Porter’s focus strategy, also known as focus differentiation strategy or focus cost leadership strategy, is one of the competitive strategies identified by Michael Porter in his seminal work “Competitive Strategy – Techniques for Analyzing Industries and Competitors.” This strategy involves focusing on a narrow segment or niche within an industry and either providing unique value to customers (focus differentiation) or achieving low costs within that segment (focus cost leadership).
There are two variants of Porter’s focus strategy…
1. Focus Differentiation Strategy – In this variant, a company targets a specific market segment or niche and differentiates its products or services to meet the unique needs and preferences of customers within that segment. By focusing on a narrow market, the company can tailor its offerings more precisely, provide specialized features or customization, and build strong customer loyalty. This allows the company to command higher prices and achieve higher profit margins than competitors serving broader markets.
2. Focus Cost Leadership Strategy – In this variant, a company targets a specific market segment or niche and achieves a low-cost position relative to competitors within that segment. By focusing on operational efficiency, cost reduction, and economies of scale within the targeted niche, the company can offer products or services at lower prices than competitors while maintaining acceptable levels of quality and value. This allows the company to capture market share within the focused segment and compete effectively against both differentiated and low-cost rivals.
Overall, Porter’s focus strategy targets a specific market segment and tailors the competitive approach to meet its unique needs. By focusing resources and efforts on a narrow market, companies can achieve a sustainable competitive advantage and position themselves for long-term success within their chosen niche.