Vertical marketing is a term used to define a company's approach towards targeting that focuses on specific industries. For example, a CAD/CAM vendor might say, "We concentrate on the following vertical markets: aerospace, medical, die and mold." Vertical markets are most often identified using the NAICS classification system (i.e. NAICS 336411 for aircraft manufacturing, etc.). One benefit to targeting a specific audience is that it's easier to establish brand recognition for your product(s).
Horizontal marketing is when you you single out a target audience that shares other characteristics, yet can be found in all industries. Common ways to horizontally market are by company size, geography or by job titles. For exampe, you could horizontally market to manufacturing engineering and production titles found in companies throughout North America. Here you're less interested in specific industries and more interested in the job functions. You can afford to do this kind of marketing when your product has a broader application and it's less dependent on the needs of certain industries.
One way to reach prospects in either vertical or horizontal markets is to follow their feet and eyeballs. Get to know which events their feet travel (trade shows, conferences, special events), or which media their eyeballs prefer (trade publications, web sites, e-newsletters). For example, vertical die and mold prospects will be reading Moldmaking Technology and attending Amerimold. Horozontal prospects will be reading Modern Machine Shop and attending IMTS.