The Times, They Are Changing May 15 Naed [Autosaved]

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The Times, They Are Changing May 15 Naed [Autosaved]

  1. 1. “The Times, They are Changing” Finding New “Blue Ocean” Market Space in Changing Times Andrea J. Simon PhD
  2. 2. Marketing Evolution Change Matters !!! 2
  3. 3. Can you find a Blue Ocean? Goal is to help you understand the essence of Blue Ocean Strategy Encourage you to go exploring Leave with a tool kit to start the process 3
  4. 4. Blue Ocean Strategy W. Chan Kim and Renee Mauborgne Studied 150 Companies in 50 industries over 100 year horizon What worked and what didn’t? And, how do I do it?
  5. 5. Let’s begin with a little mood music Andre Rieu 5
  6. 6. What did you see, feel and think? Classical Music Pop Music Traditional Setting Untraditional setting Dress in classic form Colors, fashion Conductor’s back Conductor’s Personality Disengaged Face First Focused on adults Totally engaged Funeral Young and Old Party 6
  7. 7. Must have a Real Strategy A well-defined, integrated, cohesive approach A clear, simple story What’s your hook? 7
  8. 8. All Strategies Ask… Which customers or markets? What distinguishes us? What value proposition? Why key processes give us competitive advantage? What are the human, technological or organizational enablers of the strategy? 8
  9. 9. Classic Structured Strategic Thinking Takes market structure as a given. Drives you to carve out a position against the competition in the existing market space. Reel in the competition 9
  10. 10. So, How Do You Win? Grabbing a bigger share of the market is a zero-sum game— One wins, the other loses. 10
  11. 11. Blue Ocean Strategy Reconstruct the market Creating demand in market space that does not exist today 11
  12. 12. Why Should You? Studied business launches in 150 companies 86% line extensions with 62% total revenues 39% of total profits Red Ocean of Competition 14% invested in creating new market space 38% total revenues but a startling 61% of total profits Blue Ocean of New Market Space 12
  13. 13. Want to Swim? OR Blue Ocean of Unmet Demand? I need that !!! Red Ocean of Bloody Competition? 13
  14. 14. Blue Ocean Strategy Add Value + Innovation Make the Competition Irrelevant Change the “Value-Cost” Trade-off Focus on the Nonuser Align the Entire Organization 14
  15. 15. It is All About You! All about the Strategic Moves people made to solve problems differently. They saw solutions in different ways. And then made them happen. 15
  16. 16. Skeptical? Case Studies Might Help 16
  17. 17. What did these folks see? (yellow-tail)® wine 17
  18. 18. Interesting industry to tackle About 6,500 wine brands in US. Ninety-six percent of those wine brands sold less than 100,000 cases in 2002 Only 23 wine brands sold at least 2 million cases each, accounting for 40 percent of a growing market of 245 million cases. First time they tried to tackle the market (yellow tails’ )® predecessor, the Carramar Estate Label, failed for the Cassella Wine Company 18
  19. 19. What to do? John Soutter and the Cassella family, rethought the industry established keys to the promotion of wine as: a unique beverage for the informed wine drinker worthy of special occasions 19
  20. 20. Wine Red Ocean Strategic Canvas High Premium Wines Budget Wines Low Use enological terminology Above- Vineyard the-line Aging Wine Wine Price and distinctions Prestige marketing Quality Complexity Range in wine and communication Legacy How to make fun and nontraditional wine that’s easy to drink for everyone—particularly non-wine drinkers? 20
  21. 21. Went looking for a Blue Ocean Reconstructured its market strategy to Turn non-drinkers into frequent enjoyers. Only 15% of Americans drank wine-Red Ocean 85% drank other things-Blue Ocean waiting for them 21
  22. 22. The Four Actions Framework -- ERRC Reduce Which factors should be reduced well below the industry’s standards Eliminate Create Which of the factors A New Which factors that the industry Value should be created takes for granted  Curve that the industry should be  has never offered? eliminated? Raise Which factors should be raised well above the industry’s standard? 22
  23. 23. For (yellow tail)®… Eliminate Raise Enological terminology and Price versus budget wines distinctions Retail store involvement Aging qualities Above-the-line marketing Reduce Create Wine complexity Easy drinking Wine range Ease of selection Vineyard prestige Fun and adventure 23
  24. 24. Strategic Canvas (yellow tail)® wines Strategy Canvas (yellow tail) High Premium Wines (yellow tail) Focus Diversification Tag Line Budget Wines Low Use of Above-the- Encological line Aging Vineyard Wine Wine Easy Ease of Fun and Price Distinctions Marketing Quality Prestige Complexity Range Drinking Selection Adventure 24
  25. 25. Results John Soutter expected to sell 25,000 cases in 2001, the first year (yellow tail)® would hit the market. Cautious but lucky--the wine sold 9 times as much! Bold branding Good product Very affordable price Bottles with the fancy kangaroo leapt off the shelf. 25
  26. 26. Execution helped Retailers received the brightly colored branded displays on time and were clearly built into the entire process 26
