Blue Ocean Strategy - Three Tiers of Noncustomers

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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. First Tier: "Soon-to-be" Noncustomers. These are a group of people that are on the verge of becoming customers but are not quite there yet. They could include buyers who minimally purchase an industry's offering out of necessity but are mentally noncustomers of the industry. They may be familiar with your product or industry, but are dissatisfied or uninterested for some reason. They are waiting to jump ship and leave the industry as soon as the opportunity presents itself. They may also find the product too expensive, complicated, or irrelevant. 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. Second Tier: "Refusing" Noncustomers. This group is actively avoiding your product or industry. These are buyers who have seen your industry's offerings as an option to fulfill their needs but have voted against them.
3. Third Tier: "Unexplored" Noncustomers. These are individuals 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 non-customers and existing customers, companies can understand how to pull them into their new market.

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		Jaap de Jonge Editor, Netherlands
	2 How to Use the Three Tiers of Noncustomers Companies can use the Three Tiers of Noncustomers to create new demand in an uncontested market space ("Blue Ocean") in the following ways: First Tier: "Soon-to-be" Noncustomers: By understanding their dissatisfaction, companies can tweak offerings to make them more attractive and convert these people into customers. IDENTIFY THEIR PAIN POINTS: Understand why they haven't become customers yet. It could be price, complexity, lack of certain features, or a perception issue. Offering a tailored solution or adjusting your offering to meet their needs can be key. PROVIDE EASY ENTRY POINTS: These customers are often looking for a low barrier to entry. Offering an easier onboarding process, lower-cost entry options, or simpler solutions can entice them to convert. TARGETED MARKETING CAMPAIGNS: Through a focused marketing effort, emphasize how your product addresses their concerns and provides a solution. Create promotions or trial offers to give them a taste of what they are missing. Second Tier: "Refusing" Noncustomers: Companies can identify why these customers are refusing the product and innovate to break down these barriers. This may involve redefining the value proposition, creating an entirely new user experience, or solving problems that have been previously ignored. UNDERSTAND THE REASONS FOR REFUSAL: Dig deep into why they refuse to engage with your product. Is it the high price point? The lack of trust in the brand? A perceived lack of value? A shift in attitude or new offering may be required to overcome these obstacles. REFRAME THE VALUE PROPOSITION: To attract this group, businesses need to reframe their offering to make it more relevant. This could involve revising the product to meet their needs or addressing their concerns directly. Show how your offering solves a specific pain point they face and how it aligns with their preferences or values. RECONSIDER PRODUCTS AND PRICING: Companies can offer new or modified products that better appeal to the needs of these noncustomers. A pricing strategy adjustment or a feature redesign may be necessary. Third Tier: "Unexplored" Noncustomers: Companies can explore new ways to reach these noncustomers by thinking creatively about unmet needs, creating entirely new product categories, or introducing a disruptive offering. The key here is to tap into new demographics or untapped markets. LOOK FOR LATENT DEMAND: This tier is often the most untapped because it involves people who have no current connection to your market. To appeal to them, businesses need to identify unarticulated needs and innovate to meet them. CREATE NEW MARKET CATEGORY: By identifying a completely new customer segment or addressing an overlooked need, businesses can create a new market category. This is where truly disruptive innovation often occurs, creating entirely new demand. EDUCATION AND AWARENESS: Since these potential customers may not know about your product or even the problem it solves, education is key. Marketing campaigns, demonstrations, or content that introduces them to the benefits of your offering can help open their eyes to a previously unknown need.

		Jaap de Jonge Editor, Netherlands
	2 Similar Tools to Find and Create New Customer Demand Other strategic tools and frameworks similar to the 3 Tiers of Noncustomers you may want to explore because they also can help companies explore untapped markets, rethink value propositions, and find opportunities for growth outside their current customer base are: Jobs-to-be-Done (JTBD): Identifies unmet needs by focusing on the "job" customers are trying to complete, potentially appealing to noncustomers. Market Segmentation: Identifies new customer segments, including noncustomers, based on needs and behaviors. Ansoff Matrix: Explores new markets with existing products, similar to targeting new noncustomer groups. Product Lifecycle: Identifies new opportunities during the various stages of innovation, often tapping into new customer segments. S-Curve Analysis: Think about the R&D effort in early stages of innovation and consider the timing of investing in a market segment. Values and Lifestyles: Segments people into mutually exclusive groups like "Achievers" or "Experiencers" based on their psychographics. Positioning: Manipulate how potential buyers see your product.