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What is Blue Ocean Strategy? Description
Rather than competing within the confines of the existing industry or trying
to steal customers from rivals (Bloody or Red Ocean Strategy) W. Chan Kim
and Renée Mauborgne are suggesting Blue Ocean Strategy: developing
uncontested market space that makes the competition irrelevant.
According to Kim and Mauborgne in the HBR of October 2004, competing in
overcrowded industries is no way to sustain high performance. The real opportunity
is: to create blue oceans of uncontested market space.
Competitive Advantage critique
Of course competition is important. But by focusing on competition and
competitive advantage,
according to Kim and Mauborgne, scholars, companies, and consultants have
ignored two very important - and far more lucrative - aspects of strategy:
- To find and develop blue oceans, and
- To exploit and protect blue oceans. These challenges are very different
from those to which strategists have devoted most of their attention.
In blue oceans demand is created, rather than fought over. There is ample
opportunity for growth that is both profitable and rapid.
Two ways to create blue oceans
- One is to launch completely new industries, as eBay did with
online auctions.
- It is more common for a blue ocean to be created from within a red
ocean when a company expands the boundaries of an existing industry.
Certainly Kim and Mauborgne deserve credits for having made the point of
the over-focus on competitive advantage and also for their beautiful metaphor
of the two types of oceans.
Book: W. Chan Kim,
Renée Mauborgne - Blue Ocean Strategy -
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Blue Ocean Strategy - Three Tiers of Noncustomers
"There are three tiers of non-customers that can be transformed into customers. They differ in their relative distance from your market:
1. Non-customers that are closest to your market. They sit on the edge of the market. They are buyers who minimally purchase an industry’s offering out of necessity but are mentally noncustomers of the industry. They are waiting to jump ship and leave the industry as soon as the opportunity presents itself. However, if offered a leap in value, not only would they stay, but also their frequency of purchases would multiply, unlocking enormous latent demand.
2. Non-customers who refuse to use your industry’s offerings. These are buyers who have seen your industry’s offerings as an option to fulfill their needs but have voted against them.
3. Non-customers who are farthest from your market. They are noncustomers who have never thought of your market’s offerings as an option. By focusing on key commonalities across these noncustomers and existing customers, companies can understand how to pull them into their new market." |
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Blue Ocean Strategy: Buyer Utility Map
"In Blue Ocean Strategy, the Buyer Utility Map is a chart that shows the six buy utility levers:
1. Productivity
2. Simplicity
3. Risk
4. Fun/image
5. Convenience
6. Environmental friendliness
These 6 can be pulled in the various stages of the buyer experience cycle." |
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Blue Ocean Strategy - Buyer Experience Cycle
"In Blue Ocean Strategy there is a tool called Buyer Experience Cycle. It deals with the experience a buyer has in the various stages of buying-owning-disposing of a product or service. There are six stages of buyer experience:
1. Purchase
2. Delivery
3. Use
4. Supplemental products/services
5. Maintenance
6. Disposal
Who has anything further to share RE this tool?" |
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Blue Ocean Strategic Sequencing for Delta Airlines
"The fourth principle of the Blue Ocean Marketing Strategy is to get the Strategic Sequence of the Blue Ocean Strategy correct. The sequence has four steps which are utility, price, cost, and adoption. The company that I have been studying is Delta Air Lines.
- Utility. Delta’s flight experience unlocks exceptional utility. While in flight, travelers have many entertainment options such as music, new release movies, and video games. When customers are travelling to a far destination they can also enjoy meals and snacks while enjoying their entertainment. Another benefit that comes with using Delta is that the first bag checked in is free. If someone is only travelling with one piece of luggage, they do not have to pay any extra for luggage. Delta’s amenities give customers reasons to keep choosing their airline for their travelling needs.
- Price. Delta strives to provide the lowest prices to its customers. In 2008, Delta began to offer a program called “Best Fare Guarantee.” With this program, they guaranteed that customers would get the best price if they purchased tickets at Delta.com. If customers found a better price with another airline, Delta guaranteed to refund the full ticket price or the difference in price between Delta’s ticket and their competitor’s ticket.
- Cost. In 2011, jet fuel prices began to rise. Jet fuel prices rose over fifty percent higher than the prices in 2010. “Every penny increase in the cost of jet fuel makes a $175 million difference to those carriers' bottom line, according to John Heimlich, chief economist for the U.S. airline industry group, the Air Transport Association. So when the jet fuel price rises by $1, as it has done over the past year, it adds $17.5 billion to the carriers' costs.” (Lavelle, 2011, para. 8) Delta as well as other airlines had to find ways to cut costs so that they can continue to make a profit. In 2011, Delta decided to cut the number of aircraft and seats that it was using in order to cut costs. Delta also had to temporarily raise prices in order to prevent severe revenue damage due to the high fuel costs. In May 2012, Delta came up with a better idea to cut costs. They decided to purchase an oil refinery. This purchase will allow Delta to save about $300 million per year on fuel costs. (O'Toole, 2012) By lowering costs, Delta will also be able to lower its ticket prices which will cause consumers and business to use their airline more. More customers will bring Delta more revenue.
- Adoption. Delta adopted an approach that benefits their customers, shareholders, and employees. They use investment and innovation as a means of continuously improving their airline so that everyone will be happy with the company. (Delta Shareholders Elect Board, n.d., para. 7) They care of their shareholders making money, customers saving money, and their employees working in a good environment that they are proud of." |
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eBay's Blue Ocean Strategy Strategic Sequence
"eBay operates in a Blue Ocean today due to their ability to capitalize on their first mover advantage and immense popularity. The BOS sequencing for eBay is:
- Buyer utility: eBay innovated a convenient way for sellers to list, and buyers to bid on and purchase, items online. The utility is clear for both buyers and sellers: buyers get the chance to purchase items at extremely attractive prices due to the buyer-driven market, and sellers are offered the exposure of a global marketplace in which to sell their items—all done with the excitement of an auction-style sale.
