Group 4 : Katy Neely Matt Tevis Hunter Pond Andrew McDonald Shelly Brown

The Sequence of Blue Ocean Strategy

Testing for Exceptional Utility Phillips’ CD-I “Imagination Machine” Buyer Utility Map

6 Utility Levers Purchase, delivery, use, supplements, maintenance, and disposal. Ford model T

Strategic Pricing Two reasons for change: Volume generates higher returns than in past To a buyer, value of a product/service may be closely tied to the total number of people using it. Nonrival good Excludability

Price corridor of the mass: 2 Step Process

Target Costing Three principle levers IBM Slice-share Pricing innovation Article: “Target Cost Management” by Louise Ross

Pricing Innovation? “Taking a cue from Hellman's Mayonnaise, who recently redefined the quart as 30 ounces instead of 32, the approach is simple. Hours are now 54 minutes long instead of 60.” Goal: corporate profits during economic downturn

iPhone Pricing Strategy “The early adopters of Apple's iPhone paid $599 for the privilege of being the first to have the hot new consumer product when it was launched in June of But by September, Apple announced that it was slashing prices on its most expensive iPhone by a third. As the early adopters complained about the $200 price cut, Apple shares fell 8.6 percent, losing almost $11 billion in market value in the three days following the announcement. The iPhone illustrates both the challenges of getting pricing right for new products and the dynamic changes in pricing that are needed as the market is developed.” "When you have something new about the product, such as the sleeker design and touch-screen technology for the iPhone, it is a little harder to price it... Apple may have mispriced the product in the first place and then had to make painful, costly adjustments." —Z. John Zhang, Professor of Marketing, The Wharton School

Profit Model of Blue Ocean Strategy

Blue Ocean Idea (BOI) Index Phillips CD-i MotorolaDoCoMo i- Mode Japan UtilityIs there exceptional utility? Are there compelling reasons to buy your offering? PriceIs your price easily accessible to the mass of buyers? CostDoes your cost structure meet the target cost? AdoptionHave you addressed adoption hurdles up front? - +/- +