There only seem to be about two strategies that work: you can try for growth (like most companies seem to do), or you can try for the niche that will consistently pay for your product. I don’t know if there are other models out there that work, but these two do.
The growth, aka ‘monopoly’, model is what most companies pick because they think it’s easy: just keep selling products to more and more people. The issue with this growth model is that eventually you reach [almost] everyone, and then you can only continue to grow by acquisition. Another problem I can see with it is that if you are trying to reach *everyone*, you will make many of them very unhappy.
The niche model, which far fewer mid-large companies seem to aim for, only goes after a small segment of the population. But they go aggressively for that small segment. Niche providers might ‘accidentally’ reach a large population segment (eg Apple with their iPod), but they thrive because they have customers who will only come to them (perhaps a good neighborhood salon or barber shop), and those customers are fiercely loyal – as long as the business doesn’t screw them over.
When’s the last time you heard of “loyal” Wal*Mart customers? Wal*Mart doesn’t really care if somebody leaves them and goes to KMart. I suppose they might exist, but it seems unlikely.
Compare that, though, to regulars at a local restaurant: where the waitstaff recognizes them, and goes a little (or a lot) out of their way to make their visit better than some new person who happens to stroll in.
Personally, I prefer the niche approach. It’s the Unix theory: do one thing, do it well.
If that one thing turns out to appeal to a lot of people, that’s great.
I’d prefer a strong, consistent, even if small, customer base to a huge one that constantly bitches, changes their mind, and doesn’t care about me.