- Pricing: since eBay was only a sales broker of sorts, pricing was free for buyers and only a percentage of total sale price for sellers—and in its most basic format, sellers were only charged if the item sold. The online auction model was untested, and would be fairly easy to imitate by a competitor, so strategic pricing was set very low since volume was the key as they would be dependent upon network externalities to be successful.
- Cost: since all transactions occurred online, and all with third-party goods offered for sale, overhead was low. eBay was able to apply price-minus costing to arrive at a profitable yet hard to match price cost structure.
- Adoption: eBay’s clearest adoption hurdle was consumer trust. Today there are numerous tools which were introduced at various points in the history of the business that help create trust in eBay’s market, such as detailed seller feedback and dispute resolution processes. However, at the time of company founding, the online auction concept was so new that eBay had to take a leap of faith for the sake of their own market. eBay addresses this on their values page of their website where they state, “Pierre Omidyar founded eBay on a simple idea: people are basically good.” eBay started small, and as trust was built quickly gained momentum--aided no doubt by their low pricing structure and overall value innovation." |
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Blue Ocean Strategy Sequence L.L. Bean
"The four steps of strategic sequencing for L.L. Bean's Blue Ocean Strategy (BOS) begin with buyer utility and the six stages of the buyer experience. (Kim & Mauborgne, 2005, P. 121).
When I analyzed the buyer utility map in relation to internet or mail order shopping, I was able to notice the biggest blocks to non-customers quite easily. In the purchase stage, “risk” was one lever in particular that stood out:
- Non-customers may feel that internet shopping is not safe. L.L. Bean encrypts any banking information on their website.
- They may also worry that something they buy may not fit or serve the purpose they initially thought it would. This would be a risk in the “use” stage. L.L. Bean took care of this block also with a 100% satisfaction guaranteed. They offer a lifetime guarantee and advertise their products as “built to last”.
- They offer free shipping on sales and returns so the delivery aspect is simple and convenient with no risk. These policies have cut across the biggest blocks and offer exceptional utility for customers and non-customers.
In the “strategic pricing” step, L.L. Bean has priced their products in the low end of the “price corridor”, and they rely on volume sales, because their strategy is easy to imitate.
Cost: “Target costing” was accomplished by cutting costs in their manufacturing, distribution, and administrative departments. They streamlined distribution with the use of bar codes and RFID in their warehouses and used direct shipping from third party manufacturers. They utilized software to eliminate staff in their accounting departments.
When they got to the last step of “adoption”, they communicated to their employees and other stakeholders that their jobs were secure and the revenue streams were not in any danger of decreasing but rather that it would increase due to volume sales." |
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The Blue Ocean Strategy (BOS) Sequence of Citibank
"This week in a college class I am attending, we are looking at the sequence of the Blue Ocean Strategy. And more specifically, I have been researching Citibank.
Today, I would like to examine Citibank and evaluate the sequence in accordance with Kim & Mauborgne’s Blue Ocean strategy. To start off, let us examine the four sequences or steps and how they relate to Citibank.
1. Buyer Utility. The question: “Is there exceptional buyer utility in your business area?” Is your company truly offering something exceptional to the public or is it offering something that has already been seen? The answer: no. After looking into Citibank’s offerings of banking, they do not offer anything outside normal for large banking companies today.
2. Price. The question: “Is your price easily accessible to the target mass of buyers?” Is your product priced so you are not excluding a large amount of potential customers? The answer: yes.
3. Cost: the question: “Can you attain your cost target to profit at your strategic price?” Is the company still able to make a reasonable profit by offering the product at a reasonable price? The answer: yes.
4. Adoption: the question: “What are the adoption hurdles in actualizing your business idea? Are you addressing them upfront?” What are the conflicts that will arise with the new product? Is there a large sum of money that will need to be paid up front for new processes? Will there be initial resistance from employees and/or customers? The answer: yes
Conclusion
As one can see, Citibank did not make it that far in the sequence of the BOS. What banking companies really struggle in is that none of them truly offer something amazing or exceptional compared to all other banks. They may for a period of time, but then other companies catch up. For a while, automated teller machines (ATMs) were the selling point, then free checking, then online banking, etc. I am almost getting the feeling that for some businesses, such as banks..." |
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Blue Ocean Strategic Sequence for Barnes and Noble
"Barnes and Noble while it is not presently in a Blue Ocean environment it is certainly a company that has a history of pursuing such environments and appears to be following the same procedures to achieve Blue Ocean strategy success yet again. In the past it achieved its success by creating bookstores that were a destination, complete with Starbucks coffee bars and comfortable, rather than just a marketplace in which to buy commodities. Next, Barnes and Noble introduced the Nook and recently sold an interest in its business to Microsoft.
The Blue Ocean Strategy Sequencing for Barnes and Noble's nook follows the standard model of utility, pricing, cost, and adoption. It is all fairly straight forward with the Nook:
- The utility is rather obvious it allows users to carry hundreds, if not thousands, of books in the space of a modestly sized paperback. In addition, it creates added functionality by including a dictionary that is linked to the books so that readers can easily see the definitions of words as they read them simply by pressing the word on the screen. Also, the Nook offers the ability download other apps in order to add functionality to the unit.
- The strategic pricing aspect of sequencing is achieved by offering what is essentially a light weight tablet at the price of an e-reader. While it is largely intended as an e-reader and a customer might be reluctant to use the nook for all their computing needs the nook is still capable of offering quite a bit of computing power for its price. Also, Barnes and Noble is able to offer books and magazines at a significantly lower price because the cost of the electronic versions of books and magazines is such much lower than that of the traditional paper versions.
- The cost step of sequencing was covered while discussing the price, the cost of electronic media is significantly lower than the traditional paper media, allowing the company to pass the savings on to the consumer.
