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Table of Contents
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Introduction
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The Industry State Of Play 2003

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The Industry’s Strategic Profile

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The Industry Blocks To Customer Value

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The Buyer Utility Model

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Preparing For Blue Oceans

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8H!
Creating New Demand
.+!'-1$'#C$#'3,/!A='>-$!*&#,G='3-1!U-2&3$$-!C'-=$-G!=!#,3\#-!1$'=$-/3C!5'&K32-!$%=$!
5&13$3&,-G!3$!=1!=!]C#'3&#1X!K3'A!$%=$!&KK-'-G!K#$#'-b&'3-,$-G!1$'=$-/3C!=,G!&5-'=$3&,=2!
1-'73C-1!K&C#11-G!&,!G3/3$=2:!3,,&7=$3&,:!2-=G-'1%35!=,G!15-C3=231$!1-'73C-1D!!

U-2&3$$-!T=1!=!K3'A!$%=$!#,G-'1$&&G!=,G!C&#2G!%-25!C&A5=,3-1!C'-=$-!1$'=$-/3C!=,G!
&5-'=$3&,=2!'-15&,1-!$&!=!K=1$!C%=,/3,/!T&'2G!=,G!G3/3$=2!G31'#5$3&,D!F$!&KK-'-G!
#,5'-C-G-,$-G!7=2#-!3,!%-253,/!C&A5=,3-1!A=,=/-!$%-!K#$#'-D!

"1!=!'-1#2$!U-2&3$$-!C=5$#'-G!A#C%!&K!$%-!-^31$3,/!A='>-$!52=C-!3,C2#G3,/!C&'5&'=$-1:!A3Gb
13j-G!*#13,-11-1!=,G!?<@1D!.#$!3$!=21&!C'-=$-G!,-T!G-A=,GD!!!

!""#$%"$&'! (')*+,#-! .#'/01"2'3!

"#$%!&!'()*()+,-%!%--./01!2(3-)!4--%! "*-5/+2/%,!/067%,)/-%8%-5,()%!/-! <,=-)!>0(0!4/0+05-?!6-*+),@-0,%!A-1B!

9)+0%*(),:!-0-)1;:!/04)+%,)75,7)-!&! C7@+0!D-%(7)5-%:!<*-)+,/(0%:!
)-%(7)5-%! #+).-,/01!-,5E!

! F+)1-!5()*()+,-%8!G"H!IJJ!! '2/-0,%!(4!(,=-)!K-2(/,,-!L7%/0-%%!M0/,%!

6='/-!C&'5&'=$-1!m!5'-73&#12+!3,=CC-113*2-!$&!U-2&3$$-:!A&7-G!K'&A!&$%-'!*3/!K&#'!K3'A1!$&!
U-2&3$$-!K&'!$%-3'!K#$#'-!K&C#1-G:!3,$-/'=$-G!=,G!15-C3=231$!1-'73C-1D!!

L'-73&#12+!#,-^52&'-G!,&,bC#1$&A-'1!1#C%!=1!A='>-$3,/!=,G!%#A=,!'-1&#'C-1!G-5='$A-,$1!
%=G!5'-73&#12+!2&&>-G!$&!&$%-'!3,G#1$'3-1!Z-/(!&,23,-cA='>-$!K3'A1!&'!$'=3,3,/!C&A5=,3-1[D!!
I%-+!,&T!-,/=/-G!U-2&3$$-!*-C=#1-!3$!%-25-G!$%-A!A=,=/-!G3/3$=2!G31'#5$3&,!=,G!3,$-/'=$-!
1$'=$-/+!=,G!&5-'=$3&,1!=C'&11!$%-3'!&'/=,31=$3&,1D!

