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.

Few companies have done as good a job of choosing target markets as Metaphor Computer Systems. Started in 1983 by a group from Xerox, Metaphor developed a computer system that enables managers and analysts to gain quick and easy access to business data. The system gathers statistics from the company`s own mainframe computers, combines them with data from outside sources, and organizes all the information in a form that is convenient for the manager to use at his risk.

To market their system, Metaphor recognized that it had to target its efforts. Different types of managers have different information needs, and Metaphor could not hope to satisfy all of them. So Metaphor decided to focus its efforts on particular types of managers in particular industries.

To begin with, the company chose two target industries: consumer packaged goods and financial services. And in each industry, it decided to focus on managers in two functional areas: marketing and finance. Metaphor hired experts from each of the target industries, and develop specialized software package to meet the needs of the target managers in those industries.