- Barnes and Noble had an advantage in the adoption of an electronic e-reader of its competitors." |
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Blue Ocean Strategic Sequence for Blockbuster
"The BOS sequencing for Blockbuster is as follows:
- Buyer utility. They created buyer utility by offering convenience and affordability with their new online renting business model. They took away the hassle of having to drive to the store and created a low monthly membership in which customers can rent unlimited movies.
- Pricing. Next, they created strategic pricing by offering a free first month trial. This lures customers in and creates a buzz which in turn creates volume which in turn creates higher returns. The actual membership prices are low for the same reason. Also the risk of free riding is another reason for low pricing.
- Cost. Thirdly Blockbuster achieved successful target costing by getting rid of most of their physical stores. This along with the fact that they are also not paying employees that would be working at those stores contributes to a cost structure that is profitable.
- Adotion hurdles. Lastly Blockbuster successfully overcame the hurdles that come with the adoption phase. Since Blockbuster was bankrupt at the time of its new business venture, it did not have any employees to announce the new venture to but it did stay true to its business partners which are the movie studios by agreeing to pay them profits from the new business venture. They also acquired acceptance from the general public by offering free trial memberships.
If anyone has any feedback on my post please reply. Thanks." |
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Blue Ocean Strategic Sequence for Oreck Direct
"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." |
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Blue Ocean Strategic Sequence for Amazon.com
"To create a Blue Ocean Strategy company there has to be Strategic Sequencing. The components of BOS strategic sequencing are: buyer utility, price, cost, and adoption, in this order.
It is very important that each component of the sequence be in the same order as listed in order to successfully create a Blue Ocean for any company.
A company may have all of these components already, but may not be putting them in the correct order or putting enough time and energy into the components.
We are going to look at how Amazon is doing in each of these categories.
The first component of the sequence is the buyer utility of the company, this means that the Amazon needs to have a compelling enough reason for customers to purchase from them. The online site offers its customers the option to buy and sell their own items, and carries a wide range of products. This utility is extremely attractive to customer but there are other sites that allow this too. Next the second component is price.
Setting the right price is key in creating a Blue Ocean strategy organization. The store needs to provide attractive and reasonable price to their customers without relying solely on price being the influence of demand. Amazon allows customers to create an account and buy and sell items at a lower than average cost than most retail stores. Allowing customers that sell on the Amazon site to set their own prices with many different sellers to choose the best deal in my opinion contributes to the price component.
Third in the list of components are the costs. Costs are normally the main thing that drives prices. This should not be the case, the company should be able to meet target cost without forgoing utility or driving costs up. Amazons customers set their own prices therefore it would be difficult to tell if they are setting the prices of their items based solely on the costs of them.
And the final component is adoption. Evolving into a Blue Ocean Strategy company involves addressing the adoption hurdles before you put your idea into place. Your new ideal or strategy may face many speed bumps along the way but you have to be ready for these, if you are not ready then your move to becoming a BOS company may fail." |
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Blue Ocean Sequencing - Bank of America
"As described by Kim and Mauborgne (2005) there are four principles that make up the Blue Ocean strategy: buyer utility, price, cost and adoption. To push Bank of America into a Blue Ocean, I propose they create an application for their customers that will display a unique bar code on their smart phone that can be scanned at other businesses as a form of payment, thus eliminating the use for a debit and credit card.
Following the sequencing strategy, a large amount of customers would like to have this product because of its ease in use and removing the need for a debit and credit card. The price would be reasonable for customers, a 99-cent application that could be downloaded to your smart phone. The cost to bank of America would be for the creation of the software application. The final sequence adoption, the hurdle will be ensuring the software application has the highest security possible along with password protection with the possibility of adding fingerprint authentication in the future.
Reference: Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy, Harvard Business School Publishing Corporation" |
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Blue Ocean Strategy of Google
"First it was IBM, then Microsoft and now Google. How Google made it to the top ? Adopting BOS ?
Google is a wonderful company revolutionizing information technology. The success of the networking company relies on Google's adoption of Blue Ocean Strategy. A BOS strategy follows 4 steps in the sequence of buyer utility, price, cost, and adoption:
Buyer Utility: Google Company followed those steps and made the buyer utility the major tool to attract new customers. The buyer utility enclose the fastest and best quality searching engine and the Gmail with unlimited free services. The search alone catapulted the company at the begging because it is what customer wants. Google Maps with searching direction coupled with the GPS services is also the best customer can get online. The GPS service is amazing and provides a live feed of traffic and weather report! Google News and YouTube coupled with Google Docs and many other applications such as “Android” software for cell phone are dazzling with better performance. The buyer utility list is long and is growing every year.
Pricing. Most of Google products are free and this is killing the competition of other companies. The “free” services are making the competition irrelevant. Many companies are following the same path because it is hard to compete against free services. From Adobe to Mozilla via Banking or Pharmaceutical companies, they are all offering free services. The power of “free” services is ruling today’s globalization market.
The cost for the service is cheap since the company is using simple computer applications coupled with ingenuity to create market genius strategy. Google generates it revenue from online advertizing using Google AdWords or AdSense. As it was reported: “While ads on its search engine service and partner sites continue to be Google's primary source of revenues, Google has been venturing into new initiatives in order to further boosts its dominance. Aside from a social networking site that would take on Facebook, the world's most visited site after Google, according to Alexa rankings, Google now has a stake in mobile phones and personal computers.”(International Business, 2011). The Android operating system for mobile phones is revolutionizing the cell phone industry.
The adoption of most Google applications is just for fun, simplicity and result. People use it and love it and most of the time it is free. The first time I used Google search and Gmail, I never return back to MSN or Hotmail. The first time I use the friendly Android cell phone, I went back to Sprint and changed my cell phone running Palm OS to Android phone. Many have tried Google Maps and now Google Earth, Google+ and Google Ocean for better exploration of the bottom of the Blue Ocean.
Reference: International Business, T. (7). Google+ Skyrockets to 10 Million Users; Google Revenues Beat Estimates. International Business Times." |
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Blue Ocean Strategy Sequencing for Blockbuster
"BLOCKBUSTER is an american-based provider of home video and video game rental services.
