Blue ocean-book-notes

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Product Development - Strategy
1

VALUE:
Utility: need
Price: affordable
Cost: profitable
Create new market
space & create
demand
Break out from
product categories
that compete on
price
Makes the
competition
irrelevant
Drives cost down
while increases value
2

UTILITY: Is there a compelling reason to buy it
- Makes lives dramatically simpler
- More convenient
- More productive
- Less risky
- More fun
- Fashionable
3

UTILITY LEVERS: Is there a compelling reason to buy it
- Purchase
How long does it take to find it
How secure is the transaction
How rapidly can you make a purchase
- Delivery
How long does it take to get the product
How difficult is it to unpack & install
Do buyers have to arrange delivery themselves
- Use
Does the product require training
Is it easy to store when not in use
How effective are features & functions
Does it have far more power or options than is required by the
average user
4

UTILITY LEVERS: Is there a compelling reason to buy it
- Supplements
Do you need other products & services to make it work
If so, how costly are they
How much time to they take
How much pain do they cause
How easy are they to obtain
- Maintenance
Does it require external maintenance
How easy is it to maintain & upgrade
How costly is maintenance
- Disposal
Does the product create waste items
How easy is it to dispose of
Are there legal or environmental issues is disposal
How costly is disposal
5

PRICE: Is the price easily accessible to the majority of buyers?
Also, will they have a compelling ability to pay for it
6

COST: Can we attain our cost target to profit at the strategic price?
Must arrive at a cost structure that is both profitable and hard for
potential followers to match
7

STRATEGY CANVAS
High
Low
Price
Name 1 Name 2
Availability
& Shipping
Quality
Product
Line
Robustness
Distribution
Market
Share
Innovation
Captures current
state of the market
and industry
Customer
Service
Options
Name 6
Name 3
Name 7
Name 5
Name 4
8

FOUR ACTIONS FRAMEWORK
Reduce
Which factors should be reduced well below the industry
standard
Eliminate
Which of the factors that the industry takes for granted should
be eliminated
Create
Which factors should be created that the industry has never
offered
Raise
Which factors should be raised well above the industry standard
Reduces cost
structure
Differentiation
Sometimes it is
helpful to think in
terms of “non-customers”
9

Eliminate
Reduce
Raise
Create
FOUR ACTIONS GRID
10

Diversified point
demands a clear-cut
& compelling tagline.
Pro-Tech only
STRAT CANVAS: Divergent point
High
Low
Price
Availability&
Shipping
Quality
Product
Line
Robustness
Distribution
Name 1
Name 3
Market
Share
Innovation
Customer
Service
Options
Name 4
Name 2
Name 5
Name 6
Name 7
???
???
???
11

RECONSTRUCT MARKET BOUNDARIES
Look across alternate industries
Products or services that have the different functions and forms but the same
purpose (e.g. salt)
Look across strategic groups within industries
Need to understand which factors determine customers’ decisions to trade up or
down from group to another
Look across the chain of buyers
Challenge an industry’s conventional wisdom about which buyer group to target
can lead to the discovery of a new blue ocean.
Who are the chain of buyers? How does each define value? Who to target?
Look across complementary product and service offerings
Untapped value is often hidden in complementary products & services. What
happens before, during and after your product is used.
Can we eliminate pain points?
Look across functional or emotional appeal to buyers
Do you compete on functional or emotional appeal? How can you shift?
Look across time
What trends are shaping the industry? Are the irreversible and do they have a clear
trajectory.
12

WHO ARE OUR NON-CUSTOMERS?
What are their commonalities?
Tier 1
Soon to be non-customers are those who minimally use the
current market offerings to get by as they search for something
better. Why do they want to jumps ship?
Tier 2
Refusing non-customers – do not use or cannot afford to use
current market offerings because they find the offerings
unacceptable or beyond their means. Why are they refusing to
use our products?
Tier 3
Unexplored non-customers – their needs have always assumed
to belong to other markets. What are their needs?
13

WHO ARE OUR NON-CUSTOMERS?
T3
T2
T1
Our Market
14

ADOPTION HURDLES
What are the adoption hurdles in actualizing the new product/service?
Are these being address up front
15

EXECUTION
Engagement
Involving individuals in strategic decisions that affect them
Explanation
Everyone involved and affected should understand why final
strategic decisions are made as they are
Clarity of Expectation
After a strategy is set, managers state clearly the new rules of the
game
16

ACTION ITEMS
Complete Current State Strategy Map: Honest assessment of industry, with
Pro-Tech compared to level 1, 2, 3 and 4 competitors.
Brainstorm on Four Actions Framework/Grid: Common starting point
Brainstorm on Future State Strategy Map: Where can we create points of
diversion with products & the corporation
Create Customer Team: Customer-based product development team. Three
from each category: beginner, mid-sized , large
17

ACTION ITEMS: continued
Brainstorm on Market Boundaries: Can the market be stretched
Brainstorm on Non-Customers: Can the customer base be extended
Brainstorm Incremental Product Development Ideas: Existing product
Brainstorm Blue Ocean Product/Service Development: Game changers
Awareness Building of Adoption Hurdles: Operations
18

Blue ocean-book-notes

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