I%-!A-'/-!T3$%!"CC-11!@C&,&A3C1!%-25-G!U-2&3$$-!C'-=$-!,-T!G-A=,G!=C'&11!*&$%!5#*23C!
=,G!5'37=$-!1-C$&'1D!",G!$%'&#/%!5='$,-'3,/!T3$%!?"V"!F,$-',=$3&,=2:!U-2&3$$-!%=1!=CC-11-G!
5'-73&#12+!#,$=55-G!A='>-$!1-C$&'1!3,C2#G3,/!$'=,15&'$:!3,K'=1$'#C$#'-!=,G!'-1&#'C-1D!!

8M!
How Deloitte Reconstructed Market Boundaries
I%-!'-1$'#C$#'3,/!&K!-^31$3,/!A='>-$!*&#,G='3-1!-,=*2-!$%-!C'-=$3&,!&K!=!*2#-!&C-=,D!U-2&3$$-!
'-C&,1$'#C$-G!C#1$&A-'!7=2#-!-2-A-,$1!=,G!C'-=$-G!=!,-T!=,G!G37-'/-,$!7=2#-!C#'7-D!!F$!
T=1!=*2-!$&!2&&>!*-+&,G!$%-!C&A5-$3$37-!K=C$&'1!$%=$!$%-!3,G#1$'+!$&&>!K&'!/'=,$-G!=,G!
C'-=$-!=!,-T!1$'=$-/3C!5'&K32-D!

I%-!K&#'!=C$3&,1!K'=A-T&'>!1%&T1!%&T!$%-1-!K=C$&'1!T-'-!'-C&,1$'#C$-G!$&!C'-=$-!=!,-T!
7=2#-!C#'7-D!!

Factors Eliminated
• I'=G3$3&,=2!N=2#-1!=,G!6-/=C+!m!U-2&3$$-!'-=231-G!$'=G3,/!&,!3$1!%31$&'+!=,G!
$'=G3$3&,=2!7=2#-1!T=1!3,C&,/'#&#1!T3$%!=!T&'2G!$%=$!T=1!C%=,/3,/!K=1$!=,G!T%-'-!
=G=5$=*323$+!=,G!3,,&7=$3&,!T=1!A&'-!3A5&'$=,$D!!I%-+!-23A3,=$-G!$%31!K=C$&'!$&!
C'-=$-!=,!&'/=,31=$3&,!$%=$!$'=G-G!&,!3$1!73-T!&K!$%-!K#$#'-!'=$%-'!$%=,!3$1!2-/=C+!
=,G!$%=$!$'=G-G!&,!,-T!7=2#-1(!C#'3&13$+:!=G7-,$#'&#1,-11:!=G=5$=*323$+:!3,,&7=$3&,D!

Factors Reduced
U-2&3$$-!=,$3C35=$-G!$%=$!C%=,/3,/!*#13,-11!C&,G3$3&,1!C'-=$-!=!1%3K$!3,!C#1$&A-'!
-^5-C$=$3&,1!K'&A!*322=*2-!=,G!5'&_-C$!1-'73C-1!$&!&,/&3,/!'-2=$3&,1%351:!1&2#$3&,1!=,G!
K'=A-T&'>1D!!

• P--!K&'!1-'73C-!Z*322=*2-!%&#'1[!m!U-2&3$$-!%=1!12&T2+!1%3K$-G!K'&A!=!*322=*2-!%&#'1!
'-7-,#-!A&G-2!$&T='G1!5'&7313&,!&K!1&2#$3&,1:!5'&G#C$1!=,G!K'=A-T&'>1!Z-/(!
U-2&3$$-!U3/3$=2!1-'73C-1:!6-=G-'1%35!"C=G-A+!=,G!a.@"SF[D!U-2&3$$-!31!C&,$3,#3,/!$&!
A&7-!$&T='G1!=!A&G-2!$%=$!31!A&'-!K&C#11-G!&,!5'&G#C$:!52=$K&'A1!=,G!,&,b*322=*2-!
1-'73C-1D!
• )-2=$3&,1%35!<=,=/-A-,$!ZC&,$=C$!%&#'1[!m!U-2&3$$-!%=1!*--,!=*2-!$&!'-G#C-!$%-!
G-5-,G-,C-!&,!C&,$=C$!%&#'1!T3$%!C23-,$1!*+!C'-=$3,/!&,23,-!=,G!1&C3=2!A-G3=!$&&21!
$%=$!=22&T-G!K&'!A&'-!K'-\#-,$!&,23,-!C&,,-C$3&,1D!I%31!%=1!'-G#C-G!$%-!K3,=,C3=2!
=,G!$3A-!C&1$!&K!C&,$=C$!%&#'1!=,G!%=1!=21&!-,=*2-G!=,!&,/&3,/!G3=2&/#-!T3$%!
C23-,$1!'=$%-'!$%=,!3,K'-\#-,$!K=C-!$&!K=C-!A--$3,/1D!!

