Reach Beyond Existing Demand CHAPTER 5– Blue Oceans Strategy Victoria Smith Caitlin McPherson Kevin Langford Devin Newman Nick Capodagli
Feb 24, 2016
Reach Beyond Existing DemandCHAPTER 5– Blue Oceans Strategy
Victoria Smith
Caitlin McPherson
Kevin Langford
Devin Newman
Nick Capodagli
Reaching Beyond Existing Demand
Main question: “How do you maximize the size of the blue ocean you are creating?”
To achieve this, companies should CHALLENGE 2 conventional strategy practices: Focus on existing customers Finer segmentation
Companies should focus on NONCUSTOMERS
Callaway Golf Example
Reach Beyond Existing Demand
“To reach beyond existing demand, think noncustomers before customers; commonalities before differences; and desegmentation before pursuing finer segmentation.”
The 3 Tiers of Noncustomers 1st– “Soon-to-be”
Closest to your market
2nd– “Refusing” Consciously choose against you
3rd–” Unexplored” Distant from your market
First-Tier Noncustomers
Soon-to-be noncustomers who minimally use the current market offerings to get by as they search for something better.
Pret A Manger
Pret A Manger
First-tier noncustomers shared 3 commonalities: Wanted a fast lunch Wanted it fresh and healthy Wanted it at a reasonable price
Pret offers restaurant quality sandwiches made fresh every day from only the finest ingredients, and it makes the food available at a speed that is fast than that of restaurants and even fast food. It also delivers this in a sleek setting at reasonable prices.Avg. Price $4-$6
Pret A Manger
Second-Tier Noncustomers
Refusing noncustomers
“Street Furniture” Bus Stops
Cheaper and higher value
Third-Tier Noncustomers
Unexplored Customers- have not been thought of as customers by any player in the industry. Needs assumed to belong to other markets (ex. Tooth whitening industry)
Navy, Marines, Air Force faced similar dilemma (Joint Strike Fighter) Needs were different for each branch
Maneuverability, short take off, stability, maintainability
Go for the Biggest Catchment
Three Tiers The rule… and a companies focus Searching for opportunities
Boston Brew Company
Original Stock Offering Twisted Tea Brewing Company Hardcore Cider