Encyclopaedia of Strategic Management 3 rd edition

Focus Strategies
Focus strategies are one of Porter’s archetypal three strategies (see: Generic Strategies) namely Cost
leadership, differentiation and focus. All three are based on the general principle of competitive
advantage “the delivering of superior value to customers and, in doing so, earning an above-average
return for the company and its stakeholders” (see: Competitive Advantage). Focus revolves around
the idea of serving a particular customer group better than anyone else. As explained in the entry on
Generic Strategies, the choice of focus is essentially a choice of narrow scope (see: Economies of
Scope) in which the benefits of assets and other resources and capabilities created and applied in
highly specific fashion creates differentiation and/or cost advantages for specific customer groups
only.

The core of a focus strategy is to serve the needs of a specific buyer group better than any other
competitor. The target group must receive a cost or differentiation advantage expressed in the
needs of that target group. The target group must be isolated from other offers especially from
within your own product range. The advantage must be significant so as to inhibit catch-up plays
from competitors.

The bases for focus include product features, buyer type, channel choice, geographical area, pre-
sales service level, post-sales service level, volume, payment method, and quality. The competences
required are (i) cost and/or differentiation competences (as in all forms of competitive advantage),
(ii) real understanding the nature of the market, its niches (hence the term niche marketing), and
customer buying behaviour, and (iii) ability to construct protected niches, through patents and other
intellectual property rights (IPRs), and through regulatory, taxation and other government actions.

The risks are

(i) that the target group becomes unattractive,

(ii) (ii) broad scope competitors create offers that overwhelm the target group and destroy
your own focus advantage,
(iii) (iii) new focuses and focusers re-segment the market, and
(iv) (iv) the strategy is imitated especially by more powerful and resourceful competitors. In
general any strategy that relies on advantages from specializing in customer groups or
by developing unique specialist skills is vulnerable to the following threats:

1. Skills may become routine or mass-produced

2. Technological change may make skills obsolete
3. Changes in the needs and desires of specific customer groups
4. Emergence of scale benefits that did not previously exist
5. “value-added” competitors provide services which enable identical or better niche
or specialist services to be delivered to “your” customer base.

The importance of the idea of focus is that it provides the intellectual rationale for the existence of
small firms and the power of entrepreneurship. Without focus advantages small firms would be
readily competed into non-existence by large firms with large economies of scale and scope and
entrepreneurs would always be doomed to fail. It relates closely to powerful ideas in marketing such

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 Encyclopaedia of Strategic Management 3 rd edition

as market segmentation and the served market. Market segmentation is concerns the choice of
which markets to address and is a critical strategic decision (see: Segmentation and also the volume
on Marketing). The served market is that segment of the total market or of a major market segment
that the firm actively attempts to serve (i.e. its customer focus or target group). It is on the basis of
this served market that key performance parameters such as market share and growth rate are
measured.

Bibliography

Grant R M (2011) Contemporary Strategy Analysis (7th edition) Oxford: Basil Blackwell
McGee, John, David Wilson, & Howard Thomas (2010), Strategy: Analysis and Practice (2nd
edition) Maidenhead: McGraw-Hill
Porter, M. E. (1980). Competitive strategy: techniques for analyzing industries and competitors, New
York, The Free Press
Porter, M. E. (1985). Competitive advantage: creating and sustaining superior performance, New
York, The Free Press

Keywords

Generic strategies, niche, customer groups, competitive advantage, segmentation

Abstract

Focus strategies are about serving a particular customer group better than anyone else. They are
based on practical variants of cost and differentiation allied to the idea of narrow scope. Focus
strategies have distinct attributes and particular characteristics. They require specific skills and face
an array of risks and threats. Focus strategies are, however, durable and this evidenced by the
proliferation of successful, albeit risky, small businesses. Focus is related closely to ideas of market
segmentation and the served market and is much discussed in the marketing strategy literature.

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