Factors Raised
U-2&3$$-X1!#,G-'1$=,G3,/!&K!$%-!C%=,/3,/!*#13,-11!C&,G3$3&,1!=22&T-G!3$!$&!=,$3C35=$-!$%-!
K#$#'-!,--G1!C#1$&A-'1D!I%-+!T&#2G!,--G!$&!3,$-/'=$-!$%-3'!1$'=$-/+!=,G!&5-'=$3&,1!=,G!
%=7-!=CC-11!$&!=!T3G-'!'=,/-!&K!1-'73C-1D!!"1!=!'-1#2$!U-2&3$$-!'=31-G!3$1!3,$-/'=$-G!1-'73C-1!
T-22!=*&7-!3,G#1$'+!1$=,G='G1!=,G!=21&!3,C'-=1-G!3$1!'=,/-!&K!1-'73C-1D!

• F,$-/'=$-G!?-'73C-1!m!I%-!C2#1$-'!A&G-2!=,G!*'-=G$%!&K!1-'73C-1!=22&T-G!U-2&3$$-!$&!
'=31-!3$1!G-237-'+!&K!3,$-/'=$-G!1-'73C-1!T-22!=*&7-!3,G#1$'+!1$=,G='G1D!!
• )=,/-!&K!?-'73C-1!m!I&!&KK-'!C#1$&A-'1!=!T%&2-!&K!*#13,-11!1&2#$3&,!$&!3,C'-=13,/!
/'&T$%!=,G!5-'K&'A=,C-!U-2&3$$-!13/,3K3C=,$2+!'=31-G!3$1!'=,/-!&K!1-'73C-1!=*&7-!
3,G#1$'+!1$=,G='G1D!"GG3$3&,=2!1-'73C-1!3,C2#G-!$'=3,3,/:!G3/3$=2!C&,1#2$3,/:!&,23,-!
$&&21!=,G!15-C3=231$!1-'73C-1!Z-/l!=,=2+$3C1[D!
• <='>-$!0&AA-,$='+!m!=2$%&#/%!$%-!3,G#1$'+!%=G!2&,/!C&A5-$-G!&,!A='>-$!
C&AA-,$='+:!U-2&3$$-!5&13$3&,-G!3$1-2K!$&!*-C&A-!$%-!C%3-K!C&AA-,$=$&'!&,!G3/3$=2!
8;!
 G31'#5$3&,:!3,,&7=$3&,!=,G!2-=G-'1%35:!'=313,/!3$1!A='>-$!C&AA-,$='+!=*&7-!3,G#1$'+!
1$=,G='G1D!

Factors Created
U-2&3$$-X1!#,G-'1$=,G3,/!&K!$%-!,-T!*#13,-11!-,73'&,A-,$!2-=G!$&!3$1!C'-=$3&,!&K!,-T!7=2#-:!
,&$!5'-73&#12+!&KK-'-G!*+!$%-!3,G#1$'+D!F$!3,C2#G-G(!

