Blue Ocean Strategy Chapter Three Grant Moffett Dylan Taylor Jenny Broussard Scott Bednorz

Path 2: Look Across Strategic Groups Within Industries Traditionally price and performance Mercedes, BMW, Jaguar, compete within strategic group

Strategic Groups In Fitness Industry Traditional health clubs (LA Fitness, LifeTime) At home fitness videos Neither what women want

Curves Took a different approach Acquired 2 million+ members and revenues at $1 billion mark Blue ocean of the everyday woman’s struggling fitness needs

Curves Curves focuses on the strengths of the strategic group Different system: Workout in circles, easy to use machines, quick workouts 30min

Path 3: Look Across The Chain Of Buyers Purchasers: (office supplies corporate purchasing dept) Users: (clothing industry end of the line customers) Influencers: (pharmaceutical companies doctors)

Novo Nordisk Challenged the idea of marketing drugs to doctors (influencers) Marketed an insulin to the patients themselves (users) NovoPen and NovoLet From insulin producer to diabetes care

Bloomberg Traditionally the business information provider industry focused on IT managers, or “purchasers” Bloomberg provided information easy to interpret by traders and analysts “users”

Path 4: Look Across Complimentary Product and Service Offerings Few products and services are used in a vacuum Untapped value is often hidden in complementary products and services Define total solution buyers seek when they choose a product or service

Nabi Hungarian bus company In the industry, companies competed on low purchase price NABI discovered high-cost element to municipalities was the costs that came after the purchase of a bus NABI created a new bus made out of fiberglass

Nabi Value Curve

Other Examples Philips Electronics Borders and Barnes & Noble Tea kettle industry in Britain Lime scale found in tap water Created a tea kettle with a mouth filter Borders and Barnes & Noble Transformed their product from just the book to the pleasure of reading and gaining knowledge Lounges and coffee bars

Path 5: Look Across Functional or Emotional Appeal to Buyers Most companies either compete on functional appeal or emotion appeal Industries have trained customers what to expect Emotionally oriented industries Many extras that add price but not value Functionally oriented industries Commodity products with no emotional appeal

QB House Barbershop company in Asia Asian barbershop industry is emotionally-oriented A man’s haircut takes around one hour and costs between 3,000 - 5,000 yen ($27 to $45) QB changed the industry to a highly functional one Reduced the time to 10 minutes and about 1,000 yen ($9)

QB House Value Curve

CEMEX Third largest cement producer The Mexican market was unattractive More noncustomers than customers Introduced Patrimonio Hoy program, which made their product more emotionally appealing Tandas Festivities Increased demand for cement and growth for Cemex

Path 6: Look Across Time Industries are subject to external trends Trends must: Be decisive to your business Be irreversible Have a clear trajectory Trends can be unpredictable and risky

Apple and the Music Industry Illegal music file sharing Capitalized on digital music and iPod Launched iTunes store in 2003 Broke a key customer annoyance factor

Apple and iTunes Search and browsing function of iTunes was superior Sold more than 70 million songs in its first year Accounts for 70% of the legal music market Needs to keep its sights on evolving mass market

Cisco Systems Capitalized on high-speed data exchange Internet users were doubling every 100 days Today more than 80 percent of all traffic on the Internet goes through Cisco’s products

Conceiving New Market Space

ExxonMobil What trends have a high probability of impacting ExxonMobil or any other oil company? What trends or technology may evolve in a clear trajectory?

ExxonMobil Quiz Take the quiz: www.exxonmobil.com/quiz