Chapter 5: Reach Beyond Existing Demand Team 5

Reaching Beyond Existing Demand Two Conventional Strategy Practices 1. Focusing on existing customers 2. Driving for finger segmentation to accommodate buyer differences Looking for Noncustomers Instead of just focusing on existing customers. Callaway created the “Big Bertha” for country club members and sports enthusiasts who had not chosen to play golf.

Overview Noncustomers tend to offer far more insight into how to unlock and grow a blue ocean than to relatively content existing customers The more you segment the more you enclose yourself in a small portion of the market rather than looking at the big picture Within these 3 groups there is an ocean of untapped demand waiting to be released First Tier: “Soon to be” customers Second Tier: “ Refusing” customers Third Tier: “Unexplored” customers Second Tier First Tier Your Market Third Tier

First-Tier: Soon-to-be Noncustomers On the edge of your market Waiting to jump ship Example: Prêt a manger

Second-Tier: Refusing Noncustomers Noncustomers that deliberately choose against your market They find offerings unacceptable or beyond their means To unlock this group: focus on the customers commonalities rather than their differences Example: JCDecaux

Third-Tier: Unexplored Noncustomers They are the farthest away from your industry They have not been targeted or thought of as potential customers Example: Army (US Marines, Navy and Air force)

JSF Why did it challenge the industry? Birth of the F-35 How did it improve? What were the financial implications? Pentagons Praise

Air ForceNavyMarines LightweightTwo enginesSTOVL Design Customization Integrated avionics Two SeatsLightweight StealthLarge WingsShort Wings Super-CruiseDurabilityCountermeasures Long-Distance AgilityMaintainability Air-Air Armaments Flexible Payload Weapons Customization Fixed Payload Air-Ground Armaments Air-Air Armaments Electronic Warfare Built for Every Mission Mission Customization

Conclusion Go for the biggest catchment Varies across time and industries To maximize the size of your Blue Ocean, reach beyond existing demand. Think: Noncustomers before customers Commonalities before differences Desegmentation before finer segmentation