What it Really Means for Marketing
Marketing comes in many ways, shapes and forms, with the most common aspects revolving around inbound marketing and to some extent outbound marketing as well. In terms of business ventures and ensuring that newly obtained businesses fit in with the company’s model, marketing plays a big part in the way big corporations act, which is where horizontal integration comes into play.
Horizontal integration is where a company merges, purchases/acquires or takes over another company in the same industry and tending to be at the same stage of production, usually a company of competition to the other.
Here are the most common examples of horizontal integration:
- Disney purchasing Pixar to branch into the animation market
- Heinz and Kraft merging into one company
- Merger of Exxon and Mobil
Here’s what it looks like when the companies merge. In effect they create a monopoly when all products and services merge into one.
So what are the benefits?
The main benefit is the huge amount of investment and capital gained from acquiring or merging two companies. As well as the bigger growth of the company, there’s the ability to diversify its products or services, the increased target market that these products or services can be sold to, reduced production and the less external competition involved.
Sounds good, but there have to be disadvantages right?
Horizontal integration can have general disadvantages, like the overall costs of doing a merger or takeover and the reduction in flexibility, as merging companies tend to have a monopoly over other companies in their industry, but one of the biggest disadvantages actually comes down to the decreased value of the corporation itself if new marketibng and business methods are not implemented correctly or beneficially.
So how does this fit in to marketing?
In a nutshell: getting it right. In order to produce the top marketing plan it needs to be done proper and thorough, maybe with a few tries and tests, to see it through to the end goal. In a way you’re owning two companies brought together for a while until the full merge processes, which can take some months to put together. Bit conglomerates will understand this process and act accordingly and as Facebook has shown with the purchase of Instagram, Whatsapp and recently the Oculus Rift it can all be doable and integrated with each other.