Business Operations

From the Expert: Understanding Focus

From the Expert: Understanding Focus

Our Lady of the Lake University professor D. Anthony Miles explains how employing the right variant of focus strategy can help boost your business’s effectiveness

Focus is about narrowing. Identifying your target market can help clarify your company’s goals and objectives. From there, your business can further refine its focus by accentuating cost leadership or differentiation. D. Anthony Miles, CEO of San Antonio-based consultancy Miles Development Industries and a professor at Our Lady of the Lake University, talks about the value—and idiosyncrasies—of the focus strategy.

What kinds of businesses benefit from using a focus strategy?

D. Anthony Miles: There are a number of businesses, particularly startups, that know what they want to market but aren’t clear about how to do it. So it can be very helpful to determine the target market for that product or service. For instance, we all know Wal-Mart is the low-cost provider, and Target is the quality provider. Kmart is lost in the middle, and it’s been suffering for years because customers can’t define what specific needs Kmart meets for them. Businesses should also consider their product’s position in the marketplace. Once a product starts maturing, you can concentrate on more specific groups of consumers versus a product that’s just entering the market where you’re still trying to sell the general public on it.

Once you’ve decided to pursue the focus strategy, how do you decide which variant is right for you?

Miles: In cost focus, you’re trying to reach cost leadership, which means beating the competition by maintaining economies of scale. There are several approaches to that, and one of the main ones is the experience curve, which leverages your business experience: You have your own more efficient, and therefore cheaper, ways of conducting business. With differentiation focus, you’re offering a customer something different from what’s already out there. And you have to really think about how you’re going to make your product different from everybody else’s without taking it too far away from what they want. Your differentiator needs to be something original that the competition can’t easily replicate. It tends to be easier to control cost than it is to be a differentiator, but sometimes you need that experience curve to achieve cost leadership.

How can businesses identify which focus would be most effective on their bottom line?

Miles: There’s an emerging field of competitive intelligence, which basically takes the idea of investigative intelligence and applies it to business. This act of studying and analyzing your competitors can give you nuggets of wisdom about what’s working for them and where they’re struggling, and how you can fit in to that. 

Where do businesses go wrong with focus strategy?

Miles: There’s no one-size-fits-all solution. Companies often have to craft specific strategies for each product they have in the marketplace. Each product is at a different point in the life cycle, and it might be more prudent to prioritize cost leadership for one of them and differentiation for another. Try not to rely too much on a strategy that worked in the past; as times change, the most effective strategy will change.

Four Ways to Pursue Cost Focus 

  • Simplify product design
  • Provide utilitarian service
  • Optimize productions & operations
  • Use the experience curve

Five Questions to Ask Yourself With Differentiation Focus 

  • Is this product faster?
  • Is it better quality?
  • Does it save more money?
  • Does it save more time?
  • Is it easier to use?

Read our guide to competitive strategy for more information or contact your SunTrust banker today to learn more about the resources available to you to support your strategy and strengthen your market share.

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