• ?&2#$3&,1!=,G!L'&G#C$1!!m!U-2&3$$-!C'-=$-G!=!?&2#$3&,1!=,G!L'&G#C$1!A&G-2!$%=$!
3,C2#G-G!5'&G#C$1!=,G!$&&21!1#C%!=1!a.@"SF:!6-=G-'1%35!"C=G-A+:!U-2&3$$-!U3/3$=2D!
• !])-=2!$3A-X!=G73C-!m!=,!&,/&3,/!C&,7-'1=$3&,!T3$%!C#1$&A-'1!-,=*2-G!$%'&#/%!
&,23,-!1-'73C-1!=,G!1&C3=2!A-G3=D!!
• I'=3,3,/!1-'73C-1!m!%-253,/!C#1$&A-'1!*#32G!$-C%,3C=2!=,G!2-=G-'1%35!C&A5-$-,C3-1!
$%=$!T&#2G!%-25!$%-A!'-15&,G!$&!$%-!C%=,/3,/!*#13,-11!-,73'&,A-,$D!
• F,,&7=$3&,!5'&/'=A1!m!%-253,/!C#1$&A-'1!$&!'-15&,G!$&!$%-!C%=,/3,/!*#13,-11!
-,73'&,A-,$!=,G!C'-=$-!3,,&7=$37-!5'=C$3C-1!=,G!1$'=$-/3-1!K&'!/'&T$%D!
• ?5-C3=231$!1-'73C-1!m!=22&T3,/!K&'!$%-!3,$-/'=$3&,!&K!1$'=$-/+!=,G!&5-'=$3&,1!=C'&11!
$%-!T%&2-!&'/=,31=$3&,!T3$%!1-'73C-1!'=,/3,/!K'&A!=,=2+$3C1!$&!T-*13$-!G-13/,:!!
• 4=A-1!=,G!F,$-'=C$3&,!m!T%3C%!C'-=$-G!=!,-T!-A&$3&,=2!C&,,-C$3&,!T3$%!C23-,$1!
*=1-G!&,!K#,!=,G!-,/=/-A-,$!

Deloitte’s New Value Curve

I%-!1$'=$-/+!C=,7=1!Z*-2&T[!1%&T1!%&T!U-2&3$$-X1!'-1$'#C$#'-!&K!C#1$&A-'!7=2#-!C'-=$-G!=!
#,3\#-!1$'=$-/3C!5'&K32-D!I%-!G37-'/-,$!7=2#-!C#'7-!3,G3C=$-1!$%-+!-,=C$-G!=!*2#-!&C-=,!
1$'=$-/+D!I%-+!A=G-!$%-!*3/!K&#'!C&A5-$3$3&,!3''-2-7=,$D!!I&G=+:!/37-,!$%-!*'-=G$%!&K!$%-3'!
&KK-'3,/1:!U-2&3$$-!&5-'=$-1!=C'&11!A=,+!3,G#1$'3-1!3,C2#G3,/!1$'=$-/+!=,G!$-C%,&2&/+!
%&#1-1:!A&1$!T3$%!13,/2-!1-'73C-!&KK-'3,/1D!

8O!
Three Strategic Propositions
"1!T-X7-!1--,!U-2&3$$-!C'-=$-G!,-T!C#1$&A-'!7=2#-!$%'&#/%!'-1$'#C$#'3,/!A='>-$3,/!
*&#,G='3-1!=,G!C#1$&A-'!7=2#-D!!.#$!$%-!1$'=$-/3C!'-1$'#C$#'-!T=1!1+1$-A3C!=C'&11!$%-!
&'/=,31=$3&,!=,G!$%-!$%'--!1$'=$-/3C!5'&5&13$3&,1D!!P&'!=!1$'=$-/+!$&!*-!1#CC-11K#2!3$!A#1$!
=23/,!$%'--!K#,G=A-,$=2!1$'=$-/3C!5'&5&13$3&,1(!$%-!7=2#-!5'&5&13$3&,!Z3$!A#1$!&KK-'!
G-A&,1$'=*2-!C#1$&A-'!7=2#-[l!$%-!5'&K3$!5'&5&13$3&,!Z3$!A#1$!*'3,/!1#*1$=,$3=2!'-7-,#-1!
=,G!5'&K3$!$&!$%-!*#13,-11[:!=,G!=!5-&52-!5'&5&13$3&,!Z3$!A#1$!A&$37=$-!3$1!5-&52-!$&!-^-C#$-!
$%-!1$'=$-/+[D!!!

