of people in a market. In short, a vertical market is smaller by definition, and it serves a group of customers/products that can be identified as part of the same group. A search engine like Google is a horizontal player, while a travel engine like Airbnb is a vertical player.
Horizontal vs. Vertical Markets
To understand the concept of vertical market, we can look at the concept of vertical integration and horizontal integration. In a vertically integrated strategy, a company gets closer and closer to the final customer, or perhaps it gets more control over the product manufacturing.
Take the case of Luxottica and how it integrated vertically in the eyewear industry. Luxottica didn’t expand to cover other verticals (for instance, by moving from eyeglasses to footwear) instead it moved vertically by controlling more and more of the manufacturing and distribution process.
On the other hand, think of the case of Alphabet that controls Google. While the company still operates the leading search engine, the search market by definition has grown to cover many verticals (publishing, travel, e-commerce, and many many other small niche markets). This makes Google, in part a horizontal player, therefore, able to cover various niches.
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