Concentration Strategy - Meaning & Definition

What is Concentration Strategy?

A growth strategy adopted by the company to concentrate by investing more resources in marketing and production of only one primary product or market.

本efits of the strategy is to build a strong reputation within a market and generate loyalty among the customers. But it has disadvantages because of the nature of shift of the demand of customers due to innovations in technology. This may led to the product becoming obsolete, and also a sudden economic turndown could lead to its failure.

Four concentration strategy options:

客户s		产品s
		Current	New
	Current	产品-Market Exploration	产品 Development
	New	Market Development	产品/Market Diversification

产品-Market Exploration Option

Depending on the functional & competitive strategies, firms attempt to increase sales of its current product(s) in its current market(s).For example: The cola war between Coca Cola and Pepsi: where both of them were fighting for the soft drink market. They relied on their marketing activities to gain popularity.

产品Development Option

Due to the demand from its current market firm create new product. For example: Mc Donald in order to gain market share in India

市场发展的选择

When a firm sell its current products in areas which were not before served by the firm. The way to increase the market reach is by entering to new retail channels. For example: Starbucks who entered to grocery stores to expand their market base.

产品-Market Diversification Option

Expansion both into new products & new markets, becoming a multi business firm.

For example: Starbucks who have concentrated in specialty coffee.

Hence, this concludes the definition of Concentration Strategy along with its overview.

This article has been researched & authored by theBusiness Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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