- Buyer utility: Blockbuster already offers different videos, but it could unlock exceptional utility if it also offered a wider range of subscription online streaming and music. The company already offers convenience, customer productivity, simplicity, as well as some other utility levers.
- Pricing: Blockbuster currently charges $9.99 - $14.99 a month. The low price must stay the same to attract the mass of buyers. With more options like music and online streaming, the customer will be getting more for their money. Blockbuster already did a great job strategically pricing their services. Blockbuster’s prices beat other strategic groups like entertainment retailers and movie theaters.
- Cost: with these additions I've mentioned Blockbuster will gain more customers since it’ll be offering more services than competitors. Blockbuster has already partnered with other companies which would help it meet its target cost.
- Adoption: Blockbuster should keep stakeholders informed of any big changes." |
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Blue Ocean Strategic Sequencing - Exxon Mobil
"I’m completing a college assignment and request feedback on my thoughts about Exxon Mobil and Blue Ocean sequencing.
Buyer utility: being an oil and natural gas producer, an alternative energy source is the path most apparent. Focus needs to be on the transportation industry with the massive users of trucks, trains, aircraft, and large ships, and industrial energy use, to provide a viable alternative fuel source.
Price: to get the customer price at least equal of what is currently being purchased. The performance would need to match or exceed the current standard. The ultimate goal would be to find a source that is abundant enough to keep prices from fluctuating to much easier budget.
Cost: partnering may be the best approach to keep costs down. Large-scale engine manufacturers, like general electric, are a good choice to team up with.
Adoption: need to sell users on what the new product can bring to them. Ease of use, availability, and vehicle fleet modifications are a concern.
Thanks for your time." |
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Blue Ocean Strategic Sequencing - Dell
"I have been researching dell for the past several weeks in my business class and we are currently looking at the Blue Ocean strategy. I was asked to describe my sequencing of Dell and this is what I have come up with. I would appreciate any feedback, comments or anything that could help me in better understanding the process.
Buyer Utility - Dell offers exceptional buyer utility by catering to a wide market group. It is perfect for students, teachers, businesses and also personal uses meaning that Dell offers a variety of products that will fit the needs of everyone.
Price - Dell offers products with a price range that works that can fit the needs of anyone. They also offer payment options and their own credit card that will also help consumers be able to purchase the computer or laptop that will fit their needs the best.
Cost - Dell being a company that uses a lot of technology, not only is it important to be able to keep up with the newest and greatest technology, it is important to keep the price down too. By offering computers with only the basics to the computers that have the all the bells and whistles with reasonable prices, they are able to keep the costs low and consumers happy which makes Dell bring in more of a profit.
Adoption - The biggest hurdle for Dell is getting the consumers to choose their company over other companies such as Apple. Advertising, and promoting the newest, and improved technology as it is received and processed into their computers would allow the consumers to see that Dell is a high quality product with a low price." |
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2 Wheeler Market in India in Mid 80s
"Another example of huge success of blue ocean strategy is 2 wheeler market in India in mid eighties.
Upto mid eighties two wheeler market was dominated by Bajaj Auto which had almost 100% market share with waiting period of 3-5 years for their 2 stroke 150cc fuel guzzling, (30-40 km/ltr) sluggish but dependable scooter.
Honda entered this market with very fuel efficient (100 km/ltr), 4 stroke mobike which had very good pick up and also could run on unmetalled village roads.
Honda could foresee rising fuel prices, untatapped rural market and younger generation of India which loved fuel efficiency with good pick up. Within next 5 years Honda mobike was largest selling two wheeler in India and had captured more than 50% market share. At present this mobike is largest selling mobike in the world." |
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Blue Ocean Strategic Sequencing - Apple
"I think Apple computers have demonstrated remarkable success of Blue Ocean strategies time and again by launching new products: first iMac, then iPods, then iPhones and now iPads. I hope they keep this up..." |
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Blue Ocean Strategic Sequencing - Amtrak
"To get Amtrak to a blue ocean, I propose to make it a more family-friendly product with a kids’ car (similar to Disney’s kids’ activities on their cruise ships), and replacing the snack car with food franchise cars to allow for more healthy and varied food options.
My sequencing for Amtrak includes the four steps of buyer utility, price, cost and adoption hurdles (Kim & Mauborgne, 2005).
- The buyer utility for Amtrak first and foremost is that train travel contains fewer hassles than car and air travel. With the added features listed above as well as assigned seating on every trip, train travel could surpass air travel as the number one way customers travel in the country.
- The price of this service would be comparable with or slightly lower than commercial air travel; however, given the new Blue Ocean strategy, Amtrak should have no problems attracting and retaining customers.
- As for cost, Amtrak currently operates a snack or café car. With the removal of this service, the price of ordering, storing and shipping the food that is served from that car is eliminated, as is the need to pay someone to man the car. Instead, the food franchise cars will bear the responsibility of the food supply chain and staffing the cars. In addition to the franchise fee to the company, the franchise would pay either a percentage of the profits or an exclusivity fee to Amtrak. This eliminating of its own expenses while gaining revenue from the franchise should help Amtrak defray the costs of the kids’ car. The added bonus of customer satisfaction should assist in boosting revenue, thereby earning a healthy profit margin.
- The adoption hurdles associated with this plan are two-fold: buy-in from franchise companies and consumers. Franchises might not want their company associated with Amtrak. Consumers might not like the idea of a family-friendly train at all and might prefer to continue to fly." |
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Blue Ocean Strategic Sequencing in Office Furniture
"I am working on a Blue Ocean strategy for a course I am taking, and am hoping to get a bit of input on what I have developed for its sequencing.
My goal is to take a fictitious office furniture manufacturing and sales company out of the red and into the blue by changing the way the company deals with customers.
Instead of offering one size fits all solutions, Ironseat, the company in question, would work with purchasers to establish “fittings” during which employees would be able to try out a number of seating solutions selected by the purchasers to find the one that best suits them.
