Blue Ocean Strategy

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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
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Blue Ocean Vs.study Marketing.org 3 . Red Ocean Strategy www.

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 .Blue Ocean vs.

Red Ocean Strategy Blue Ocean Strategy Red Ocean Strategy ‡ ‡ Break the value.org 5 .study Marketing.Blue Ocean vs.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.

Blue Ocean Strategy Tools ‡ 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.org 6 Strategy Canvas . service and delivery ‡ what customers receive from existing competitive offerings on the market www.study Marketing.

Four Action Framework Eliminate Raise Reduce Create www.org 7 .study Marketing.

Four Action Framework Eliminate Which of the factors that the industry takes for granted should be eliminated? Which factors should be reduced well below the industry¶s standard? Reduce Raise Which factors should be raised well above the industry¶s standard? Which factors should be created that the industry has never offered? 8 Create www.org .study Marketing.

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 .

Reach beyond existing demand 4.study Marketing. Reconstruct market boundaries 2. Focus on the big picture.org 10 .Six Principles of Blue Ocean Strategy Formulation Principles 1. not the numbers 3. Build execution into strategy www. Get the strategic sequence right Execution Principles 5. Overcome key organizational hurdles 6.

study Marketing.org 11 .Formulating Blue Ocean Strategy www.

study Marketing.org 12 .1. Reconstruct Market Boundaries Head-toHead-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.

org 13 .1. Reconstruct Market Boundaries Head-toHead-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.

study Marketing.org Visual Awakening Visual Exploration Visual Strategy Fair Visual Communication 14 . not the Numbers Focus on the Big Picture not Picture. Focus on the Big Picture.2. the Numbers The Four Steps of Visualizing Strategy ‡ ‡ ‡ ‡ www.

not the Numbers ‡ Visual Awakening Compare your business with your competitors¶ by drawing your ³as is´ strategy canvas See where your strategy needs to change ‡ www.org 15 .study Marketing. Focus on the Big Picture.2.

org 16 .study Marketing. 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. Focus on the Big Picture.2. create. or change ‡ ‡ www.

and noncustomers Use feedback to build the best ³to be´ future strategy ‡ ‡ www.org 17 . competitors¶ customers.study Marketing.2. not the Numbers ‡ Visual Strategy Fair Draw your ³to be´ strategy canvas based on insights from field observations Get feedback on alternative strategy canvases from customers. Focus on the Big Picture.

2. Focus on the Big Picture.org 18 . 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.

3. Reach Beyond Existing Demand ‡ First tier: ³Soon to be´ nonnoncustomers who are the edge of your market.study Marketing.org 19 . waiting to jump ship ‡ Second tier: ³Refusing´ nonnoncustomers who consciously choose against your market ‡ Third tier: ³Unexplored´ nonnoncustomers who are in markets distant from yours The Three Tier of NonNoncustomers www.

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? www.study Marketing.org A commercially viable blue ocean idea 20 .4.

org 21 .Executing Blue Ocean Strategy www.study Marketing.

5.study Marketing.org 22 . Overcome Key Organizational Hurdles Cognitive Hurdle Overcome Key Organizational Hurdles Motivational Hurdle Resource Hurdle Political Hurdle www.

org . Overcome Key Organizational Hurdles Cognitive Hurdle (status quo) ‡ ‡ Ride the ³Electric Sewer´ Meet with Disgruntled Customers ‡ Resource Hurdle Redistribute resources to your hot spots Redirect resources from your cold spots Engage in horse trading 23 ‡ ‡ www.5.study Marketing.

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 .5.

Explanation. Expectation clarity Attitudes Trust and Commitment ± ³I feel my opinion counts´ Behavior Voluntary Cooperation ± ³I¶ll go beyond the call of duty´ Strategy Execution Exceeds Expectation ± self initiated www.org 25 . Build Execution Into Strategy Fair Process of Strategy Strategy Formulation Process Fair Process ± Engagement.study Marketing.5.

study Marketing. Blue Ocean Strategy.org 26 . Chan Kim and Renée Mauborgne.Source of Reference ‡ W. HBS Publication www.

org 27 .End of Material www.study Marketing.

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