Focus Strategy
Target a niche
The focus strategy involves targeting a specific buyer group, segment of the product line, or geographic market, and developing functional policies to serve this target well. This approach can lead to differentiation, lower costs, or both, and can be used to select targets that are least vulnerable to substitutes or where competitors are weakest.
- A focus strategy requires a deep understanding of the target market and its needs.
- The company must develop functional policies that are tailored to the target market.
- The focus strategy can be used to achieve differentiation, lower costs, or both.
- Identify the target marketThe company must identify a specific buyer group, segment of the product line, or geographic market to target. This requires a deep understanding of the market and its needs.Pro tipUse market research and analysis to identify the target market.WarningBe careful not to target a market that is too broad or too narrow.
- Develop functional policiesThe company must develop functional policies that are tailored to the target market. This includes developing a marketing strategy, product development strategy, and operational strategy that meet the needs of the target market.Pro tipUse a cross-functional team to develop the functional policies.WarningBe careful not to develop policies that are too rigid or inflexible.
- Implement the focus strategyThe company must implement the focus strategy by allocating resources and making investments in the target market. This includes investing in marketing, product development, and operational capabilities that meet the needs of the target market.Pro tipUse a phased approach to implement the focus strategy.WarningBe careful not to over-invest in the target market.
Illinois Tool Works focused on specialty markets for fasteners and created switching costs for its customers. The company designed products for particular buyer needs and created a unique value proposition.
Fort Howard Paper focused on a narrow range of industrial-grade papers and avoided consumer products vulnerable to advertising battles and rapid introductions of new products. The company developed a unique value proposition and established a strong market position.
The focus strategy was first introduced by Michael Porter as one of the three generic strategies for achieving above-average returns in an industry. It is based on the idea that a company can achieve a competitive advantage by focusing on a specific target market and tailoring its strategy to meet the needs of that market.