Additionally, Ironseat would simultaneously offer complimentary items that further assist in the creation of an ergonomically healthy workplace. The goal is to increase buyer utility by offering the potential of reduced repetitive stress injuries and ergonomics issues by giving each user a custom, tailored solution. My sequencing is as follows:
- Buyer utility: By offering customers the ability to custom order seating and ergonomic accessories for each employee, customers can be sure their employees have workable ergonomic solutions that suit their needs. Offering something unavailable from standard furniture sales agents, Ironseat brings their customers a level of utility far and above what they have come to expect from office furniture sales.
- Price: Pricing for individual items is only marginally more expensive than the industry average, allowing for the coverage of extra personnel costs due to more in depth user consultations. Though this idea does reflect a slight increase in initial cost to the customer, it does not create a barrier to entry. Furthermore, with the additional value offered by Ironseat via their highly customized ergonomic solutions (leading to lower occurrences of repetitive stress injuries and ergonomically generated pains) any additional costs are offset by long term savings in medical costs and lost productivity.
- Cost: With personnel costs rising by a fair bit, savings will need to be made to ensure Ironseat can maintain profitability with its selected strategic price. To meet this requirement, Ironseat will need to investigate new methods of design and construction in an effort to reduce unit cost.
- Adoption: The three levels of stakeholders must be accounted for to ensure a strong level of adoption. First, the new strategy must be explained to the employees. There exists a potential issue here, particularly with the sales force. With a myriad of new requirements being piled on the sales side, there is a reasonable expectation that there will be push back from the sales force. With this in mind, it is imperative that the benefits of this new strategy be thoroughly explained to the sales force in order to gain their buy-in." |
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Nestle Blue Ocean Strategy Sequencing
"Nestle's Blue Ocean Strategy Sequence
Greetings to the group. For an assignment I described a Blue Ocean strategy sequence for Nestle. Please read the following and make any comments or suggestions you think of! Thank you in advance for your participation.
Introduction:
The Blue Ocean strategy sequence as described by Kim and Mauborgne (2005) follows the pattern of: buyer utility, price, cost, and adoption.
Using this sequence, please consider the following business idea for Nestle Drink Products to open a Blue Ocean market in children’s drinks:" |
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Blue Ocean Strategic Sequencing - Boeing
"Buyer utility: Boeing has a buyer utility that reaches a smaller amount of the populace, aircraft companies. That being said, there are plenty of options for Boeing to be the best option for their customers. They consistently set aggressive delivery dates as well as offer a continuing maintenance practice that allows customers access to blueprints, maintenance drawings, and parts.
Price: the price of the aircraft is completely up to the customer. It can range from very inexpensive (in aircraft terms) to very expensive depending on the options that customers request. Also, there are deals that can be reached with the customer on multiple package options.
Cost: this is the most difficult step of the sequence due to the fact that there are several factors out of Boeing’s control. Bad parts issued from supply as well as maintainer issues can weigh heavily on the cost, but these things are planned for in the price quoted to customers.
Adoption hurdles: there are very few adoption hurdles in the airline industry." |
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Strategic Sequencing Education Industry for Adults
"There needs to be significant changes in the way education is delivered to adult learners. A new company could use this strategy.
Buyer utility: with high unemployment, new skills are needed by most workers to be competitive. Flexibility and convenience of online education would be attractive.
Strategic price: kept low enough that many employers could reimburse tuition. There are also student loans and grants. It is an investment for future higher earnings.
Costs: company could save a lot by not focusing on research facilities and instead, focus on imparting knowledge and skills to learners. Videos could replace lecture courses. No campus to maintain will save as well.
Hurdles: current accreditation practices may not be adequate. There is a stigma attached to degrees earned through the internet. Old school mentality is maintained by the ivory tower elitists." |
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Nintendo's Wii BOS Strategic Sequence
"Get the Strategic Sequence right," is an important part of the Blue Ocean strategy. Buyer utility, price, cost and adoption. Nintendo has been successful in meeting all the strategic requirements by the creation of Wii. This product meets the buyer's expectation from every angle. Value is defined in terms of utility to the buyer. As Steve Jobs (rip) put it best: "... It's not about pop culture, and it's not about fooling people, and it's not about convincing people that they want something they don't..."
Nintendo is not trying to convince buyers that they are receiving the best graphics, the best chip, or the brest home entertainment system. They are marketing a game system that is the most fun and that is the primary utility they receive from any game console.
Nintendo refused the complexity and added the ease of use and fun. The price is accessible to the mass of buyers and the cost to Nintendo is relatively low with a high profit margin. Adoption hurdles are non-existent for Nintendo. Everyone seems to love Wii." |
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Verizon Communications Strategic Sequencing
"Verizon communications Strategic Sequence:
- Buyer utility-mobile devices unlock exceptional buyer utility in terms of convenience and entertainment. They also substantially increase buyer productivity and are deemed a necessity by many.
- Price-due to the extreme competitive industry Verizon faces, a strong attempt in providing more flexible plans for individual subscribers could help set them apart. This along with maintaining unlimited data plans and military or other discounts.
- Costs-enticing two year contracts is where Verizon makes their money so having competitive phones being offered for greater discounts or even free in conjunction withe plans could increase market share. This example pertains to select phones being offered by competitors such as the iPhone or androids.
- Adoption hurdles-consistently making headway with lobbying and attaining greater network share could perpetuate their "most reliable network" status. The largest hurdle will be the continuous price war they face with at&t and sprint." |
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Papa Murphy's Strategic Sequence
"Papa Murphy’s strategic sequence:
- Buyer Utility - as a retailer of take n bake pizzas, Papa Murphy’s provides an alternative to industry offerings. One can either order a restaurant style pizza, made to order and ready to eat, or a frozen pizza that can be taken home and consumed at a later date. Take n bakes offer the best of both worlds-a fresh pizza made to order, and consumable at the buyer’s convenience.
