Focus Strategy: 3 Examples of Focus Strategies

A focus strategy is a competitive strategy to direct marketing and sales efforts to a specific market segment. This strategy seeks to exploit underserved or undiscovered segments of a target market. While many competitors try to sell as many products to as many customers as possible, a focus strategy picks one or more specific segments. It gains an advantage by offering either high quality or low cost to that segment. These efforts can increase customer loyalty.

Business academic Michael Porter developed competitive strategies in the 1980 book Competitive Strategy: Techniques for Analyzing Industries and Competitors. Porter’s generic strategies vary in approach, and choosing the right one for your company depends on your industry and the field of competition:

1. 1. Cost leadership strategy: In this competitive strategy, a company utilizes economies of scale to gain a price advantage over its competitors. Simply, by offering a good or service at a lower price than anyone else, you become the low-cost producer of your particular industry and gain a definitive competitive edge. This option is hard to do unless you have a large-sale business and can invest heavily in ramping up production, sourcing raw materials, and taking advantage of overall low costs.
2. 2. Differentiation strategy: In this approach to competitive strategy, you gain a competitive advantage by having a product that distinguishes itself from the competition: extra features, exceptional quality, and enhanced functionality. This justifies charging a premium price, directly leading to higher profit margins.
3. 3. Focus strategy: This generic strategy can utilize either differentiation or cost leadership, but it declines to pursue the whole market for a particular product. As the name suggests, the idea is to focus on a specific market segment, striving to offer a desirable product to that segment, either because of excellent quality or distinctiveness to the customer or lower costs than any competitors can match.

There are two main types of focus strategies. One seeks to beat the competition by being cost leaders, while the other aims to win through differentiation:

1. 1. Cost focus strategy: This approach utilizes the basic philosophy of the cost leadership strategy but with a specific focus on a particular market segment. By targeting a specific sector and using a good marketing strategy to pursue this sector, you can offer a lower cost than your competitors and use this cost advantage to grow your market share.
2. 2. Differentiation focus strategy: This approach offers a specialized product to a specific market segment rather than the entire field. A luxury electric vehicle—if offering notable advantages in quality and functionality that justify the high prices—would be a type of differentiation focus strategy.

Legacy brands seeking to expand or new entrants to a market niche looking to gain a foothold can use a focus-based competitive strategy. Consider how companies might employ this strategy:

1. 1. Musical instruments: A company that makes high-quality classical guitars will likely pursue a focus business strategy. The buyers of high-end nylon string classical guitars will favor richness of tone, attention to detail, and excellent overall design. A focused differentiation strategy in the product line will have the best chance of success in this niche market.
2. 2. Vacation resorts: Some resorts and cruises will seek to focus on the singles market, while others cater to couples without children. These cruise lines can compete through price offerings or appeals to specific customer needs, such as room design and activity selection, to gain an edge in differentiation.
3. 3. Jewelry: A jewelry brand that markets exclusively to teenage girls can use the cost focus strategy since this demographic is unlikely to have the expendable income of adult jewelry customers.

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