Ch 3 Reconstruct Market Boundaries Blue Ocean Strategy

Ch. 3 Reconstruct Market Boundaries Blue Ocean Strategy Sara, Cher, Sarah, Daisy, & Sean

1 st Principle of Blue Ocean Strategy • Break from the competition • Create blue oceans • Questions ▫ Are there systematic patterns for reconstructing market boundaries to create blue oceans? ▫ If so, can they be applied across all industry sectors? Yes, there are six basic approaches to remaking market boundaries. Six Paths Framework

Six Assumptions • Define industry and focus on being the best in it. • Look at the industry through generally accepted strategic groups and strive to stand out in the group they play in. • Focus on same buyer group. (Be it the purchaser, user, or influencer. ) • Define scope of products and services offered by their industry. • Accept industry’s functional or emotional orientation • Focus on same point in time (current competitive threats) in creating strategy.

Six Paths Framework • Path 1: Look Across Alternative Industries ▫ Compete with industry and alternative products and services Alternatives Substitutes ▫ Sellers abandon intuitive thinking. ▫ Creation of blue oceans Net. Jets NTT Do. Co. Mo’s i-mode

Six Paths Framework • Path 2: Look Across Strategic Groups Within Industry ▫ Strategic groups- group of companies within an industry that pursue similar strategies. ▫ Two dimensions: ▫ Break from narrow tunnel vision by determining factors that influence customers’ decisions ▫ Ex: Curves for Women ▫ Why do customer’s trade up or down?

Six Paths Framework • Path 3: Look Across the Chain of Buyers ▫ Chain of buyers who are involved in directly or indirectly in the buying process. ▫ Discovery of a new blue ocean Novo Nordisk Focus from doctors to users- Novo. Pen Bloomberg Purchasers to users ▫ What are the chain of buyers in your industry? ▫ By shifting the buyer group, what new value will you add?

Six Paths Framework • Path 4: Look Across Complementary Product and Service Offerings ▫ Value in complementary products and services ▫ Define solution buyers seek in choosing products and services. Before, during, and after product is used NABI- bus transit ▫ How do you eliminate pain points in products and offerings?

Six Paths Framework • Path 5: Look Across Functional or Emotional Appeal to Buyers ▫ Two basis of Appeals Functional (rational) Emotional Customers’ expectations ▫ Challenge functional-emotional orientation and discover a new market space. Ex. QB House- eliminating time ▫ What elements of emotional appeal can you add to a functional orientation and vice versa?

Six Paths Framework • Path 6: Look Across Time ▫ External Trends ▫ The value a market delivers today and the value it might deliver tomorrow. ▫ Finding insights in trends Decisive to business Must be irreversible Must have clear trajectory ▫ Ex. Apple- illegal music

Head to Head Competition Take Aways Industry Focuses on rivals within its industry Strategic Group Focuses on competitive position within strategic group Buyer Group Focuses on better serving the buyer group Scope of Focuses on maximizing the value of Product/Service product and service offerings within Offering the bounds of its industry Functional- Focuses on improving price emotional performance within the functional. Orientation emotional orientation of its industry Time Focuses on adapting to external trends as they occur Blue Ocean Creation Locks across alternative industries Looks across strategic groups within industry Redefines the industry buyer group Looks across to complementary product and service offerings Rethinks the functional emotional orientation of its industry Participates in shaping external trends over time