- Price - the pizzas are competitively priced, affordable, and within the industry norms.
- Cost - this step tells us to make sure that a profit is still attainable. The lack of ovens and related necessities produces less overhead, allowing papa murphy’s to win industry awards year after year for its profit growth.
- Adoption Hurdles - in the beginning, the owner of Murphy’s pizza lacked success because he had no prior fast food experience. As a result, he brought in the owner of Papa Aldo’s Pizza who had much fast food experience. The two combined and created Papa Murphy’s." |
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The Importance of Innovating
"This model is useful because it makes managers think about breaking the rules of competition.
Aristoteles said: "You can't change the wind, you can however adjust your sails.“
So let's adjust our sails to reach a blue ocean." |
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Blue Ocean Strategic Sequencing - Best Buy
"Buyer utility. For Best Buy, I see the most compelling reason the mass of people flock there is because of the vast products and product experience the customers can get. In the gaming environment, customers can experience the game before they purchase it.
The prices are competitively priced and sometimes a bit higher. Most consumers will pay a higher price from a trusted retailer.
Cost. Best Buy has confirmed the profits are being made as they are the top retailer by exceeding analyst' forecasts in the first quarter of this year.
Adoption. Best Buy management is encouraged to change the displays to fit the individual store locations. A Houston store recognized that they had an increased international customer base so they moved the iPods and international power converters to the front of the store. This change increased the sales 67%. Most large retailers do not change displays per store assuming all stores will have the same success with the same displays. Any thoughts?" |
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Wal-Mart Strategic Sequence
"Based on the BOS sequence, Wal-Mart (branded as Walmart since 2008) is clearly in a blue ocean:
The buyer utility is obvious, peddling the most popular and essential items from a dozen different stores into one location. Rather than spend an entire day shopping, a common customer can go directly to WalMart and purchase most if not all the items on their shopping list.
The price is one of WalMarts strongest suits, they have Chinese and many domestic producers leveraged to the point where they can offer unbeatable price value.
The cost is also a parameter that they have down pat, with their mastery of supply chain management and overwhelming volume, there is no surprise that they rank high in the fortune 500 list.
Adoption was seamless; WalMart has become as American as baseball and apple pie. Offering a wide variety of goods at very low prices draws and retains customers easily.
Any thoughts from the shooting gallery?" |
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Blue Ocean Strategic Sequencing for US Airways?
"US Airways is in in a red ocean, they must determine there their 3 tiers of consumers. For them to work toward a Blue Ocean they need to think of non consumers first, commonalities before differences and then desegregation before pursuing segmentation.
Once they determine there strategy and answer those questions then they may move onto buyer utility and the blocks that may encompass this step.
US Airways has room for improvement, for example, one reason people beside business class individual are not flying is due to today economy (cost) due to fuel, why not purchase fuel in bulk at a fixed rate or move to smaller airports which could possible open those people that are on the edge or even the consumers that do not pick there service at all.
Then they can move onto the next step of price, cost and adoption in this sequence. Once all this has been completed then they can move onto the utility map to validate. Either way US Airways needs to re-look at their business model and make some changes. Thanks for your feedback." |
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Six Paths Framework for Property Management Companies
"For the property management industry, one of the major issues that keep companies in the red ocean is simply trying to be better than the competition. Instead of trying to be different than other management companies, most companies learn everything they can about their competitors and then use that information against them.
While it is important to know your competition’s strengths and weaknesses, it is not the only thing one needs to know. It is also important to discover exactly what your market is looking for; what are their needs and wants.
Instead of creating a strategy where your company simply undercuts the price of a competitor, one needs to focus on things that the competitors are lacking or do not consider.
Another issue with management companies is that they tend to stick to what they know. For example, most homeowner association management companies rarely delve into rental properties or commercial properties. This leads companies to be pigeonholed and limits their marketability." |
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Getting the Strategic Sequence Right for Verizon Wireless Droid Pro
"Verizon wireless has come out with a new phone called the droid pro. The sequence of Blue Ocean strategy consists of: the buyer utility, price, cost, and adoption. Is it considered a Blue Ocean strategy that is used by verizon wireless for the droid pro phone? What is your thought on this idea?" |
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Blue Ocean Strategy Disadvantages
"While most of the participants in this forum are quick to point out the first mover advantage that a BOS creator gets, we need to be aware of the cost in case the strategy flops. Given today's global economic conditions and aversion of companies towards cost & risk, can BOS still be a valid business strategy?" |
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Blue, Green or Even Violet Ocean Strategies
"I think ROS and BOS are parts of a process that all active companies will pass. In fact they are inevitable events during organizations' perfection. Only a creative company can enter BOS.
A dynamic system not only needs Blue Oceans but also needs green or violet oceans, because of outspread and perfection hence we need to transit through all things we are going to face." |
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This Isn't Strategy?
"This could be a few things but, strategy, really? It's a process at best either, deliberate (ROS) or emergent (BOS). It could be a question for managers to ponder in forming strategy. Arguably those in mature industries with strong market presence could and should identify with both aspects of ROS, BOS, however those just entering the marketplace unless squarely in the bos, may struggle with the principles in ROS. I believe that the ROS/BOS once you begin on the path of understanding your market can only help define your strategy which inevitably will sit in one of the four, classical, evolutionary, processualist or systemic which pretty much cover all strategies." |
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BOS in Less Developed Countries
"Kim & Mauborgne: create uncontested market space and make the competition irrelevant.
In the market place in less developed countries there are informal small businesses and illegal points of sale. If small business and illegal point of sale are competition for the legal businesses, then they should try to make that competition irrelevant, with innovation for example." |
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Blue Ocean Strategy in Small Companies
"For most small businesses in the current environment, staying alive is a major issue! Simply paying the bills tends to drive one towards the ROS concepts.
