What is a Focus Strategy? Importance, Types, Pros & Cons, Examples 

While launching any business venture, you should know your destination and how you plan to reach there. In order to gain a defendable position in the market, businesses and companies employ defensive and offensive strategies. Today, we’ll discuss what is a focus strategy; its importance, two main types, advantages, disadvantages, and examples.

Michael Porter suggested that companies could gain a competitive advantage by employing generic strategies. The three generic strategies are; focus, differentiation, and cost leadership. Many companies employ these strategies, but some companies employ more than one strategy with the purpose of creating differentiated products at a lower cost.

What is a Focus Strategy? 

The focus strategy also goes by the name of niche strategy; it is the process of narrowing down precisely to a specific segment of the market. The objective of the focus strategy is to create, market, advertise, and sell precise goods to a specific segment of the customer market.

However, it is a type of marketing strategy that plans to produce goods and services for a specific segment of the customer. Usually, companies choose to implement the focus strategy to amplify their penetration rate in a specific segment of the market. It allows companies to gain a competitive edge through focused effectiveness.

Importance of a Focus Strategy 

The focus strategy helps businesses and companies in various ways;

  • A best strategic approach to comprehend the wishes and wants of customers
  • Precisely targets the needs of the specific customer market
  • Develops a better and more valuable product based on their requirements
  • Along with generating profit for the company, it also helps companies to establish a trusting relationship with their target customers
  • The loyalty of customers is the benefit of satisfying the specific group of target customers
  • Excited customers would affiliate themselves with the brand
  • The satisfied customers would act as a brand ambassadors for your company and do free marketing for you

Types of a Focus Strategy 

The focus strategy has got two main types, and they’re as follows;

Focused Low-Cost Strategy

When companies enter the market for the first time, they choose this strategy. It means that the company offers a differentiated product with more benefits to the customers at a low price. However, it doesn’t mean that well-developed companies cannot or do not follow this strategy; all types of companies could follow it.

This is the most suitable approach for new companies to enter the market and compete indirectly. Some companies prefer a market penetration strategy of entering the market with low prices for their goods and service. It would be difficult for them to implement this strategy in the long term.

Focused Differentiation Strategy

As the name implies, it is a type of strategic approach that concentrates on creating a differentiated product for a specific segment of the customer market. When a company implements the differentiation strategic approach, it focuses on narrowing down the specific customer segment by offering customized and differentiated features in the product.

Breezes Resort is a great example of implementing the focused differentiation strategic approach. The hospitality brand satisfies the wishes of couples and partners and offers them a children-free environment with no noise. Couples and partners would love to visit this place and enjoy their service.

Advantages of a Focus Strategy 

Some of the key benefits and advantages of focus strategy are as follows;

Availability of Resources

When you’re planning to implement the focused strategic approach, it is important that you have the availability of financial and other resources. The cost of producing the precise product for the specific segment of the customer market is higher. However, if a company is developing a rare product by employing scare resources, then it should make sure that it has the availability of those resources.

Competitive Edge

The key element of implementing the focused strategic approach is to gain a competitive edge. A company would easily stand out when it targets a specific segment of the customer market with a unique offer. When you offer something valuable to the customers, it would be difficult for the competitors to copy it easily.

High Growth

Businesses and companies should always keep in mind that there is always room for growth. It is difficult for businesses and companies to survive that are not growing with time and the market. Before targeting a specific segment of the customer market, you should check the growth potential in that segment.

Increased Profitability

You can easily find and serve the smaller segment of the customer market. But the question is whether the segment you’re targeting is profitable or not. It is because the main objective of any business or company is to earn profit. Those market segments should be large enough to generate profit.

Disadvantages of a Focus Strategy 

Some of the main disadvantages and challenges of the focus strategy are as follows;

Changing Preferences

The choices and preferences of customers are always changing, and their focus is to conform to the perception of the majority. When a company offers something different that is important to them, then they would choose it and it would last longer.

High Competition

The goal of a focused strategic approach is to gain a competitive edge by offering something unique and valuable. It is difficult to maintain a competitive edge because the competitors are always working on improvement. You have to keep up with their growth and pay heed to the offering. When completion increases in the market, it lowers the company’s profitability.

Examples of a Focus Strategy 

Rolls Royce

Rolls Royce is a British iconic brand that has earned a global reputation for manufacturing luxury vehicles, jet engines, and other mega engineering products. The company implements a focused strategic approach to offer only luxury products to target the status co-market.

Coca Cola

The consumer market is becoming cautious about the healthy diet and what they’re eating and drinking. In order to target the diet-conscious market, Coca-Cola launched diet coke and coke zero to target health-conscious customers.

Conclusion: What is a Focus Strategy? Importance, Types, Pros & Cons, Examples 

After an in-depth study of what is a focus strategy; its importance, various types, advantages, disadvantages, and examples; we have realized that a focused strategic approach is highly useful for all types of businesses and companies. If you’re planning to implement this practice, then you should keep in mind the abovementioned guidelines.

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