Focus strategy is Michael Porter's term for serving one narrow group of customers better than broad competitors can. The company tailors its product, pricing and operations to that group's needs, either at lower cost or with something more specialized, and accepts losing the customers outside it.
Broad competitors serve many segments with one set of activities, so their offer is a compromise for everyone. A focused firm tunes every activity to one segment, and a broad rival can only match it by changing how it serves its other customers. HubSpot started at $250 a month for small businesses, against advice to move upmarket, while Marketo required at least $2,000 a month. Qualtrics built research software sophisticated enough for academic power users, a group a free, simple survey tool served poorly.
The cost is the business you turn away. A small segment can cap growth, and a broad rival can still decide to follow.
From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.
Grow where costs are known; retreat elsewhere
Alumni-funded loans for top-school graduates
MSK focus: home exercise replaces paid care
Sophisticated research, self-serve, for academics
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| What it is | How to tell it apart | Example | |
|---|---|---|---|
| Focus Strategy | Tailoring the whole operation to a narrow segment that broad rivals serve poorly | It can be permanent; the segment is defined by needs, size or use | HubSpot pricing for small businesses Marketo priced out |
| Vertical Specialization | Building the offering around one customer industry's distinctive requirements | The segment is a single industry; use this narrower tag instead | Veeva's CRM built for life-sciences sales teams |
| Monopolize a Small Market First | Dominating a tightly defined first market, then expanding outward from it | The narrow market is a starting point with a plan to expand | Facebook starting at Harvard before other colleges |
| Author | What they call it / where it appears |
|---|---|
| Porter | Focus (cost focus / differentiation focus) |