The smaller companies have little spare capacity in people to consider the BOS approach. I have seen it work through internal think tanks involving all groups in the company, only to see the hand of the CEO strike it out as he was very conservative." |
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What is the Four Action Framework?
"I am looking for more information on the 4 action framework. I found that it's a key tool in the Blue Ocean Strategy process made up of the four strategic moves
- Eliminate
- Reduce
- Raise
- Create
This tool helps create new buyer value elements thus breaking the tradeoff between differentiation and low cost. Once the four actions have been decided, a future Blue Ocean Strategy value curve can be created." |
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BOS and ROS are Both Supplier Centric
"In both ROS and BOS the focus is on the supplier and on competition with other supplier(s). Both try to outdo the competition by studying competition and fighting or bypassing its USP.
In the process, the customer may get more of what he does not need and less of what he really needs. Suppliers will be better off by concentrating on customer(s), their needs and possible future needs to formulate strategies. Suppliers will get more success and better customer loyalty in this manner." |
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The Context Determines BOS or ROS
"A good strategy is a winning strategy. So in some circumstances we need to use BOS and in some other ROS fits better. The context makes the choice and not the contrary." |
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Blue Ocean is Economics Failure
"In my opinion, the idea of a Blue Ocean hurts the basic principles of economics which results in all economic profits tending to zero. Whenever an industry presents abnormal earnings, it will attract competitors. Even the creation of barriers to these new entrants is costly and soon, if the firm isn't able to create sustainable competitive advantages, the ocean will turn into red." |
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Differences in BOS / ROS Cultures
"I have discovered over the last five years that in Red Ocean Strategies (ROS) people compete to maintain a competitive edge over the rival companies, organizations or individuals through a number of unprofessional practices driven by a culture of GREED and the 'winner takes it all syndrome'.
The Blue Ocean Strategy (BOS), I believe is driven by a 'GIVE TO SOCIETY culture' by creating and providing commodities where others fail to do. While competition supports innovation, when it is driven by greed it becomes a ROS. In Blue Ocean strategy, one creatively innovates and creates products where ROS will never see it as a necessity.
One of the dire needs of society is integrity, credibility, and culture of excellence. BOS can develop around this 'unique product' - integrity, honesty, and culture of excellence driven by central desire to serve others." |
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What is a Strategic Sequence?
"According to Kim and Mauborgne (2005) the BOS will only work if it’s formulated in the right strategic sequence. Without fulfilling one of these, the plan will fail. The sequence laid out by the authors is Buyer Utility, Price, Cost, and Adoption:
1. Buyer Utility. The company must have substantial reasons for the public to want to purchase its products to advance to the next step within a Blue Ocean Strategy (price).
2. Price must be attractive to the customers in order for demand to increase. The right price encourages the customer to want to purchase the product and this increases the company’s presence.
3. Cost. It is important to target the majority of buyers, but also ensure the company makes a profit.
4. AdoptionLastly and to complete the sequence, there is adoption, which is the marketing of the company’s ideas. The company needs to prepare itself for any rejection from the industry as customers are not easily swayed by a bargain." |
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Best Buy - Blue Ocean Strategy Proposal
"I’ve chosen Best Buy to form a Blue Ocean strategy. The idea is to offer music lessons and basic computer courses to accompany the products they provide for sell.
The first consideration is the buyer utility. I need to examine if this idea is something that will attract potential customers. If so, then move to the next step.
Next, I’ll consider the price. Everyone knows that customers love low prices. So it has to be set low enough to interest them in bringing in business. The cost should be set to a position where its low enough to draw in my target market but high enough for me to still earn and maintain a decent profit.
Lastly, I want to ensure that I weed out all of my obstacles and find a way to overcome them in order to adopt the business into the market. Resistance includes refusing noncustomers or other business that may not agree with your company. Therefore, strategizing is important so that you don’t have run-ins with other agencies." |
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Can a Blue Ocean Eventually Turn Into a Red Ocean?
"When a company creates a blue ocean by foreseeing an opportunity, there is always a chance of other companies entering the same segment by sensing the opportunity already created. Thus, can we say that a BOS eventually changes into a ROS?" |
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Define the Gap in the Market
"Launching new company (for example in medical equipment) with a me-too kind of product is always having a traction into the ROS (red ocean strategy), but in the end due to lack of branding and product retention in the market, these companies must take a path to BOS - to get some immediate business... It's critical to define the gap in the market to create the road map for BOS." |
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BP Moving From Red Ocean to Blue Ocean
"BP have much to do to move from red ocean to blue ocean. They must figure out a way to redeem themselves to please the millions of unhappy customers, both current and non-customers alike. The most important thing for them to do is rebuild their management team. This will have to begin with training old and new managers on how to proper deal with hazardous major disasters. In one since the oil spill was somewhat of a positive thing. I say this, because it gave BP an opportunity to know their area of weakness and where they need to improve. These types of things should always be welcome, which gives them a chance to build a Blue Ocean strategy off of their bad experiences and the pains and discomfort of the country and their customers." |
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Six Paths to Moving from Red to Blue Ocean
"I am seeking feedback on my class project. I am trying to move a red ocean company to a Blue Ocean company. I am working with the world famous Pike Place Fish Market in the fish and seafood industry. The fish market will need to follow the six path strategy to:
1. Look across alternate industries
2. Look across strategic groups within the industry
3. Look across chain of buyers
4. Look across complementary products and services offerings
5. Look across functional or emotional appeal to buyers
6. Look across time
I think the fish market should look to the trend of buyers caring about the environment and sustainability. By only selling sustainable fish, the fish market will be environmentally friendly. This could open up a larger customer base. It will make it easy for individual and commercial buyers who care about the environment to order because they will know items sold are sustainable. It provides the convenience of shopping for seafood without the risk of purchasing something that was possibly illegally harvested." |
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Navy Federal Credit Union
"I am seeking to identify ways in which Navy Federal Credit Union (NFCU) can convert and break away from the competition. I would be interested in your opinions.
Thank you in advance.
