Blue Ocean Strategy
Science of making competition Irrelevant
Blue Ocean Strategy
There are no permanently excellent companies, just as there are
no permanent excellent industry.Blue Oceans, means all the
industries not in existence today.Blue ocean strategy is about
growing demand and breaking away from the competition.Blue ocean
Strategy challenges company to break away from the from the
cutthroat bloody competition i.e. from the Red Ocean to Blue Ocean.
INTRODUCTION
Compete in existing market space.Boundaries are defined and
accepted and rules are known to the players.Prospective growth and
profit is low due to cutthroat competition.Beat the
competition.Exploits the existing demand.Create a new market
space.Its an untapped market and for which rules are yet to be
set.High scope of market growth and profit.Makes competition
irrelevant.Create and capture new demand.Red Oceans V/S Blue
Ocean
Profit and Growth Consequences of Creating Blue Oceans -
Value Innovation4 Action Plans.3 Tiers of Non Customers.
Strategy Canvas CurveReconstruct Market Boundaries - The Six
Principles of Blue Ocean Strategy.
Analytical Tools and Framework..
Creation of Blue Ocean is by driving cost down while
simultaneously drivingvalue up for the buyers.
Cost saving is done by eliminatingand reducing the factors on
which industry competes.
Buyer value is lifted by raising and creating the elements which
industryhas never offered.Value Innovation
Created ValueTarget new customerUpgrade the value Base model
cost around 1.25lakhSafety test exceeds regulatory requirementsHigh
fuel efficiency and low curb weight and also low emission.
Tata Nano Creating Value Inovation
4 Actions FrameworkEliminateWhich of the factors that industry
take for granted should be eliminated?RaiseWhich factors should be
raised well above the industry standards?CreateWhich factors should
be created that the industry has never offered?ReduceWhich factors
should be reduced well below the industry standards?A New Value
Executive Jet Management, Manages on-demand air charter
services, charter aircraft management, and aircraft management
services. Based inCincinnati, Ohio and United States.How NetJet
Created Blue Ocean
Net Jets 4 Action Framework
3 Tiers of Non Customers
Zynga Creating Blue OceanTraditional Gaming (Red Ocean)Zynga
(Blue Ocean)Industry was divided into different segmentsConsole
basedOnline gamingMobile gaming /Flash gamesConsole gaming
dominated marketplace with 75% of shareSony, Xbox and Nintendo
dominated 95% of share.The traditional gaming companies competed
each other on below criteriaConsoles : top speedHi end
accessoriesHi end real time graphicsCatered only to teenagers and
professional gamers.Parents usually dont recommend as it is
addictive and lack of mind stimulation .Zynga did not compete in
any of the segment or market player dominance.Zynga did not get
affected by industry factorsZynga catered to all - children,
parents and professional.Created and captured new market
demand.
What did Zynga Change??Tier 1 Non CustomerTier 2 Non
CustomerTier 3 Non CustomerAudienceRegular Players - teenage
boysCasual PlayersParents - women/housewivesChange 1Changed genres
completely from shooting, arcade and racing to simulationsCost of
acquisition freeRemoved ViolenceChange 2Made social networking fun
and excitingEliminated hassles of gaming consoles, hardware and
setupPlaying with friends and family not necessarily together
(virtual)ResultFun last longer with reduced time and
effortsNon-Serius play to relax No Winner - No loser
1) Look across alternative industryWhen commercial airline was
fast but expensive and the coach was cheap but slow, Air Asia came
up with point to point direct flight at cheap fare.Now everyone can
fly2) Look across strategic industryFigure out which factors
determine customers to trade up or down from one group to
another
3) Across chain of buyersA chain of buyers who are directly or
indirectly involved in the buying decision.Purchasers pay for the
product or serviceUsers use the product or serviceInfluencers
influence the decision in the purchase
4) Across Complementary Products & ServicesDefine the total
solution buyers seek when they choose a product or service.Think
about what happens before, during and after your product is
used.
5) Look across Functional/Emotional Appeal for BuyersSwatch
revolutionized the affordable watch industry by turning functional
instrument into fashionable and desirable watch which was not so
expensive to purchase.6) Look Across timeYears ago when people were
obsessed with floppy drives, iMac came with CD/DVD and USB drives,
now when all are so use to USB and CD/DVD the new McBook Air has
none of this. As they anticipate that use of internet and USB would
replace CD/DVD
BLUE OCEAN STRATEGY
Blue ocean strategy20-20 cricketLook across alternative
industriesCreated altogether new industry CRICK-ENT by combining
both cricket and entertainmentCreate uncontested market space20-20
cricket is a fast pace game innovation which caters to total market
segment rather than just cricket loversCreate and capture new
demandCreate new demand-watching cricket with familyMake the
competition irrelevantTest cricket and One day are both longer
version of game as compared to 20-20Look across complementary
productProvides complementary service of entertainment along with
cricket
Look across functional or emotional appeal to buyersCaters to
consumers emotional appeal by introducing performance of cheer
leaders and movie starsBreak value and cost trade offProvides
differentiation value at low cost20-20 Blue Ocean
2020 provides great utility by increasing pace of the game and
creates more excitement in shorter version. It combines
entertainment with cricket. Indian Premier League (IPL) is a great
example of 20-20 crickets BLUE OCEAN.It creates differentiation by
introducing the concept of cheer leaders and movie stars in cricket
and provides total entertainment at low cost.VALUE INNOVATION
-CRICK-ENT
4 ACTION FRAMEWORK -
3 Tiers of Non Customers
Strategy Canvas / ValueCurve
