Focus strategy means concentrating on a particular group of customers, geographic markets or on particular product-line segments in order to serve a well-defined but narrow market better than competitors who serve a broader market.
A successful focus strategy depends on the following:
(i) A vast existing market that is of sufficient size to ensure sufficient profitability,
(ii) Has good growth potential, and
(iii) Is not crucial to the success of other major competitors.
Strategies such as market penetration and market development offer substantial focusing advantages. Focus strategies are most effective when consumers have distinctive preferences or requirements and when rival firms are not attempting to specialise in the same target segment.
Risks of pursuing a focus strategy include the following:
a. The possibility that numerous competitors will recognize the successful focus strategy and copy it, or
b. Consumer preferences may change.