  27. 27. Today, Dominates the American Market « Dominating the overseas export market, [yellow tail]® is the fastest growing imported wine in US market history. The Shiraz is currently ranked as the No.1 selling 750ml red wine in the USA. The [yellow tail]® Merlot being the No. 1 selling Merlot in the USA. Selling more than 300,000 bottles a day, [yellow tail]® is now regarded as a global phenomenon. » 27
  28. 28. Others? 28
  29. 29. Today new stories coming out Shimano—Coasting Bike for non-bikers Wii—gaming for non-game players 29
  30. 30. Pattern Here Concept Targeted Alternatives Nonusers Andre Rieu Non-concert Rock, pop, jazz goers/younger everything but people classical music Yellow Tail Non-wine drinkers Beer/hard liquor Ford Non-car drivers Horses Southwest Non-fliers Drove distances Curves Women who did not Gold’s Gym or in-home work out equipment American Girl Girls but not the Video games/no time dolls with mom Cirque Du Soleil Adults—non-circus Theater, dance, goers circuses for kids Wii Non-gamers Lots of options Shimano Coasting Non-bikers Lots of options Bike 30
  31. 31. EAC/Integrated Power Solutions A Battery Design and Manufacturing Company “We were OEM’s– Original Equipment Manufacturer in the battery creation business” 31
  32. 32. Strategic Canvas Process Beginning of the process they thought what mattered to the customer was: Vertically Integrated Battery design experts Global Manufacturer Good Customer Service, responsive to solving problems Good supplier relationships 32
  33. 33. Not of much importance Branding Financial stability Charger capabilities 33
  34. 34. Their Strategic Canvas Summary Strategic Canvas 5-High tg/am sb/jd tg/jd tg/am/jr tg/am/jr jr 3-Medium jr am am/jr sb/jd sb/jd sb tg/ am/ jr/jd tg/jr/sb/jd tg/am/jr/sb jr 1- Low sb jd tg/am/jd tg/am/sb/jd Battery Wholly Owned Vertical Expertise/ Charger Global Customer Supplier Financial CM Integration Experience Expertise Manufacturing Service Relationships Stability relationships Branding 34
  35. 35. How they saw their competitors What they thought about their competition along the same attributes that they thought were important to their own customers. 35
  36. 36. Took them out to the field Found a whole different set of issues for their customers and nonusers among their customers Speed to market Innovative ideas about mobile power solutions Stay on top of the battery power industry—what was happening that could help them? Teach them about rechargeable power. Give them a competitive edge. Longer, stronger, lighter power solutions. 36
  37. 37. For EAC… Eliminate Raise Focus on only disposable Integrated Power Solutions batteries Speed Acting like an order taker Competitive Advantage Technical Advantage Proactive leadership and consultative services Reduce Create Concern with pricing Charger Capabilities Concern with reactive Innovation customer service Branding Focus on Vertical Integration 37
  38. 38. Now they Visualized a Blue Ocean Summary Strategic Canvas 5-High tg/am Customer Needs/Desires sb/jd tg/jd tg/am/jr tg/am/jr jr 3-Medium jr am am/jr sb/jd sb/jd sb tg/ am/ jr/jd tg/jr/sb/jd tg/am/jr/sb jr 1- Low sb jd tg/am/jd tg/am/sb/jd Wholly needs Owned help state of Battery Global Supplier CM them be innovative needs the art Vertical Expertise/ Charger Manufactur Customer Relationship Financial relationship speed to cutting (game Customer- technical information Integration Experience Expertise ing Service s Stability s Branding market edge boy) centric talent n Change the Focus, Differentiation and the Brand •Tag line: Lighter, Longer Power Solutions •What we do: Batteries and Chargers and Ideas and Solutions 38
  39. 39. What are you investing in? Not investing in? What is on the bottom of your canvas? What do you and your industry invest in— or use to? What could be on your canvas but isn’t? Marketing Fun Environmental benefits Easy to use/to buy Less complex Innovation 39
  40. 40. What could be on the bottom of yours? High Premium Wines Budget Wines Low Use enological terminology Above- Vineyard the-line Aging Wine Wine Price and distinctions Prestige marketing Quality Complexity Range in wine and communication Legacy Would you look just like your competitors? Do you have a focus or are you all over the canvas? What are potential customers using instead of your industry? 40
  41. 41. Let’s think about your Strategic Canvas Strategy Canvas -- Your Company High Low PRICE INDUSTRY ATTRIBUTES YOU ARE INVESTING IN Would you look just like your competitors? Do you have a focus or are you all over the canvas? What are potential customers using instead of your industry? 41
  42. 42. Maybe you see yourself as the low price distributor High Low Full line Excellent Above the Customer of Good sales line Online Price Service products inventory people marketing strategy Do you know what you are focused on and investing in? Are these the things that you are investing in? Are you investing in the things that matter to customers? 42
  43. 43. Maybe you are the premium distributor High Low Full line Excellent Above the Customer of Good sales line Online Price Service products inventory people marketing strategy Or are you the premium distributor? Are you innovative and using the Internet ? Are you investing in the things that matter to customers? 43