U-2&3$$-!T=1!=*2-!$&!'-1$'#C$#'-!-=C%!5'&5&13$3&,!$&!C'-=$-!7=2#-!K&'!3$1!C#1$&A-'1:!5'&K3$1!
=,G!5-&52-D!

The Value Proposition

U-2&3$$-!'-1$'#C$#'-G!3$1!7=2#-!5'&5&13$3&,!C'-=$3,/!,-T!C#1$&A-'!7=2#-D!I%-!C%=,/-G!7=2#-!
$&!C#1$&A-'1!31!G-A&,1$'=$-G!3,!$%-!1$'=$-/+!C=,7=1!*-2&TD!

The Profit Proposition

U-2&3$$-!C'-=$-G!,-T!'-7-,#-!1$'-=A1!$%'&#/%!1-'73C-1!3,C2#G3,/!U-2&3$$-!U3/3$=2!=,G!
6-=G-'1%35!"C=G-A+D!I%-+!'-G#C-G!&5-'=$3&,=2!C&1$1!1#C%!=1!V)!=,G!$'=3,3,/!C&1$1!*+!
C'-=$3,/!&,23,-!3,b%&#1-!1-'73C-1D!I%-+!2=$-'!C&AA-'C3=231-G!$%-1-!1-'73C-1:!/-,-'=$3,/!
=GG3$3&,=2!'-7-,#-!1$'-=A1D!

8W!
 !

The People Proposition

0-,$'=2!$&!U-2&3$$-X1!1$'=$-/3C!A&7-!%=1!*--,!$%-!C'-=$3&,!&K!=!,-T!C&'5&'=$-!C#2$#'-D!
F,1$'#A-,$=2!$&!$%-!,-T!C#2$#'-!%=1!*--,!$%-!C%=,/-!3,!*#13,-11!1$'#C$#'-:!T3$%!$%-!C'-=$3&,!
&K!C2#1$-'1:!C&AA&,!5-'K&'A=,C-!A-=1#'-1!=,G!/'-=$-'!3,$-',=2!$'=3,3,/!=,G!A-,$&'3,/D!

8Q!
Strategic Pricing
U-2&3$$-!%=1!*--,!=*2-!$&!C=5$#'-!=!A=11!*#13,-11!A='>-$!$%=$!%=1!3,C2#G-G!2='/-!
C&'5&'=$-1:!?<@1:!/&7-',A-,$!=,G!15-C3=231$!1-C$&'1!1#C%!=1!$'=,15&'$:!3,K'=1$'#C$#'-!=,G!
'-1&#'C-1D!!

U-2&3$$-!%=1!5'3C-G!3$1!1-'73C-1!$&!A=^3A31-!G-A=,GD!!I%-!1-'73C-1!%=7-!*--,!5'3C-!=CC&'G3,/!
$&!$%-!-=1-!&K!3A3$=$3&,!=,G!'-2=$37-!$&!C&A5-$3$3&,!$%=$!3,C2#G-G!=2$-',=$37-!3,G#1$'3-1!=,G!
1#*1$3$#$-1!Z1--!I%-!L'3C-!0&''3G&'!&K!$%-!<=11!G3=/'=A!*-2&T[D!

?&A-!1-'73C-1!C&#2G!*-!5&13$3&,-G!=$!=!%3/%-'!5'3C-!*-C=#1-!$%-+!5&11-11-G!=!%3/%!2-7-2!&K!
2-/=2!=,G!'-1&#'C-!5'&$-C$3&,!=,G!='-!G3KK3C#2$!$&!3A3$=$-D!I%31!3,C2#G-G!U-2&3$$-!"CC-11!
@C&,&A3C1!=,G!F,,&7=$3&,!0&,1#2$3,/D!!

