Is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity?

For business managers understanding the best practice on how to deal with and distinguish Marketing Channels is one of their main issues. The importance of this subject goes beyond the imaginary border of your own company. You must conduct an analysis considering the holistic view of your business and understand that there are many other variables that will determine the success of your business.

Marketing Channel Structure and Functions

Marketing Channels are related to all the possible tracks the product travels from production to the end customer and is one of the important pillars of the Marketing Mix. Also known as one of the 4P’s, marketing channels is related to “Place” and how customers can find the product and vice-versa.

The marketing channels have a bi-dimensional spectrum and must be analysed in both ways to avoid myopia and perform in the best way.

In the conventional view of it we can relate it to the different levels of the channel from one member to the other till the product arrives at the hands of customers.

A Marketing Channel can only reach a better performance when there is vertical integration of it. In other words all the components of the marketing channel must work together, share information and have common goals to attend the customer’s expectations.

The other dimension is the Horizontal Marketing System where two or more companies join together at one level to follow a new market opportunity. By working together companies can combine their resources to accomplish more than they could alone.

In this spectrum businesses must build strategic alliances with common goals. For example Pepsi Cola drinks can be found in Burger King and ATM machines can be found in retail shops. Both companies take advantage of products, services and market share of each partner.

Multichannel Distribution Systems

Organisations can do business in several ways. In the past companies used a single channel to sell to a single market or market segment. Today with the proliferation of customer segments and all the channels possibilities is easier to find companies using multichannel distribution.

The producer can sell straight away to final customers through catalogues, by telephone, or via the Internet. Or they can sell direct to retailers and use distributors to find retailers. There are many options and the challenge for managers is to deal with the many marketing channels trying to ensure the best performance by doing so.

When we are talking about International Business the possibilities are even more complex and choosing the right alternatives requires the right skills.

Author: Murilo Branco

Home → Terms → Horizontal marketing system

Horizontal marketing system is a channel arrangement in which two more companies at one level join together to follow a new marketing opportunity. By working together, companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone. Companies might join forces with competitors or noncomnpetitors. They might work with each other on a temporary or permanent basis, or they may create a separate company.