  44. 44. Maybe there are other things High Low Make Excellent Online them Customer Full line of Good sales conversati Ease of Simple to more Price Service products inventory people ons Innovation use buy profits Maybe you are going out and listening to the end user? Maybe there are things you can do to address their headaches? Hit those levers to make it easier for them? 44
  45. 45. Let me share a story with you A company who did this in your industry Wanted to add value but in an innovative way Went out and listened to users and nonusers, customers and noncustomers Did a Blue Ocean Strategy without even calling it that 45
  46. 46. Techline Snap Track 46
  47. 47. Culture of Techline Belief that adding value in an innovative way is exactly what they should be investing in— strategic canvas would be high in innovation Went out exploring to listen to customers and non-customers Went back and found ways to re-think what was being done, improve buyer’s utility: Make it easier to get the job done Make it better ROI—faster and simpler Created demand in an entirely new market space 47
  48. 48. What did they do? Looked across industries Applied a Lego-model to electrical fittings Thought about time in a new way What use to take hours takes seconds From a buyer’s use More safely, more productively, more fun 48
  49. 49. What came out was very Blue Ocean Snap Track was developed in response to repeated requests for a complete industrial cable tray system designed for the limited width requirements of instrumentation data cable. Snap Track has been designed to provide the ease of installation and the economy of wire basket tray while retaining the stability and inherently superior cable protection of traditional raceway. Our philosophy is simple – the purpose of a cable tray system is to support and “Protect the Cable”. 49
  50. 50. Ok, so I am interested… HOW DO I DO THIS? 50
  51. 51. Visual Awakening Take your management team through a Visual Awakening • What does your industry invest in? • What do you invest in? • What could you invest in to create a Blue Ocean and open up new market space? Strategy Canvas -- Your Company High Low Industry Attributes 51
  52. 52. Let’s Go Exploring… Get out of the office Go into the field Take a camera Take a video camera Spend a day with a customer Listen to nonusers—don’t ask them Take an anthropologist
  53. 53. Headaches? Go-Arounds? What could you see that would add value in an innovative way? Six Levers to improve Buyer’s Utility Make Buying Easier? Use Simpler? Reduce the Risks? Make Them More Productive? More Environmentally Friendly? Make it Fun, and Adventure 53
  54. 54. Buyer Experience Cycle The Six Stages of the Buyer Experience Cycle 1. 2. 3. 4. 5. 6. Purchase Delivery Use Supplements Maintenance Disposal Customer  Productivity Simplicity Convenience Risk Fun and  Image Environmental  friendliness 54
  55. 55. Who am I looking for? Nonusers The first tier Your BOS Market minimally buy an industry’s offering out of necessity. The second tier First refuse to use your Tier industries offerings. Second The third tier never Tier thought of your market’s offerings as an option. Third Tier 55
  56. 56. Where are they? Shift your Focus Industry Strategic group Red Stuck Ocean within Buyer group Scope of product or Blue service offering Ocean Across these Functional-emotional orientation of an industry Time Kim & Mauborgne 2005 56
  57. 57. Once you are done, what next? Draw your “To Be” Canvas Visualize some ideas about new solutions Get feedback on alternative strategy Strategy Canvas -- Your Company Use feedback to build the High best “to be” future strategy Low Industry Attributes 57
  58. 58. Where do I find my Blue Ocean Opportunity? Go Exploring 58
  59. 59. Time for to get out of the office “ If you want to understand how a lion hunts, don’t go to the zoo. Go to the Jungle.” (Kevin Roberts, Saatchi & Saatchi) 59
  60. 60. Please, don’t ask them what they need Henry Ford’s quote: “If I had asked people how I could improve their transportation they would have told me to make their horses go faster.” 60
  61. 61. What are you trying to do? Blue Ocean Strategic Theory Add Value + Innovation Make the Competition Irrelevant Change the “Value-Cost” Trade-off Focus on the Nonuser Align the Entire Organization 61
  62. 62. Why Should I Find My Blue Ocean? Because it could open up an entirely new opportunity for you! 62
  63. 63. This copy of our presentation today was created to help you take these tools and apply them to your own company. The goal is to discover your company’s own Blue Ocean with new ideas, new market space, new customers and new demand. Please let us know how your exploring goes. We like to help others with case studies. Perhaps you will become a success story we can share as well. Send us your story to: asimon@simonassociates.net We would love to continue our discussions. Feel free to Skype us andrea.j.simon or connect however you like. Simon Associates Management Consultants 1905 Hunter Brook Road Yorktown Heights, NY 10598 www.simonassociates.net asimon@simonassociates.net Phone 914-245-1641 Cell 914-261-1631 63

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