Marketing Strategy: Creating Blue Oceans

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Questions and Answers

What is the primary goal of a commercially viable Blue Ocean Strategy?

To increase market share in an existing industry

To reduce costs and increase efficiency

To improve customer service and loyalty

To create a new market space and make the competition irrelevant (correct)

What is the purpose of the Four Actions Framework in a Blue Ocean Strategy?

To identify the industry's best practices

To eliminate, reduce, raise, and create factors that will shape a new value curve (correct)

To set price points and revenue targets

To analyze the competition's strengths and weaknesses

What is the result of creating a new value curve in a Blue Ocean Strategy?

A new market space is created (correct)

Market demand is increased

The competition is eliminated

The industry's boundaries are expanded

What is the purpose of the Strategy Canvas in a Blue Ocean Strategy?

To visualize the new value curve Signup and view all the answers

What is the primary goal of eliminating factors in the Four Actions Framework?

To simplify and focus on what matters most Signup and view all the answers

What is the outcome of value innovation in a Blue Ocean Strategy?

Creation of a new market space and increased demand Signup and view all the answers

What is the primary goal of value innovation in a blue ocean strategy?

To create a leap in value for both buyers and the company Signup and view all the answers

What is the outcome of successfully creating a blue ocean?

A company will create a new and uncontested market space Signup and view all the answers

What is the primary reason why companies need to create blue oceans?

Because globalism has made many brands become increasingly similar Signup and view all the answers

What is the outcome of creating a blue ocean in terms of revenue and profit?

A company will experience a significant increase in revenue and profit Signup and view all the answers

What is the unit of analysis for exploring blue oceans?

The strategic move Signup and view all the answers

What is the primary focus of value innovation?

Aligning innovation with utility, price, and cost positions Signup and view all the answers

What is the outcome of exploiting existing demand?

A company will experience increased price wars Signup and view all the answers

What is the relationship between value innovation and blue ocean strategy?

Value innovation is a key component of blue ocean strategy Signup and view all the answers

What is the primary focus of the Blue Ocean Strategy?

Reconstructing market boundaries and creating new demand Signup and view all the answers

What is the main goal of Value Innovation?

To create new markets and demand Signup and view all the answers

What is the key principle of Reconstructing Market Boundaries?

Reaching beyond existing demand and creating new markets Signup and view all the answers

What is the primary risk associated with reaching beyond existing demand?

Scale Risk Signup and view all the answers

What is the key principle of the Blue Ocean Strategy that involves creating uncontested market space?

Reconstructing Market Boundaries Signup and view all the answers

What is the main objective of the Blue Ocean Strategy's execution principles?

To overcome key organizational hurdles and build execution into strategy Signup and view all the answers

What is the primary focus of the Red Ocean Strategy?

Competing in existing markets and beating competitors Signup and view all the answers

What is the key principle of Value Innovation that involves putting value first?

Value Innovation First Signup and view all the answers

Study Notes

The Imperative of Creating Blue Oceans

The rising imperative of creating blue oceans is due to supply exceeding demand, accelerated commoditization of products and services, increasing price wars, shrinking profit margins, and brands becoming more similar.
Globalism has made many brands increasingly similar and more of a commodity, and technological improvement has caused supply to outweigh demand.
It is now harder than ever to differentiate among brands.

The Impact of Creating Blue Oceans

In a study of 108 company launches, 86% were line extensions (red ocean) and accounted for 62% of total revenues and 39% of total profits.
The other 14% of launches were aimed at creating blue oceans and accounted for 38% of revenue and 61% of total profit.

Value Innovation

Value innovation is the cornerstone of blue ocean strategy, and it occurs when companies align innovation with utility, price, and cost positions.
Value innovation makes the competition irrelevant, creates a leap in value for both buyers and the company, and opens up new and uncontested market space.
Value innovation involves creating new buyer utilities, setting a price that attracts a mass of buyers, and setting the cost structure based on a target cost.

Blue Ocean Strategy vs. Red Ocean Strategy

Blue ocean strategy involves creating a new market space, whereas red ocean strategy involves competing in an existing market space.
Blue ocean strategy focuses on value innovation, whereas red ocean strategy focuses on beating the competition.

Minimizing Risks and Maximizing Opportunities

The core principles of blue ocean strategy include reconstructing market boundaries, focusing on the big picture, reaching beyond existing demand, and getting the strategic sequence right.
The execution principles include overcoming key organizational hurdles, building execution into strategy, and minimizing risks and maximizing opportunities.

BOS Logic: The Core Principles

BOS logic involves reconstructing market boundaries, reaching beyond existing demand, getting the strategic sequence right, and addressing the four actions framework.

Four Actions Framework

The four actions framework involves reducing factors that should be reduced well below the industry standard, eliminating factors that the industry has taken for granted, raising factors that should be raised well above the industry standard, and creating new markets.

Strategy Canvas

The strategy canvas is a visual representation of the four actions framework, which helps companies visualize and create a new value curve.
The strategy canvas involves plotting industry variables on a graph to identify areas for reduction, elimination, raising, and creation.

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Description

Learn about the importance of creating blue oceans in marketing strategy, due to supply exceeding demand, commoditization, and shrinking profit margins.