Vertical differentiation occurs in a market where the several goods that are present can be ordered according to their objective quality from the highest to the lowest. It's possible to say in this case that one good is "better" than another.
Horizontal differentiation exists when one product's attributes vary from those of another product in ways that satisfy the needs of a particular customer group. For example, variations in the design, size, fabric or color of a dress constitute horizontal differentiation.
In the organizational literature, vertical complexity refers to the layers of management in the organizational hierarchy with varying levels of authority and decision-making power and is often a response to the administrative burdens resulting from increasing size and specialization (Tolbert and Hall 2009. 2009.
Horizontal integration is when a business grows by acquiring a similar company in their industry at the same point of the supply chain. Vertical integration is when a business expands by acquiring another company that operates before or after them in the supply chain.
A vertical market is a market in which vendors offer goods and services specific to an industry, trade, profession, or other group of customers with specialized needs. A horizontal market is a market in which a product or service meets a need of a wide range of buyers across different sectors of an economy.
Horizontal differentiation begins when the company assigns specific job functions to specific people rather than having a few people performing all needed tasks. As the company continues to differentiate horizontally, it can organize by function, process, product, service, location or client.
Differentiation strategy allows a company to compete in the market with something other than lower prices. For example, a candy company may differentiate their candy by improving the taste or using healthier ingredients.
1 : the act or process of differentiating. 2 : development from the one to the many, the simple to the complex, or the homogeneous to the heterogeneous differentiation of Latin into vernaculars. 3 biology. a : modification of body parts for performance of particular functions.
In competitive markets, where similar products compete, business economics dictates that there are three types of product differentiation:
- VERTICAL DIFFERENTIATION.
- HORIZONTAL DIFFERENTIATION.
- SIMPLE/MIXED DIFFERENTIATION.
A differentiation strategy is an approach businesses develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. The main objective of implementing a differentiation strategy is to increase competitive advantage.
Apple attempts to increase market demand for its products through differentiation, which entails making its products unique and attractive to consumers. By focusing on customers willing to pay more and maintaining a premium price at the cost of unit volume, Apple also set up an artificial entry barrier to competitors.
as a source of competitive advantage, a company may differentiate itself from its competitors by image; the particular image or 'personality' it acquires is created by its logo and other symbols, its advertising, its atmosphere, its events and personalities.
Price differentiation is a pricing strategy that charges different segments of customers altered prices for the same products or services.
A company can set itself apart from the competition in two ways: through cost leadership or through product differentiation. Cost leadership emphasizes saving money and appeals to those who are on a budget. Product differentiation focuses on providing quality.
Channel Differentiation. A firm can also gain competitive advantage by channel differentiation. This means that the firm differentiates itself by differentiating their channel's coverage, expertise and performance.
Vertical organizational structures define a clear chain of command. The highest levels of managers make decisions about sales, marketing, customer service and other standards and communicate them to middle managers. Middle managers assign work to employees and communicate processes and goals.
: music composed or viewed as a succession of harmonies or chordal units in contrast to simultaneous independent melodies — compare horizontal structure.
Vertical hierarchy shows the different jobs and horizontal specialization shows the tasks for each person.
The 3 Different Levels of Management
- Administrative, Managerial, or Top Level of Management.
- Executive or Middle Level of Management.
- Supervisory, Operative, or Lower Level of Management.
Vertical differentiation involves the installation of a "chain of command" among employees and managers. Horizontal differentiation separates workers by their assigned tasks, such as accounting, sales or computer networking.
A vertical line is one the goes straight up and down. The horizontal line is a straight line that goes from left to right. Parallel lines are lines which are always the same distance apart and never meet.
The difference between horizontal and vertical organizations is that vertical organizations have a top-down management structure, while horizontal organizations have a flat structure that provides greater employee autonomy.
Anything parallel to the horizon is called horizontal. As vertical is the opposite of horizontal, anything that makes a 90-degree angle (right angle) with the horizontal or the horizon is called vertical. So, the horizontal line is one that runs across from left to right.
Horizontal: Communication established with people on the same hierarchical level within the company (or project) Vertical: Communication established with people who belong to a different hierarchical level.
In economics, successful product differentiation leads to competitive advantage and is inconsistent with the conditions for perfect competition, which include the requirement that the products of competing firms should be perfect substitutes.
