Creating New Market Space G1

Creating New Market Space Lena Rune Wei Wei Zhao Hélène Vinberg Roberto Hoyos G1

° C r e a t i n g N e w M a r k e t S p a c e : : Creating new market space is critical for smaller start-up companies as well as the world’s largest companies. Markets must be created and re-created to keep sustainable, profitable economic growth and competitive advantages. Six Basic Approaches: 6 Looking Across Substitute Industries Across Strategic Groups Within Industries Looking Across the Chain of Buyers Looking Across Complementary Product and Service Offerings Looking Across Functional or Emotional Appeal to Buyers Looking Across Time

° C r e a t i n g N e w M a r k e t S p a c e : : 1

Looking Across Substitute Industries

Across Strategic Groups Within Industries

Looking Across the Chain of Buyers

Looking Across Complementary Product and Service Offerings

Looking Across Functional or Emotional Appeal to Buyers

Looking Across Time

Ask 4 basic questions Reduce : What factors should be reduced well below the industry standard? Eliminate : What factors should be eliminated that the industry has taken for granted? Create : What factors should be created that the industry has never offered? Raise : What factors should be raised well beyond the industry standard? Home Depot (hardware store for ordinary home users, with expertise sales people).

Looking Across Time

This refers to a group of companies within an industry that pursue a similar strategy. Two dimensions for strategic groups: Price Performance These two generally follow each other. Polo Ralph Lauren – Trading both up and down: haute couture & the classical lines.

Looking Across Time

The target group is a chain of customers directly or indirectly involved in the buying decision:

1) The purchasers

2) The users

3) The influencers

These groups may overlap, but often differ.

Challenging an industry’s conventional wisdom about which of these groups to target may lead to the discovery of new market space and thus create value.

Bloomberg (Finance) – Selling an easy-to-use, broker-friendly system to traders (users), not IT managers.

Looking Across Time

Other products and services often affect the value of product and services. Think about what happens before, during and after the product is being used. Book Superstores, adding entertainment and help to find a book, by staff with extensive knowledge about the products… instead of clerks…

Looking Across Time

Functional vs. Emotional appeal could be challenged in order to create value. Often companies looking for just functionality tend to stuck with JUST functionality. The same is told for companies looking the “emotional value.” Starbucks – The Coffee Bar : Selling coffee is not only a product… is an experience. Swatch – Turning budget watches into fashion accessories. The Body Shop – Stripping away emotional appeal and saving costs.

Looking Across Time

External trends affect businesses over time. Recognising these trends and where they are heading can unlock innovation and create new market space. Enron (before they thought of a new trend in irregular accounting practices) – Saw the logical conclusion in the deregulation of the gas industry which enabled them to buy where it was cheap and sell where it was expensive; thus unlocking trapped value. They later went on to innovate in accounting… but that is another story.

° C r e a t i n g N e w M a r k e t S p a c e : : Our Example

Looking Across Time

Hence, using approach 1, 3, 4 & 6  Creating new market space! Google recognised the trend of the information-based society and was able to withhold substitutes by creating a new advertising model, focusing on users and influencers, rather than purchasers (those buying advertising space) first hand. They also recognised the complementary value of information related to what is being searched for by adding connected advertisements to the search results.