Slide 1: Blue Ocean Strategy www.study Marketing.org 1
Slide 2: Contents 1. Blue Ocean Vs. Red Ocean Strategy 2. Blue Ocean Strategy Tools 3. Strategy Canvas and Four Action Framework 4. Six Principles of Blue Ocean Strategy 5. Formulating Blue Ocean Strategy 6. Executing Blue Ocean Strategy If you find this presentation useful, please consider telling others about our site (www.studyMarketing.org) www.study Marketing.org 2
Slide 3: Blue Ocean Vs. Red Ocean Strategy www.study Marketing.org 3
Slide 4: Blue Ocean vs. Red Ocean Strategy Blue Ocean Strategy Red Ocean Strategy • • • Create uncontested market space Make the competition irrelevant Create and capture new demand • • • Compete in existing market space Beat the competition Exploit existing demand www.study Marketing.org 4
Slide 5: Blue Ocean vs. Red Ocean Strategy Blue Ocean Strategy Red Ocean Strategy • • Break the value- cost trade off Align the whole system of a firm’s activities with its strategic choice of differentiation and low cost • • Make the value-cost trade off Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost www.study Marketing.org 5
Slide 6: Blue Ocean Strategy Tools • Strategy Canvas A diagnostic tool for building a compelling blue ocean strategy It captures the current state of play in the known market space Allow you to understand : • • where the competition is currently investing the factors the industry currently competes on in product, service and delivery • what customers receive from existing competitive offerings on the market • • www.study Marketing.org 6
Slide 7: Four Action Framework Eliminate Raise Reduce Create www.study Marketing.org 7
Slide 8: Four Action Framework Eliminate Reduce Which of the factors that the industry takes for granted should be eliminated? Which factors should be reduced well below the industry’s standard? Which factors should be raised well above the industry’s standard? Which factors should be created that the industry has never offered? 8 Raise Create www.study Marketing.org
Slide 9: Four Action Framework The Case of Cirque du Soleil (A Circus Company) Eliminate • • • • Star performers Animal shows Aisle concession sales Multiple show arenas • • Reduce Fun and humor Thrill and danger Create • • • • Theme Refined environment Multiple productions Artistic music and dance • Raise Unique venue www.study Marketing.org 9
Slide 10: Six Principles of Blue Ocean Strategy Formulation Principles 1. Reconstruct market boundaries 2. Focus on the big picture, not the numbers 3. Reach beyond existing demand 4. Get the strategic sequence right Execution Principles 1. Overcome key organizational hurdles 2. Build execution into strategy www.study Marketing.org 10
Slide 11: Formulating Blue Ocean Strategy www.study Marketing.org 11
Slide 12: 1. Reconstruct Market Boundaries Head-to-Head Strategy Blue Ocean Strategy • • Focus on rivals within industry Focuses on competitive position within strategic group • • • Looks across alternative industries Looks across strategic group within industry Redefines the industry buyer group • Focuses on better serving the buyer group www.study Marketing.org 12
Slide 13: 1. Reconstruct Market Boundaries Head-to-Head Strategy Blue Ocean Strategy • Focuses on maximizing the value of product or service offerings within the bounds of its industry • Looks across to complementary product and service offerings • Participates in shaping external trends over time • Focuses on adapting to external trends as they occur www.study Marketing.org 13
Slide 14: 2. Focus on the Big Picture, not the Numbers Focus on the Big Picture, not Picture the Numbers The Four Steps of Visualizing Strategy • • • • www.study Marketing.org Visual Awakening Visual Exploration Visual Strategy Fair Visual Communication 14
Slide 15: 2. Focus on the Big Picture, not the Numbers • Visual Awakening Compare your business with your competitors’ by drawing your “as is” strategy canvas See where your strategy needs to change • www.study Marketing.org 15
Slide 16: 2. Focus on the Big Picture, not the Numbers • Visual Exploration Go to the field to explore the six paths to creating blue oceans Observe the distinctive advantages of alternative products and services See which factors you should eliminate, create, or change • • www.study Marketing.org 16
Slide 17: 2. Focus on the Big Picture, not the Numbers Visual Strategy Fair • Draw your “to be” strategy canvas based on insights from field observations Get feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers Use feedback to build the best “to be” future strategy • • www.study Marketing.org 17
Slide 18: 2. Focus on the Big Picture, not the Numbers • Visual Communication Distribute your before-and-after strategic profiles on one page for easy comparison Support only those projects and operational moves that allow your company to close the gap to actualize the new strategy • www.study Marketing.org 18
Slide 19: 3. Reach Beyond Existing Demand • First tier: “Soon to be” noncustomers who are the edge of your market, waiting to jump ship • Second tier: “Refusing” noncustomers who consciously choose against your market • Third tier: “Unexplored” noncustomers who are in markets distant from yours www.study Marketing.org 19 The Three Tier of Noncustomers
Slide 20: 4. Get The Strategic Sequence Right The Sequence of Blue Ocean Strategy Buyer utility Is there exceptional buyer utility in your business idea? Price Is your price easily accessible to the mass of buyers? Cost Can you attain your cost target to profit at your strategic price? Adoption What are the adoption hurdles in actualizing your business idea? A commercially viable blue ocean idea www.study Marketing.org 20
Slide 21: Executing Blue Ocean Strategy www.study Marketing.org 21
Slide 22: 5. Overcome Key Organizational Hurdles Overcome Key Organizational Hurdles Cognitive Hurdle Resource Hurdle Motivational Hurdle Political Hurdle www.study Marketing.org 22
Slide 23: 5. Overcome Key Organizational Hurdles Cognitive Hurdle (status quo) • • Ride the “Electric Sewer” Meet with Disgruntled Customers • Resource Hurdle • • www.study Marketing.org Redistribute resources to your hot spots Redirect resources from your cold spots Engage in horse trading 23
Slide 24: 5. Overcome Key Organizational Hurdles • Motivational Hurdle • • Zoom in on Kingpins (key influencers) Place kingpins on a fishbowl Atomize to get the organization to change itself • Political Hurdle • Secure a consigliere on your top management team Leverage your angels and silence your devils www.study Marketing.org 24
Slide 25: 5. Build Execution Into Strategy Fair Process of Strategy Strategy Formulation Process Fair Process – Engagement, Explanation, Expectation clarity Attitudes Trust and Commitment – “I feel my opinion counts” Behavior Voluntary Cooperation – “I’ll go beyond the call of duty” Strategy Execution Exceeds Expectation – self initiated www.study Marketing.org 25
Slide 26: Source of Reference • W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy, HBS Publication www.study Marketing.org 26
Slide 27: End of Material www.study Marketing.org 27