Once a company finds the right markets to target, it should keep the same focus as it adds followup products. This advice seems so logical, but many companies ignore it. Company often feel an the urge to expand into new areas where they have little expertise and no established position. Of course, companies must continue to experiment with new ideas. They can not fall into a rut. But they must remember where their positioning strengths lie and take advantage of them.

Digital Research, Inc., is one company that fell into this trap. In the late 1970s, the company became a big success by selling system software for personal computers. Its CP/M operating system emerged as an industry standart and the company`s profit soared.

But Digital Research then expanded into “retail” application software -that is, low-end application software aimed at consumers. The retail software business very different from the expertise were poorlu suited for the new business. Its expansion effort flopped, and the company saw profits drop sharply.