What is a focus strategy in positioning?

A focus strategy in positioning refers to the approach where a company concentrates on a specific market segment or niche, employing either cost leadership or differentiation to meet the specialized needs of that target market. This strategy is effective because it allows the business to cater closely to the unique preferences and demands of a particular group of customers, which can result in a loyal customer base and a competitive advantage. By narrowing its scope, the organization can allocate its resources more efficiently and develop tailored strategies that resonate well with its audience.

In contrast, the other options provide strategies that do not align with the focused approach. Reducing overall business size or focus is more about downsizing or consolidating operations, rather than targeting a specific segment. Following general market trends without specific targeting lacks the precision necessary for a focus strategy, which is all about specialization. Lastly, a method that cuts costs indiscriminately may undermine the benefits garnered from tailored offerings, as it does not align with the goal of addressing the specific needs of a targeted market segment. Thus, the focus strategy is centered on either low-cost or differentiation approaches aimed at a narrowly defined market, which is why the first option is the most accurate representation of a focus strategy in positioning.