Successful businesses know exactly who their target customers are. They strive to cater to specific and strategic customer needs. They focus on the most important customers to the business, and sometimes even refocus on a more lucrative target market. But it’s not uncommon for even successful businesses to become unfocused as they seek to grow by catering to a broadening spread of customer demands. And even with a conscious refocusing there are pitfalls; changing target customer isn’t easy and it doesn’t always go to plan.
Tim Flach/Getty Images
Summary.
Companies expanding into new markets often purchase a local player and convert it to their existing strategy, often changing the customer focus in the process. This can be a costly mistake, as Australian DIY Chain Bunnings found to its detriment. Bunnings’ venture in the UK failed because its strategy required a radical shift in primary customers. Companies in similar positions should avoid acquiring businesses whose target customer is too different from its own, or have a clear plan for making careful choices about which customers to prioritize.
New!
HBR Learning
Strategy Planning and Execution Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Strategy Planning and Execution. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
How to develop a winning strategy—and put it to work.
Learn More & See All Courses
New!
HBR Learning
HBR Learning
Strategy Planning and Execution Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Strategy Planning and Execution. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
How to develop a winning strategy—and put it to work.