Concentration strategy involves focusing a business's efforts on a specific target such as a customer group, product, or geographic market. There are three main types of concentration strategies: market penetration, market development, and product development. Market penetration aims to gain market share in an existing market. Market development expands an existing product to new markets. Product development introduces new products for the existing market. Companies that employ concentration strategies specialize in their area of focus to develop expertise and efficiencies. Examples include McDonald's focusing on the Latin American market through advertising and Starbucks selling coffee beans through other retailers.

1. STRATEGIC MANAGEMENT
Concentration Strategies

2. STRATEGY
A strategy is a plan of action designed to achieve a long-term or overall aim.
Corporate strategy is the way in which a business strives to create value, develop a unique selling
advantage and capture maximum market share.
Expansion Strategy is one of the corporate strategies widely used.
Expansion strategy is adopted when an organization aims at high growth by substantially
broadening the scope of one or more of its businesses.
It could be in terms of their respective customer groups, customer functions, alternative
technologies, etc.
Expansion through Concentration is one among the Expansion Strategies.

4. 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.
 A growth strategy where the firm concentrates on its primary line of business.
 The concentration strategy is also known as intensive strategy, focus strategy
or specialization strategy.

5. Ansoff proposed 3 types of
Concentration Strategies in his
product-market mix.
Diversification came up in the later
stage.

6. 1. Market Penetration
2. Market Development
3. Product Development
Types of Concentration Strategies
A firm can use one, two, or all the three strategies as part of their efforts to
excel within an industry

7. Three Concentration Strategies
Market Penetration(Exploration)
• This concerns acquiring a larger percentage of the
existing market for the firms 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.
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.
 Enables the firm to master a few
businesses
 Helps to specialize by gaining an in-
depth knowledge of these businesses.
 Develops a competitive advantage.
 People are familiar with the systems
and processes within the firm.
 The decision making process is under
less strain and there is high level of
predictability.
Advantages

8. EXAMPLES
The world’s leading fast-food brands like Subway, McDonald’s and Starbucks follow the concentration strategy by targeting a specific
target audience in one sort of product or service. It’s one of the main reasons behind their success.
Market Penetration
McDonald’s, the world’s top fast-food brand, has recently shifted its focus on the Latin American market and
employed a market penetration strategy. The fast-food brand has launched advertisement and promotional
campaigns in the Spanish language. The translation of the company’s slogan was “I’m lovin’ it.” The brand attracted
the attention of the Latin customer market and online traffic through its advertisement campaigns.
The world’s leading sportswear brand, Nike, hires sports athletes as the company’s brand ambassadors. The company
features those sports celebrities advertising company’s products. That’s how the company increases the market share
and competes with competitive brands like Puma and Adidas.
Market Development
Starbucks has made a worldwide reputation for selling hot coffee and coffee beans at its franchises. The company has
recently allowed the sale of its coffee beans in the other grocery stores as well. It has helped the company to
approach more customers that aren’t the coffee drinkers of Starbucks.
Product Development
McDonald’s started its business by offering burgers initially; the company expanded its product portfolio by offering
French fries, breakfast, and soft drinks. The product development helped the company to increase its revenue and
market share.

9. Major Advantages
• Economical
• Competitive Advantage
• Specialization
Major Disadvantages
• Limited Customer
• Decreasing Demand
• Limited Diversification

10. Concentrated growth is the strategy of the firm that directs its resources to
the profitable growth of a single product, in a single market, with a single
dominant technology.
Companies that use concentrated marketing emphasize how their products
can meet the unique needs of their niche audience.
Niche marketing is a targeted marketing strategy aimed at small, specific
and well-defined portions of the population. Organizations adopting this
strategy, also known as concentrated or focused marketing, identify a
specific market segment and tailor a marketing plan to that segment's
habits and preferences.
CONCLUSION