Consulting firms. Do they target only one industry?

Simply put, I would rather be a big fish in a little pond than a small fish in a big pond.

Generally speaking, consulting firms hone in on one specific industry or strategy as it helps define the target audience, skill etc. The idea is simple. If you're a specialized niche, you offer specific clients a service. When you do this, you have a better chance of dominating and building reputation within that niche. If all you do is take bits and pieces from various industries, you'll never be more than a catch-all bottom feeder (as a generalization).

For instance, I run a marketing consult company. We work ONLY with small business owners/freelancers. We don't deal with business to business clients (although we've been swamped with multiple requests). It's against our business focus.

As a consulting firm that focuses on implementing technology to solve business/data centric problems we do not focus in a specific vertical market (HR or Legal). Instead we focus on specific types of problems and clients who need a specific range of advice. Over the years we have done a lot in many different industries but we now have 3-4 industries that we know a lot about.

I think you do need to focus on being "the best" at something, otherwise why would a prospective client choose you over another candidate?

Typically what happens is consulting companies either have a specific domain knowledge like "the problems faced by lawyers" or they simply end up with a good reputation in a given few industries ... this leads to them gaining more domain knowledge in that area ... thus more likely to be thought of by prospects in that industry.

... Most companies will focus on a few key areas so they don't confuse their most likely market or give their competitors the chance to say "we do YOUR thing better". That said nearly all of them will do things outside of their stated scope, they just don't push that through their central branding message.