Blue Ocean Strategy

How to create uncontested market space

and make the competition irrelevant

Two worlds …

Two worlds …Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space.

Create uncontested market space.

Beat the competition. Make the competition irrelevant.

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off. Break the value-cost trade-off.

Align the whole system of a strategic firm's activities with its choice of differentiation or low cost.

Align the whole system of a firm's activities in pursuit of differentiation and low cost. VALUE INNOVATION

Value Innovation The cornerstone of Blue Ocean

Strategy

Value-cost trade-off (Conventional Believe)

Differentiation and Low cost simultaneously(Blue Ocean Strategy)

VIVI

VALUE

COST

Value-Innovation

The rising Imperative of Creating Blue Oceans

• Supply exceeds demand

• Globalization

• Increasing price wars

• Shrinking profit margins

• Brands are becoming more similar select

based on price

Mobilink

Features of CompetitionLow call ratesBundle offersInternational RoamingMobile Internet UsePromotional StrategiesEasy Paisa

New Features of Competition

Mobile BankingPurchase of Air Ticket, Railway TicketsBillingFund TransferSatellite Roaming

Features for competition

Mobile Banking(Balance Enqiry,Confirmation)

Fund Transfer from one Account or Bank to another Bank

Fund Transfer(Easy Paisa)

Buy E-Tickets(Railway, Air)

Satellite Roaming

Hotel Room Reservation

Least Offered Features Not Offered Features

BOS Logic: The Core Principles

1. Reconstruct Market Boundaries… overcome believes.

2. Reach beyondexisting Demand… go for uncontested space.

3. Get the strategic sequence right… value [innovation] first.

VIVI

COST

VALUE

BOS Logic: 1. Reconstruct market boundaries

Industry Focuses on rivals within its industry

Strategic Group Focuses on competitive position within strategic group

Buyer Group Focuses on better serving the buyer group

Scope of Product and Service

Offerings

Focuses on maximizing the value of product and service offerings within the bounds of its industry

Functional-emotional Orientation of an

Industry

Focuses on improving price-performance with the functional or emotional orientation of this industry

Time/Trends Focuses on adapting to external trends as they occur

Establishing Consortium/Joint Ventures with other industries like Baking, Hotel industry etc.

Instead of focusing on local users only, all classes of clients who are technology pioneer and value poineer.Frequent Movers to international markets.CEO & Top executives of MNCs who travel a lot.

Mobile BankingPurchase of Air Ticket, Railway TicketsBillingFund TransferSatellite Roaming

Prestigious group, Ego Sensitive, Reference Group

Trend Setters, Ist movers advantages,Eraly Adopters

Boundaries of Competition

Head-to-HeadCompetition

Creating New Market Space

Reach beyondexisting Demand… go for uncontested space.

BOS Logic: 2. Reach Beyond Existing Demand

Companies should challenge two conventional strategy practices: 1. Focus on existing customers.

2. Drive for finer segmentation to accommodate buyer differences.

Core Customer Noncostumer

Soon-to-be-NC Refusing Customer

BOS Logic: 2. Reach Beyond existing Demand

Three Tiers of Noncustomers

Your Market

First TierSMS, Low Call

Second Tier

Int. Roaming, MMS,Internet

Third Tier

Technology PioneerEarly Adopters

BOS Logic: 3. Get the Strategic Sequence rightBuyer utility

Is there exceptional buyer utility in your business idea?

Adoption

What are the adoption hurdles in actualizing your

business idea?Are you addressing them up

front?

PriceIs your price easily

accessible to the mass of buyers?

Cost

Can you attain your cost target to profit at your

strategic price?

A commercially viable Blue Ocean Strategy

YES

YES

YES

YES

No Rethink

No Rethink

No Rethink

No Rethink

What factors should be eliminated that the industry has taken for granted?

Eliminate

What factors should be reduced well below the industry standard?

Reduce

What factors should be created that the industry has never offered?

Create

What factors should be raised well beyond the industry standard?

Raise

Four Actions to create a Blue Ocean

BOS & Mobilink

Application Four Actions Framework

A New Value Curve

Reduce

Eliminate Create

RaiseThe concept/Attitude that “PTCL is not serving Pakistani market well, landlines are no more in usage, PTCL hiring is political based, PTCL has left the market for others, need to be eliminated.

All people/complete market who are price sensitive, focused on low offers & who fight on low price.

Mobile BankingPurchase of Air Ticket, Railway Tickets, Billing, Fund TransferSatellite Roaming

Offerings beyond SMS, MMS, and Local call rates, International Roaming, International calls

Strategy Canvas

High

Low

Call Rates SMS BundleMMS Bundle

Roaming

Internet

HotelSatellite Roaming

Factors the industry currently competes on

Ticketing