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Blue ocean strategy

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  • 1. Blue Ocean Strategywww.study Marketing.org 1
  • 2. 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 If you find this presentation useful, please consider telling others about our site (www.studyMarketing.org)www.study Marketing.org 2
  • 3. Blue Ocean Vs. Red Ocean Strategywww.study Marketing.org 3
  • 4. Blue Ocean vs. Red Ocean Strategy Blue Ocean Strategy Red Ocean Strategy •• Create uncontested Create uncontested •• Compete in existing Compete in existing market space market space market space market space •• Make the competition Make the competition •• Beat the competition Beat the competition irrelevant irrelevant •• Create and capture Create and capture •• Exploit existing Exploit existing new demand new demand demand demandwww.study Marketing.org 4
  • 5. Blue Ocean vs. Red Ocean Strategy Blue Ocean Strategy Red Ocean Strategy •• Break the value- cost Break the value- cost •• Make the value-cost Make the value-cost trade off trade off trade off trade off •• Align the whole system Align the whole system •• Align the whole system Align the whole system of a firm’s activities with of a firm’s activities with of a firm’s activities with of a firm’s activities with its strategic choice of its strategic choice of its strategic choice of its strategic choice of differentiation and low differentiation and low differentiation or low differentiation or low cost cost cost costwww.study Marketing.org 5
  • 6. Blue Ocean Strategy Tools • A diagnostic tool for building a Strategy compelling blue ocean strategy Canvas • 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, service and delivery • what customers receive from existing competitive offerings on the marketwww.study Marketing.org 6
  • 7. Four Action Framework Eliminate Raise Reduce Createwww.study Marketing.org 7
  • 8. Four Action Framework Which of the factors that the industry Eliminate takes for granted should be eliminated? Which factors should be reduced well Reduce below the industry’s standard? Which factors should be raised well Raise above the industry’s standard? Which factors should be created that Create the industry has never offered?www.study Marketing.org 8
  • 9. Four Action Framework The Case of Cirque du Soleil (A Circus Company) Eliminate Reduce • Star performers • Fun and humor • Animal shows • Thrill and danger • Aisle concession sales • Multiple show arenas Create Raise • Theme • Unique venue • Refined environment • Multiple productions • Artistic music and dancewww.study Marketing.org 9
  • 10. Six Principles of Blue Ocean Strategy Formulation Principles Execution Principles 1. Reconstruct market 5. Overcome key boundaries organizational 2. Focus on the big picture, hurdles not the numbers 6. Build execution into 3. Reach beyond existing strategy demand 4. Get the strategic sequence rightwww.study Marketing.org 10
  • 11. Formulating Blue Ocean Strategywww.study Marketing.org 11
  • 12. 1. Reconstruct Market Boundaries Head-to-Head Strategy Blue Ocean Strategy • Focus on rivals within • Looks across alternative industry industries • Focuses on competitive • Looks across strategic position within strategic group within industry group • Redefines the industry • Focuses on better buyer group serving the buyer groupwww.study Marketing.org 12
  • 13. 1. Reconstruct Market Boundaries Head-to-Head Strategy Blue Ocean Strategy • Focuses on maximizing • Looks across to the value of product or complementary product service offerings within and service offerings the bounds of its • Participates in shaping industry external trends over time • Focuses on adapting to external trends as they occurwww.study Marketing.org 13
  • 14. 2. Focus on the Big Picture, not the Numbers Focus on the The Four Steps of Big Picture, not Picture Visualizing Strategy the Numbers • Visual Awakening • Visual Exploration • Visual Strategy Fair • Visual Communicationwww.study Marketing.org 14
  • 15. 2. Focus on the Big Picture, not the Numbers • Compare your business with your Visual competitors’ by drawing your “as is” Awakening strategy canvas • See where your strategy needs to changewww.study Marketing.org 15
  • 16. 2. Focus on the Big Picture, not the Numbers • Go to the field to explore the six Visual paths to creating blue oceans Exploration • Observe the distinctive advantages of alternative products and services • See which factors you should eliminate, create, or changewww.study Marketing.org 16
  • 17. 2. Focus on the Big Picture, not the Numbers • Draw your “to be” strategy canvas Visual based on insights from field Strategy observations Fair • Get feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers • Use feedback to build the best “to be” future strategywww.study Marketing.org 17
  • 18. 2. Focus on the Big Picture, not the Numbers • Distribute your before-and-after Visual strategic profiles on one page for Communication easy comparison • Support only those projects and operational moves that allow your company to close the gap to actualize the new strategywww.study Marketing.org 18
  • 19. 3. Reach Beyond Existing Demand • First tier: “Soon to be” non- customers who are the edge of your market, waiting to jump ship The Three Tier of Non- • Second tier: “Refusing” non- customers customers who consciously choose against your market • Third tier: “Unexplored” non- customers who are in markets distant from yourswww.study Marketing.org 19
  • 20. 4. Get The Strategic Sequence Right The Sequence of Blue Ocean Strategy Buyer utility Price Is there exceptional buyer Is your price easily utility in your business idea? accessible to the mass of buyers? Adoption Cost What are the adoption Can you attain your cost hurdles in actualizing your target to profit at your business idea? strategic price? A commercially viable blue ocean ideawww.study Marketing.org 20
  • 21. Executing Blue Ocean Strategywww.study Marketing.org 21
  • 22. 5. Overcome Key Organizational Hurdles Cognitive Resource Hurdle Hurdle Overcome Key Organizational Hurdles Motivational Political Hurdle Hurdlewww.study Marketing.org 22
  • 23. 5. Overcome Key Organizational Hurdles Cognitive • Ride the “Electric Sewer” Hurdle • Meet with Disgruntled Customers (status quo) • Redistribute resources to your hot Resource spots Hurdle • Redirect resources from your cold spots • Engage in horse tradingwww.study Marketing.org 23
  • 24. 5. Overcome Key Organizational Hurdles • Zoom in on Kingpins (key influencers) Motivational • Place kingpins on a fishbowl Hurdle • Atomize to get the organization to change itself • Secure a consigliere on your top Political management team Hurdle • Leverage your angels and silence your devilswww.study Marketing.org 24
  • 25. 5. Build Execution Into Strategy Fair Process of Strategy Strategy Formulation Process Strategy Formulation Process Fair Process – Engagement, Explanation, Expectation clarity Fair Process – Engagement, Explanation, Expectation clarity Attitudes Attitudes Trust and Commitment – “I feel my opinion counts” Trust and Commitment – “I feel my opinion counts” Behavior Behavior Voluntary Cooperation – “I’ll go beyond the call of duty” Voluntary Cooperation – “I’ll go beyond the call of duty” Strategy Execution Strategy Execution Exceeds Expectation – self initiated Exceeds Expectation – self initiatedwww.study Marketing.org 25
  • 26. End of Materialwww.study Marketing.org 26