1 Marketing.org Blue Ocean Strategy

2 Marketing.org 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 (

3 Marketing.org Blue Ocean Vs. Red Ocean Strategy

4 Marketing.org Blue Ocean vs. Red Ocean Strategy Create uncontested market space Make the competition irrelevant Create and capture new demand Create uncontested market space Make the competition irrelevant Create and capture new demand Compete in existing market space Beat the competition Exploit existing demand Compete in existing market space Beat the competition Exploit existing demand Blue Ocean Strategy Red Ocean Strategy

5 Marketing.org Blue Ocean vs. Red Ocean Strategy Break the value- cost trade off Align the whole system of a firm’s activities with its strategic choice of differentiation and low cost Break the value- cost trade off Align the whole system of a firm’s activities with its strategic choice of differentiation and low cost Make the value-cost trade off Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost Make the value-cost trade off Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost Blue Ocean Strategy Red Ocean Strategy

6 Marketing.org Blue Ocean Strategy Tools Strategy Canvas diagnostic toolA diagnostic tool for building a compelling blue ocean strategy current state of playIt 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 market

7 Marketing.org Four Action Framework Eliminate Reduce Raise Create

8 Marketing.org Four Action Framework Eliminate Reduce Raise Create eliminated? Which of the factors that the industry takes for granted should be eliminated? reduced well below Which factors should be reduced well below the industry’s standard? created Which factors should be created that the industry has never offered? raised well above Which factors should be raised well above the industry’s standard?

9 Marketing.org Four Action Framework The Case of Cirque du Soleil (A Circus Company) Theme Refined environment Multiple productions Artistic music and dance Eliminate Reduce Raise Create Star performers Animal shows Aisle concession sales Multiple show arenas Fun and humor Thrill and danger Unique venue

10 Marketing.org Six Principles of Blue Ocean Strategy 1.Reconstruct market boundaries 2.Focus on the big picture, not the numbers 3.Reach beyond existing demand 4.Get the strategic sequence right 5.Overcome key organizational hurdles 6.Build execution into strategy Formulation Principles Execution Principles

11 Marketing.org Formulating Blue Ocean Strategy

12 Marketing.org 1. Reconstruct Market Boundaries Focus on rivals within industry Focuses on competitive position within strategic group Focuses on better serving the buyer group Head-to-Head Strategy Blue Ocean Strategy Looks across alternative industries Looks across strategic group within industry Redefines the industry buyer group

13 Marketing.org 1. Reconstruct Market Boundaries Focuses on maximizing the value of product or service offerings within the bounds of its industry Focuses on adapting to external trends as they occur Head-to-Head Strategy Blue Ocean Strategy Looks across to complementary product and service offerings Participates in shaping external trends over time

14 Marketing.org 2. Focus on the Big Picture, not the Numbers Big Picture Focus on the Big Picture, not the Numbers The Four Steps of Visualizing Strategy Visual Awakening Visual Exploration Visual Strategy Fair Visual Communication

15 Marketing.org 2. Focus on the Big Picture, not the Numbers Visual Awakening Compare your business with your competitors’ by drawing your “as is” strategy canvas See where your strategy needs to change

16 Marketing.org 2. Focus on the Big Picture, not the Numbers Visual Exploration Go to the field to explore the six paths to creating blue oceans Observe the distinctive advantages of alternative products and services See which factors you should eliminate, create, or change

17 Marketing.org 2. Focus on the Big Picture, not the Numbers Visual Strategy Fair Draw your “to be” strategy canvas based on insights from field observations Get feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers Use feedback to build the best “to be” future strategy

18 Marketing.org 2. Focus on the Big Picture, not the Numbers Visual Communication Distribute your before-and-after strategic profiles on one page for easy comparison Support only those projects and operational moves that allow your company to close the gap to actualize the new strategy

19 Marketing.org 3. Reach Beyond Existing Demand The Three Tier of Non- customers “Soon to be” non- customersFirst tier: “Soon to be” non- customers who are the edge of your market, waiting to jump ship “Refusing” non- customersSecond tier: “Refusing” non- customers who consciously choose against your market “Unexplored” non- customersThird tier: “Unexplored” non- customers who are in markets distant from yours

20 Marketing.org 4. Get The Strategic Sequence Right The Sequence of Blue Ocean Strategy Buyer utility Is there exceptional buyer utility in your business idea? Price Is your price easily accessible to the mass of buyers? Cost Can you attain your cost target to profit at your strategic price? Adoption What are the adoption hurdles in actualizing your business idea? A commercially viable blue ocean idea

21 Marketing.org Executing Blue Ocean Strategy

22 Marketing.org 5. Overcome Key Organizational Hurdles Overcome Key Organizational Hurdles Cognitive Hurdle MotivationalHurdle ResourceHurdle Political Hurdle

23 Marketing.org 5. Overcome Key Organizational Hurdles Cognitive Hurdle (status quo) ResourceHurdle Ride the “Electric Sewer” Meet with Disgruntled Customers Redistribute resources to your hot spots Redirect resources from your cold spots Engage in horse trading

24 Marketing.org 5. Overcome Key Organizational Hurdles Motivational Hurdle PoliticalHurdle Zoom in on Kingpins (key influencers) Place kingpins on a fishbowl Atomize to get the organization to change itself Secure a consigliere on your top management team Leverage your angels and silence your devils

25 Marketing.org 5. Build Execution Into Strategy Fair Process of Strategy Strategy Formulation Process Fair Process – Engagement, Explanation, Expectation clarity Strategy Formulation Process Fair Process – Engagement, Explanation, Expectation clarity Attitudes Trust and Commitment – “I feel my opinion counts” Attitudes Trust and Commitment – “I feel my opinion counts” Behavior Voluntary Cooperation – “I’ll go beyond the call of duty” Behavior Voluntary Cooperation – “I’ll go beyond the call of duty” Strategy Execution Exceeds Expectation – self initiated Strategy Execution Exceeds Expectation – self initiated

26 Marketing.org Source of Reference W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy, HBS Publication

27 Marketing.org End of Material