I have chosen to focus on NFCU, which I joined many years ago when I signed up for the Navy. At that time, NFCU would only accept immediate family members of the serviceman in either the navy or marines. However, in an effort to expand their customer base, they began to accept relatives of the service member, and now compete in a red ocean with other banking institutions including Bank of America, City Group, and Wachovia.
In looking to implement the Strategic Sequence needed to continue to allow the company to grow, there are several options the company can take. These include:
- Further expanding to allow membership from any service member and/or family
- Working in conjunction with smaller banking institutions to provide no-fee ATM services
- Extending their auto- and home-loan programs to everyone, and
- Expanding their insurance offerings to include auto and home." |
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Blue Ocean Strategy for UPS
"UPS currently operates world wide and is at the forefront with electronic shipping technologies and a massive fleet of transportation to support business. By identifying the three tiers of non-customers and analyzing the buyer utility map, UPS needs to broaden its current services through inventive thinking and removing themselves from their comfort zone. Since UPS has pretty much dominated the US market, and is still trying to expand overseas, one recommendation would be to partner with or acquire a smaller, more remote delivery services.
Another suggestion for opening up to a Blue Ocean in the US market is a possible exclusive partnership with a large retailer. Another company that I have been analyzing for BOS is Amazon.com. Through an exclusive relationship with Amazon.com, UPS would be able to become the ‘face’ of Amazon thus thrusting it into a Blue Ocean worldwide.
Another BOS suggestion for UPS would be to take advantage of the current awareness of our environment. Think about your last visit to the UPS store to ship something. Although these businesses are franchised, UPS (corporate) could offer incentives to business owners for promoting the recycling of boxes and packaging supplies. This works on two levels, it helps the environment through a ‘green’ initiative while bringing communities together. This will satisfy the disposal phase of the buyer experience cycle while bringing an emotional connection of community to the customer.
Each one of these strategies/recommendations come with their challenges and satisfies the six utility levers in a different manner; some stronger than others. The main goal is to reach out to non-customers by giving them a ‘wow’ factor and making them want to know more about what UPS is all about.
Thoughts?" |
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Sony Playstation in Medical Field
"Part of my class assignment is to overlook the transition of red ocean company into Blue Ocean one. I choose Sony Playstation. Although Sony Playstation has been highly praised as the most advanced video game console, the company is actually losing money for every console they have sold. So because of this, I think rather than operating at loss, Sony Playstation could take the risk by transforming into a Blue Ocean company.
I think that Sony Playstation should enter the medical technology field. Considering the existing technology they have already and the complementary benefits that come with the product (blu-ray, 60 gb hard drive, etc…), I think that the company can do wonders in medical field. In fact, an article from Business News magazine stated that some engineers from Rutgers University have modified Playstation 3 to an improved hand function in teenagers with cerebral palsy (hoydicz, 2010)." |
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CSR Part of Blue Ocean Strategy
"Companies may consider Corporate Social Responsibility (CSR) as part of Blue Ocean strategy. Recent research concluded that most of people preferred to buy from a business bringing out a product / service which is addressing social issues or problems. Hence corporates should concentrate on social issues rather than finding some space in a red ocean where there is a blood bath due to intense competition." |
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What is a Pioneer-Migrator-Settler Map (PMS Map)?
"In Blue Ocean Strategy, what is a Pioneer-Migrator-Settler Map? I read it is a key tool in the Blue Ocean Strategy process that involves plotting each offering or product as to whether it is a:
- Pioneer, (diverting from the competition, high growth and profit potential, Blue Ocean)
- Settler (little growth or profit potential, lots of competition, Red Ocean)
- Migrator (has potential to be Blue Ocean, but isn’t at this point).
Who can contribuite some more information about the PMS Chart? Many thanks..." |
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Creating a New Mental Category
"Blue ocean strategies are basically about creating a new mental category or a frame of reference. For example, Red Bull created a new category called "energy drinks" within the existing "beverage" category. Hence, Blue Ocean strategies are played out in the minds of consumers rather than in physical markets." |
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Blue Ocean Strategic Sequencing on Disney
"For school, I have to devise a blue ocean strategy for a specific business and industry (and post it in a user group such as this one_- I also need your responses to work with, lol:)
I chose to use the amusement park industry, focusing on Disney. My strategy involves finding the commonalities of my non customers (the three tiers spoke of in the book). I am going to focus on those who may choose camping as an alternative activity-but have, on occasion, visited the park; those who may have considered Disney but opted not to come because they hate long lines, crowds, etc.; and those who don't even consider Disney because they don't think Disney has what they want (such as a camper--who thinks of going camping at Disney?).
I have to map out the stages of buyer experience and the utility levers at each stage, trying to find an area that needs improvement-because that is where one should find blue ocean. Any comments?" |
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Blue Ocean Strategy Research
"I am a Phd Student and would like to do a research in Blue Ocean Strategy. Any research model can you suggest." |
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Visionary Leadership and Blue Ocean Strategy
" I think BOS success merely depends on the leadership of the leaders, how visionary a leader is, and how far business is seen.
The process of achieving the strategic vision will generate and execute the blue ocean strategy involuntary.
I think it is all about being visionary and setting the vision changing the world." |
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Using Blue Ocean Strategy Inside Companies
"Many people think BOS is only applicable for creating new markets, outside a company. Though, the Blue Ocean concept can also be applied while working inside companies. Discovering new/breakthrough in problem solving, effectively get the result will result in better business for the company. Why I say inside a company? Not every single one of us has a business mind / orientation / talent. Most of creative & genius people need someone else to sell & convert their ideas to become money. So, yes, we need to think out of the box, given we have searched in every single corner INSIDE our box." |
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BOS: more of the same
"Blue Ocean Strategy is just more of the same old stuff. It takes industry analysis from Porter, differentiation from Trout and the ancient concept of strategy from Sun Tzu. There is not anything new with this theory. It is just a nice catching title, merely good for selling books." |
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Andrew Nelson