The benefits of specialisation

Many business owners often have the dilemma of choosing whether to specialise in selling a certain product/service, or offer as many products as they can to maximise sales.

What is specialisation?

Specialisation occurs when a business focuses on a specific area or limited scope of products/services, in order to increase their productivity and sales. In economic terms, this is known as division of labour, which encourages trade and economic interdependence. The benefits of specialisation include the ability to excel in one area or target a specific audience, and enabling customers to differentiate your business from competitors.

Excelling in one area

Being a "Jack of all trades and master of none" can often negatively impact your business as it means that you're involved in a vast range of activities but not an expert in any one area. Consider the example of a manufacturing business that tries to manufacture steel pipes, car parts and furniture. These three products are so different from each other that trying to do all of them would place immense pressure on time, employees and resources. On the other hand, a manufacturer of steel pipes, rods and sheets may find it a lot easier to succeed in one industry. You may find that excelling in one area enables you to produce higher quality products that can be marketed to a target group.

Competitive edge

In an oversaturated market, identifying your unique selling proposition (USP) is crucial to standing out and seen as different to your competitors. You can compete on price, quality, customer service or simply that your product is different from any other in the market. To develop your USP, Queensland Business recommends asking yourself the following questions:

  • What is unique about my business?
  • What does my customer want and need?
  • What is the main reason my customers buy from me or buy from my competitors?
  • How can I match or exceed customer expectations?
  • Which areas are being ignored by my competitors?

Also read: 5 things you must know about your competition

Targeted selling

Developing a USP will help you sell to more targeted groups of people, particularly individuals that can't find the same product or service elsewhere. For example, a local cafe that sells vegetarian food will find it easier to market to vegetarian customers rather than a cafe that sells all types of food. Your business may also appeal to demographics you didn't think would buy from you, such as health-conscious or picky customers and local business supporters. This can then help you develop a marketing or sales strategy to target these customers.

Also read: How to identify your target audience

The bottom line...

Specialisation has many benefits but it doesn't mean you have to sell just one specific product. Selling related products that won't place a significant burden on your operations and will appeal to select audiences can be an effective method of specialisation.

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