SGroup 4Raul GuerreroJose MedinaLaura RandallMelissa DunlopMona ShaferAlma Pena

RECONSTRUCT MARKET BOUNDARIES

Six Paths Framework

Chapter 3

Breaking Away From Competition

Look systematically across boundaries

Six Paths Framework

Across Alternative Industries

Across Strategic Groups

Across Buyer Groups

Across Complimentary Products and Service Offerings

Across the Functional-Emotional Orientation of an Industry

Across Time

Path 1: Look Across Alternative Industries

Substitutes

Different Form Same Function

Alternatives Different Form Different Function Same Purpose

Creating Blue Oceans

NetJets Fractional Jet Ownership

NTT DoCoMo’s i-mode Wireless Transmission of Voice, Text, Data, and Pictures

Path 2:Looking Across Strategic Groups

Companies within a given industry that use similar strategy

Compete on price and performance

Trade up or down from one group to another

Creating Blue Oceans

Curves Combining the industries of traditional health clubs and

home exercise programs

Lexus Combine luxury of higher end cars with lower priced

vehicles

Path 3: Look Across the Chain of Buyers

Many Industries can create a blue ocean by asking; What is the chain of buyers in this industry? Which buyer group does this industry typically focus on? If the buyer group is shifted how could new value be unlocked?

Target Buyers Vs. Chain of Buyers

Companies tend to focus on the target buyer

In reality there is a chain of “buyers” Purchaser may be different then actual user The direct buyer and the indirect buyer may have very different

values

Challenging which buyer group to target can create a new blue ocean

Path 3: Look Across the Chain of Buyers

Many Industries can create a blue ocean by asking What is the chain of buyers in this industry? Which buyer group does this industry typically focus on? If the buyer group is shifted how could new value be unlocked?

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Path 4: Look Across Complementary Product and Service offer

Before, During and After the Storm

Total Solution

What buyers seek when they choose a product or service?

What happens before, during, and after your product is used?

IKEA

NABI

Pain points in transit bus industry Designs outdated Late delivery times Low quality Penny pinching pricing approach in industry.

Created a value curve that radically differed from the industry's average curve. (Low Life-Cycle Costs) o Named one of the 30 most successful companies in the world by

Economist Intelligence Unit in 2002 Has Captured 20% of the US Market since 1993

Phillips Electronics

In teakettle’s, the major pain point in customers’ total solution was the lime scale found in tap water

Opportunity in the complementary product of water: Created a kettle having a mouth filter that

effectively captured the lime scale as water poured

Creating Blue Oceans

Barnes & Noble

Virgin Entertainment’s megastores

Zeneca’s Salick cancer centers

Path 5: Look Across Functional or Emotional Appeal to Buyers

Industry converge over scope of its products and services

Also on one of two possible bases of appeal Functional appeal Emotional appeal

Functional Appeal

Industry competes on price and function largely on calculations of utility

Appeal is rational

Emotional Appeal

Industry competes largely on feelings

Appeal is emotional

Offer many extras that add price without increasing functionality

Path 5: Look Across Functional or Emotional Appeal to Buyers

Companies’ behavior affects buyers’ expectations in a reinforcing cycle Functionally oriented become more functionally

oriented Emotionally oriented become more emotionally

oriented

Path 5: Look Across Functional or Emotional Appeal to Buyers

Challenge the functional-emotional orientation of the industry

Find new market space

Path 6: Look Across TimeAssessing Trends Across Time

Three Principles Decisive Irreversible Have a clear trajectory

Identifying a Trend

When a trend is identified, working from the inside out and taking it to its logical conclusion could take a firm into a blue ocean.

Three Takeaways

The first principle of blue ocean strategy is to reconstruct market boundaries by looking systematically across different boundaries to break from the competition and create blue oceans.

By looking at different angles, such as buyers, products, and services a company can expand its values and break into a blue ocean.

Through the perception of time, companies can evaluate the emotional and functional appeal from the buyer’s perspective and create ways to diversify your market space.

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