Horizontal marketing is a clever and cost-efficient way to extend your reach
What do the following have in common: a restaurant, a museum, a department store, and a clothing label? Would you believe—their customers!
Late last year, customers of high-end retail chain Rustan’s department store were given a catalog for imported clothing brand Banana Republic, which included a coupon that offered a 15 percent discount on any Banana Republic purchase worth 10,000. While this cross-promotion is understandable, given that Rustan’s and Store Specialists, Inc. (the company that brought in Banana Republic) are sister companies, customers also received a promotional coupon for the Chef Laudico Bistro Filipino restaurant at The Bonifacio Global City in Taguig, as well as a discount coupon for the Ayala Museum in Makati.
Such is an example of horizontal marketing, defined as when two (or more) companies producing different products but with similar target audiences combine marketing efforts.
WHY IT WORKS
People buy different things all the time—from socks to party dresses, from toiletries to perfume. It therefore makes sense to forge alliances with companies that sell products complementary—not necessarily similar—to yours.
When executed properly, horizontal marketing can be a boon even to small businesses:
■ It can be an effective way for a business to increase customers without significant additional marketing investment. For example, when neighboring businesses hold an event, i.e. a sidewalk sale, they will only be responsible for a fraction of the overall marketing investment.
■ Such alliances allow/encourage different organizations to share their expertise and give each other access to new customer segments. You see this around you all the time: kiddie photography studios tie-up with children’s clothes and accessories stores, gyms tie-up with health food stores or spas, and appliance repair centers collaborate with home cleaning companies.
■ Small businesses with little or no brand identity can boost their image by offering bigger, more established brands some type of promotion for their customers. For example, if you own a dessert café, offer the well-known bookstore in your area a ton of “Free dessert!” coupons. The big bookstore may accept it because it’s a free gift, so when they hand it out, not only do you get an implied “endorsement,” but also access to all the customers looking for a place to snack after a day of shopping. The increased traffic will likely cover the discounts you offer.
CREATE A WINNING STRATEGY
Here are some ways you can make your horizontal marketing program a success:
■ BE A FRIEND FIRST. Don’t be in such a hurry to snag those customers that you offer a tepid promotion. Instead, have the customer’s experience in mind when you band together with other companies, so avoid piece-meal efforts. What other products or services would your clients like to receive? What would give them a compelling reason to ‘might as well try’ a new thing? Then pitch your ideas to your neighbors. For example, if you are a bookstore and are next door to a restaurant and an accessories shop, why not organize a “Children’s Fair”—you host a storytelling session, the restaurant sponsors the snacks, and the accessories shop takes care of the decorations and giveaways. It’s a win-win situation for all—even for the parents and the children.
■ EMPHASIZE ‘WHAT UNITES US’. Rally your fellow restaurateurs to organize a breakfast buffet for a cause; collaborate with fellow organic food enthusiasts to hold a fitness festival; get pet store owners to help advertise a “Pet Blessing Day.”
SOMETHING TO THINK ABOUT
Horizontal marketing is essentially collaborating with a business that complements yours, but be sure you have studied all possibilities and scenarios before entering into the relationship. Doing business with someone who may have a personality or management style different from yours may also compound matters. But as long as everything is handled professionally, you and your partner can count on stretching your marketing budgets further than ever. ●BY JEMPS GALLEGOS & JACLYN LUTANCO-CHUA
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