Concentration Strategy

Cite this article as:"Concentration Strategy," in The Business Professor, updated April 27, 2020, last accessed September 23, 2020, https://thebusinessprofessor.com/lesson/concentration-strategy/.

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What is a Concentration Strategy?

A concentration strategy is when a business focuses on a specific group of clients, a specific product, or a specific geographic market. As the name implies, the primary purpose is to allow the business to concentrate (rather than diversify) their efforts. The idea is that this concentrated effort is more likely to yield expertise, innovation, and efficiencies within the area of concentration.

There are three sub-strategies:

  • Market Penetration – This concerns acquiring a larger percentage of the existing market for the firm’s existing products. This is normally done through extensive marketing campaigns.
  • Market Development – This concerns selling existing products in new markets. A popular method of entering new markets with existing products is to pursue new sales channels. For example, a brick and mortar retail store might enter a new market by selling online. Another example would be expanding into a foreign market.
  • Product Development – This concerns the creation of new products to sell or deliver within the existing market. The products or services offered may be related. The key aspect is that they are novel to the company and they are selling the products within their existing market space.

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