?-'73C-1!1#C%!=1!$%-!6-=G-'1%35!"C=G-A+!T=1!C&A5='=$37-2+!5'3C-G!3,!$%-!A3GG2-!'=,/-:!
&KK-'3,/!/'-=$-'!7=2#-!$&!C#1$&A-'1!*+!5'&73G3,/!=,!&,23,-!5'&/'=A!$%=$!/=7-!C#1$&A-'!
=CC-11!$&!$'=3,3,/!=$!=,+!$3A-!K'&A!=,+T%-'-D!I%31!C=A-!=$!*&$%!=!$3A-!=,G!C&1$!1=73,/!$&!
C#1$&A-'1D!!

a.@"SFp!31!A&G-'=$-2+!5'3C-D!F$!&KK-'1!?<@1!1#*1$=,$3=2!C&1$!=,G!&5-'=$3&,=2!-KK3C3-,C3-1!*+!
-23A3,=$3,/!$%-!C&1$!=,G!C&A523=,C-!&K!G-7-2&53,/:!=,G!A=3,$=3,3,/!$%-3'!&T,!1-'7-'b*=1-G!
K3,=,C3=2!A=,=/-A-,$!1+1$-A1D!!

I%-!*-2&T!G3=/'=A!C&,13G-'1!I%-!L'3C-!0&''3G&'!K&'!$%-!<=11!K&'!U-2&3$$-X1!F,,&7=$3&,!
0&,1#2$3,/:!6-=G-'1%35!"C=G-A+!=,G!a.@"SFpD!

Target Costing
U-2&3$$-X1!5'3C3,/!'-1#2$-G!$%'&#/%!=!K&C#1!&,!$='/-$!C&1$3,/!$%'&#/%!K3,G3,/!-KK3C3-,C3-1!$%=$!
'-G#C-G!G-7-2&5A-,$!=,G!&5-'=$3&,=2!C&1$1D!U-2&3$$-!=C%3-7-G!$='/-$!C&1$1!$%'&#/%!C&1$!
3,,&7=$3&,1!=,G!5='$,-'1%351D!

8R!
0&$*%'!+-.'()*!'1$-,*1!.'$%&H9()()*!I!+-.'!())-J&'(-).!

U-2&3$$-X1!2-=G-'1%35!=,G!3,,&7=$3&,!$'=3,3,/!=,G!C&=C%3,/cA-,$&'!5'&/'=A1!1=7-G!U-2&3$$-!
qM99d!5-'!+-='!3,!$'=3,3,/!=,G!q8<!Ze-,!E99R[!5-'!+-='!3,!C&=C%3,/cA-,$&'3,/!*+!*'3,/3,/!
$%-!5'&/'=A1!3,b%&#1-!=,G!G-237-'3,/!A&1$!$'=3,3,/!&,23,-D!S&$!&,2+!G3G!$%-+!A=>-!
13/,3K3C=,$!C&1$!-KK3C3-,C3-1:!$%-+!-7-,$#=22+!C&AA-'C3=231-G!$%-!F,,&7=$3&,!"C=G-A+!=,G!
6-=G-'1%35!"C=G-A+!$#',3,/!$%-A!3,$&!=!,-T!'-7-,#-!1&#'C-D!

",!3,$-',=2!5'&/'=A!C=22-G!]U#A*-1$!I%3,/1X!T=1!C&,G#C$-G!-=C%!+-='D!U-2&3$$-!1$=KK!T-'-!
=1>-G!$&!C&,$'3*#$-!3G-=1!=*&#$!T%-'-!U-2&3$$-!T=1!T=1$3,/!'-1&#'C-1!=,G!%&T!$%-+!C&#2G!
C'-=$-!-KK3C3-,C3-1!=C'&11!$%-!-,$3'-!*#13,-11!3,C2#G3,/!3$1!-,$3'-!5&'$K&23&!=,G!&5-'=$3&,1D!

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