Vertical Market

AAA

DEFINITION of 'Vertical Market'

A group of companies that serve each other's specialized needs and that do not serve a broader market. A vertical market is tightly focused on meeting the needs of one specific industry. Vertical markets are focused on a single niche, such as creating payroll software for start-up Internet companies. A horizontal market, by comparison, is able to sell its goods and services in more than one industry, and is therefore focused on a wider range of business segments.

INVESTOPEDIA EXPLAINS 'Vertical Market'

A company that manufactures automobile parts would belong to a vertical market. It would have a limited market of - auto manufacturers and mechanics - for its products. A furniture manufacturer, on the other hand, would belong to a horizontal market because its customer base could include homeowners, apartment dwellers, offices, hotels, restaurants and more.

RELATED TERMS
  1. Vertical Merger

    A merger between two companies producing different goods or services ...
  2. Horizontal Market

    A market diversified so that the products created are able to ...
  3. Vertical Integration

    When a company expands its business into areas that are at different ...
  4. Forward Integration

    A business strategy that involves a form of vertical integration ...
  5. Horizontal Integration

    The acquisition of additional business activities that are at ...
  6. Horizontal Merger

    A merger occurring between companies in the same industry. Horizontal ...
RELATED FAQS
  1. What components are factored in determining net sales?

    The key components that factor into determining net sales include revenue, sales returns, allowances and discounts. Essentially, ... Read Full Answer >>
  2. What is price variance in cost accounting?

    Price variance in cost accounting is the difference between the actual price paid by a company to purchase an item and its ... Read Full Answer >>
  3. What do you need to know to create a business model?

    A business model lays out the idea for a business, along with the step-by-step plan for making the business profitable. To ... Read Full Answer >>
  4. Do any markets not exhibit asymmetric information?

    Asymmetric information, when interpreted literally, means that two parties to an economic transaction have different information ... Read Full Answer >>
  5. What are the benefits of using ceteris paribus assumptions in economics?

    Most, though not all, economists rely on ceteris paribus conditions to build and test economic models. The reason they do ... Read Full Answer >>
  6. What is the difference between marginal benefit and marginal revenue?

    Marginal benefit measures the consumer's benefit of consuming an additional unit of a good or service, while marginal revenue ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    8 Tips For Starting Your Own Business

    Do you have what it takes to be a top entrepreneur? Learn tips on what to do to make it happen.
  2. Fundamental Analysis

    Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  3. Economics

    Understanding Supply-Side Economics

    Does the amount of goods and services produced set the pace for economic growth? Here are the arguments.
  4. Economics

    What is Deadweight Loss?

    Mainly used in economics, deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources.
  5. Economics

    The Big Chill: What’s Wrong With The U.S. Consumer

    Based on the most recent April data, investors may, once again, be disappointed when the second-quarter gross domestic product (GDP) report comes in.
  6. Economics

    Explaining Tier 1 Capital

    Tier 1 capital refers to the core capital a bank must maintain in relation to its assets.
  7. Personal Finance

    Can Electric Cars Replace Gas Guzzlers?

    High costs and poor battery performance have deterred many from switching to electric cars, which begs the question: can electric cars replace gas guzzlers?
  8. Trading Strategies

    Understanding The Price Vs. Time Equation

    Price and time generate vastly different reward: risk profiles.
  9. Economics

    Explaining Business Risk

    Business risk is the risk associated with the overall operations of a business entity.
  10. Fundamental Analysis

    How to Calculate a Combined Ratio

    Combined ratio is a formula used in the insurance industry to measure the performance of an insurance company.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center