Blue Ocean Strategic Sequence for Oreck Direct

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Blue Ocean Strategic Sequence for Oreck Direct
Pat Smetzer, Manager, United States

Oreck direct has been providing home cleaning products, such as vacuum cleaners and other household cleaning supplies since the 1970s to consumers. They sell these products through storefronts, retailers, infomercials, and websites.
A small portion of these products is sold to commercial properties (hotels, motels, business offices) for their cleaning needs. These commercial properties are where I believe Oreck direct would be able to expand and grow into a Blue Ocean company.
According to the Kim & Mauborgne the authors of BOS: how to create uncontested market space and make the competition irrelevant, companies such as Oreck need to consider the buyer utility, price, cost, and adoption as their sequence strategy.
- Buyer Utility and Pricing: Oreck’s current commercial vacuum cleaner is a standard Oreck XL with a more sturdy cord, heavier outer bag, and a one-year warranty. Oreck’s vacuum is a quality product, and has been rated by many companies as one of the best vacuums. One way that Oreck may be able to attract commercial businesses is to include the price of their complementary products into the price of the vacuum. This would be similar to Southwest Airlines attracting customers by not charging for luggage.
- Cost: although oreck may lose some profit per vacuum, the increase of sales may make up for those loses.
- Adoption of the strategy: I concur with kim & Mauborgne that these hurdles should be addressed first. One of the hurdles would be to convince the CEO and other partners in Oreck that the consumer is still the target audience.
Ref: Kim, W. & Mauborgne, R. 2005. Blue Ocean Strategy: How to create ncontested market space and make the competition irrelevant.

The Path to Blue Ocean Strategy versus the Strategic Sequence
Andrew Nelson, CEO, Australia
Pat, I like your post, posing a real life case to challenge our application of Blue Ocean Strategy.
But the Strategic Sequence you mention (value, price, cost, adoption) is about the process or sequence of validating and executing your Blue Ocean Strategy rather than the process for originally devising it.
To devise what Oreck should focus on to achieve its Blue Ocean Strategy you must consider the Six Paths to commercially viable innovation and use the tools (Strategy Canvas, Buyer Experience Cycle/Utility Map) to identify the actual strategic moves Oreck should pursue.
For example, your suggestion to bundle other products with the vacuum is a possible six path innovation in the Complementary Products and Services Path. But you should explore all the Six Paths and not just settle on one innovation as that is likely to be easy to replicate.
Also, you mistake "cost" for "price". In the Strategic Sequence, cost means the underlying cost of production.
Any other comments anyone?



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