Concentration Strategy

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What is a Concentration Strategy?

In a Concentration Strategy a firm directs all or most of its resources to a single market (for a single product, or for a single technology). In this strategy, a company chooses to pursue a large share of one or a few submarkets rather than chasing a small share of a large market. An inherent risk belonging to this strategy occurs when the demand in the submarket suddenly drops, or if a strong competitor enters the same submarket.

Note that a strategy of concentration still allows for a several different actions: the company can attempt to capture a big market share of the market it focuses on by:

1. Increasing present customer's rate of usage.
2. Attracting customers from its competitors.
3. Interesting non-users in its products or services.

Also called Penetration Strategy. The opposite of Diversification.

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Compare with: Diversification  |  Economies of Scale  |  Competitive Advantage  |  Synergy  |  Working Capital  |  Penetration Pricing  |  Core Competence

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