How to create uncontested market space and make the competition irrelevant

Manish Kumar

17 May 2012

Two worlds

Blue Ocean

Red Ocean

Two worlds Red Ocean Strategy

Compete in existing market space. Beat the competition. Exploit existing demand. Make the value-cost trade-off.

Blue Ocean Strategy

Create uncontested market space. Make the competition irrelevant. Create and capture new demand. Break the value-cost trade-off.

Align the whole system of a Align the whole system of a strategic firm's activities with its firm's activities in pursuit of choice of differentiation or low differentiation and low cost. cost. VALUE INNOVATION

Need of Creating Blue Oceans

supply exceeds demand globalization accelerated commoditization of products and services increasing price wars shrinking profit margins brands are becoming more similar select based on price ...

BOS Logic: The Core Principles

Reconstruct Market Boundaries overcome believes.
Reach beyond existing Demand go for uncontested space. Get the strategic sequence right value [innovation] first.

COST

VI VI
VALUE

BOS Logic: Reconstruct market boundaries

Boundaries of Competition
Industry

Head-to-Head Competition
Focuses on rivals within its industry

Creating New Market Space

Looks across alternative industries

Strategic Group

Focuses on competitive position within strategic group Focuses on better serving the buyer group

Looks across strategic groups within its industry Redefines the buyer group of the industry Looks across to complementary product and service offerings that go beyond the bounds of its industry Rethinks the functional-emotional orientation of its industry

Buyer Group

Scope of Product and Focuses on maximizing the value of Service Offerings product and service offerings within the bounds of its industry Functional-emotional Focuses on improving priceOrientation of an performance with the functionalIndustry emotional orientation of this industry Time/Trends Focuses on adapting to external trends as they occur

Participation in shaping external trends over time

BOS Logic: The Core Principles

Reconstruct Market Boundaries overcome believes.

Reach beyond existing Demand go for uncontested space.

Get the strategic sequence right value [innovation] first.

COST

VI VI
VALUE

BOS Logic: Reach beyond existing demand

Core Customer

Noncostumer

Soon-to-be-NC

Refusing Customer

BOS Logic: The Core Principles

Reconstruct Market Boundaries overcome believes. Reach beyond existing Demand go for uncontested space.

COST

Get the strategic sequence right value [innovation] first.

VI VI
VALUE

BOS Logic: Get the Strategic Sequence right

Buyer utility Is there exceptional buyer utility in your business idea?

No Rethink YES
Price Is your price easily accessible to the mass of buyers?

YES
Cost Can you attain your cost target to profit at your strategic price?

No Rethink

No Rethink

YES
Adoption What are the adoption hurdles in actualizing your business idea? Are you addressing them up front?

No Rethink

YES

A commercially viable Blue Ocean Strategy

The case of Accor's Formule 1

The value curve of Formule 1 in the French Low Budget Hotel Industry

References
W. Chan Kim, Rene Mauborgne, Blue Ocean Strategy, 2005, Havard Business School Press. http://www.blueoceanstrategy.com HANDELSBLATT, Donnerstag, 06. Oktober 2005, Mit Nichtkunden neue Mrkte finden. http://www.hotelformule1.com

Question & Answers Session