3.4 Focus Strategy

0:00welcome to video number five in the third module of the course where we are learning about business strategy in previous modules we have discussed Khan's leadership generic competitive strategy and differentiation generic competitive strategy and as I have promised to you there is a third one that we need to touch upon which is focus strategy now this is going to be rather a short video I was thinking for a long time about whether I should go deeply into focus strategies or I should just sort of narrowly touch upon it well this should be sort of beginner to intermediate level course when it comes to business strategy so I have decided

0:41just to narrowly touch upon this topic of a focused strategy so that you understand the idea and did you understand the two parts that are under focus strategy so let's go for it we have three definitions actually focus strategy targets a narrow segment of domain of activity and ten words its product or services to the needs of that specific segment to the exclusion of others so imagine we are running a business in a way that we have selected a group of customer maybe 1,000 customers and we do our best to serve these 1000 customers the best while we are forgetting 1 million other people which are on the market and we do not

1:29really care whether this 1 million other customers are going to purchase our product or not what we care about is these 1,000 people well I think the best example can be me when I was starting with my videos I told myself hmm I'm going to care about business or social sciences students that are sort of graduating right now from their bachelor or master studies it's quite a focus target it's quite a narrow group of people and I told myself that I'm going to be focused on the European market and it worked I focused with my videos especially with with other courses that are a bit older

2:08right now on this group of people which is maybe few thousand people every year and I try to make them as happy as possible with my videos so you see the focus strategy can sometime pay off now once you serve this focus group of yours well then you can try to grow to wider audiences when we talk about my videos and and then try to grow from there this is going to be my core group and I'll now try to serve wider group and wider one and maybe gradually over time I will become generalist and I will be serving many different customer groups when it comes to online learning so that

2:51is generally about the focus strategy now there are two ways how we can go about the focus strategy first one of them is cost focus strategy the other one is differentiation focus strategy let's go for the definitions cost folk users identify areas where broader cost base strategies fail because of the added cost of trying to satisfy a wide range of needs let's go straight ahead for the other one for the differentiation focus so differentiation focuses look for specific needs that broader differentiators do not serve well that is exactly the second part what I did with my videos when I was starting well there were many online

3:38channels or lectures that were trying to talk for instance about how to write a research thesis but I focused on the European market social sciences and specifically business students and I designed a course about how to write a research paper particularly valued by this group of customers and that is all I was a differentiator folk user but now let's talk about cost folk users as well I think the greatest example is Ryanair maybe you already heard about them runner is ultra low-cost company but from my perspective there more of them cost folk user because they offer flight which are well suited for price sensitive customers who

4:23really wanna pay as little as possible for the traveling and of course it's also the customers that do not have the need to change the flats many of the fights for instance in Europe that we do are two to three hours long so other short flights and we do not have to need to change the flight I often times when I pick my vacation I look at where I have the direct fights where I do not need to change the flight to reach my destination and this was exactly the thinking of Ryanair will offer super low prices and will offer it to the customers who do not have the need to

5:05change the flight and can reach the destination directly that is all that was dinner niche to which they focus themselves well I should bring against an example for the differentiator focus strategy there is a there are several companies within cosmetics and also cleaning detergents sort of these chemicals industry where these companies offer ecological products there is something that I appreciate because I like that my cosmetics or the cleaning chemicals that I use at my home are at least somewhat ecological and you see there are companies such as eco or body shop that exactly offer me this they do not try to address the wide audience because generally people are not that

5:58ecologically thinking so that their cosmetics should be ecological but there is a niche there is a focus group that will appreciate this offering and well that would be me so that was the focus strategy you can either be the host focus one or the differentiator focused strategy and those were the three generic competitive strategies we have the cost leadership the differentiator and the focus strategy and I'm looking forward to see you in the upcoming videos where we will nicely wrap up these three different strategies in so called strategic lock