Blue Ocean Strategy Frameworks are the fusion of Low Price and Differentiation. The 4 Actions Framework is a tool that marketers can use to create a tactical advantage that can render the competition irrelevant.
1. Blue Ocean Strategy
Implementation
Presented by:
Reyland B. Nepomuceno, MBA
General Manager – International Business Division
Netpia Phils, Inc.
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
2. The Path to Blue Ocean
• “Imagination will often carry us to worlds that never were. But without it we
go nowhere.”
- Carl Sagan
• “All men who have achieved great things have been great dreamers.”
-Orison Swett Marden
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
3. What is Blue Ocean Strategy?
• Creating New Markets
• Shift in Paradigm
• Value Innovation: The cornerstone of BOS
• Hybrid of Differentiation and Low-Cost Strategy
• Traditional Marketing Focuses on serving “Customers”
• BOS focuses on serving “Non-Customers”
• Defense against thinning profit margins in Red Ocean
• Red Ocean = Marketing is War!
• Blue Ocean = Reinventing the Market
Red Ocean Blue Ocean
Create Uncontested Market Space
Compete in Existing Market
Make Competition Irrelevant
Beat the Competition
Create and Capture New Demand
Exploit Existing Demand
Break the Value-Cost Trade Off
Value-Cost Trade Off
Differentiation or Low-Cost Strategy Differentiation and Low-Cost Strategy
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
4. Value Innovation
• Value Innovation is created in the region where a company’s actions entail:
– Cost Savings: elimination and reduction of factors where industry
competes on
– Buyer Value: raised through creation of elements the industry has never
offered
Costs
Value
Innovation
Buyer Value
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
5. Blue Ocean Frameworks
• 6 Principles of Blue Ocean Strategy
• Strategy Canvass
• 4 Actions Framework
• PMS Map
• 3 Tiers of Non-Customers
• Blue Ocean Strategy Sequence
• Buyer Experience Cycle
• Price Corridor of the Mass
• Blue Ocean Index
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
6. 6 Principles of Blue Ocean Strategy
• Formulation Principles
– Reconstruct Market Boundaries
• Look Across Alternative Industries (different form but same purpose)
• Look Across Strategic Groups w/in Industries (pursue similar strategy)
• Look Across Chain of Buyers (not just the end-user but the influencer)
• Look Across Complementary Products & Service Offerings
• Look Across Functional or Emotional Appeal to Buyer
• Look Across Time (Proactive not Reactive)
– Focus on the Big Picture, Not the Numbers
– Reach Beyond Existing Demand
– Get the Strategic Sequence Right
• Evaluation Principles
– Overcome Key Organizational Hurdles
– Build Execution into Strategy
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
7. Strategy Canvass
• Diagnostic and an Action Framework
• Reveals where the Competition is Investing
• Dissects the factors where the Industry currently competes in Product,
Service and Delivery
• Reveals “Gaps” in the current market offerings
• Looking to “Alternative Industries” for Differentiation Focus
Ave. Airline
Cebu Pacific
Car Transport
Friendly
Seating Speed Frequent X-Factor
Price Meals Lounge
Service
Classes Departures
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
8. 4 Actions Framework
• Customers may be “Over-served in Areas which are not critical” and
“Underserved” in areas that matter to a specific market
• Core of the Blue Ocean =
Enables the Fusion of Differentiation and Low-Cost Strategy
• ELIMINATE – Factors that Industry Takes for Granted
• REDUCE – Factors that should be reduced below industry Standard
• RAISE – Value Factors above industry standard
• CREATE – New Factors that Industry has not offered
ELIMINATE REDUCE
RAISE CREATE
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
9. 4 Actions Framework: Sisig Hooray!
ELIMINATE REDUCE
-Above the Line -wait time
Advertising (They actually raised the bar
as it is served quicker)
(They use Blogs)
-cost = plastic spoon
-Beer that is usually
partnered w/Sisig and fork
-Bar Music / Entertainment -price = P50
-comfortable seats
-Sizzling Plate
RAISE CREATE
-Taste -Time of Availability
(Any time of the day)
-Convenience
(Disposable Styro) -Place of Availability
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
10. PMS Map
• Defines a Roadmap to your Target Market
Pioneer, Migrator and Setters
“The Soul
Never Thinks
Without an
Image”
-Aristotle
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
11. 3 Tiers of Non-Customers (Targeting)
Tier Tier 2:Tier 3: Non-Customers
1: Mainly Buy
Non-Customers
That have offeringbuy your Industry’s Offerings
Industry never thought of your market’s offerings as an option
That refuse to Out of necessity
(Either “Soon-to-be” Non-Customers to Belong to other Markets)
(Their Needs have been Assumed
they find it Unacceptable or Beyond Their Means)
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
12. Blue Ocean Strategy Sequence
Buyer Utility
Exceptional Buyer Utility?
No, Rethink
YES
Price
Affordable to Masses?
No, Rethink
YES
Cost
Can you Attain Cost Target to Profit
No, Rethink
At Strategic Price?
YES
Adoption
Adoption Hurdles Being Addressed?
No, Rethink
YES
A Commercially Viable Blue Ocean
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
14. Price Corridor of the Mass
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
15. Blue Ocean Idea Index (BOI Index)
Microsoft Sony Nintendo
Xbox-360 PS3 Wii
- +
+
- - +
- -,+ +
- - +
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
16. Case Study: Crocs
ELIMINATE REDUCE
• Innovation in the shoe industry
-Shoe Box and -Labor Manufacturing
• unique lightweight clogs that
packaging Costs
combine comfort and fashion and
-Material Costs
low price point.
-Advertising Costs
• Crocs branded shoes have broad
RAISE CREATE
appeal because they are a fun
-Comfort (Lightweight -Fun (emotional)
alternative to traditional sandals
and loose fitting) -New Type of
and casual shoes and come in a
-Ease of Use Fashionable,
wide range of funky bright colors. Functional Casual
-Durability
• Customer Value: ergonomic Footwear
-Safety (Skid resistant)
comfort, lightweight, anti-skid, -Purchase
waterproof, and anti-microbial. Accessibility
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
17. Case Study: Blackberry
• Blackberry was a breakthrough in ELIMINATE REDUCE
mobile communication -Need for computer to -implementation time
• Was ideal for Corporate People check email -training time
“On-the-Go” and must be reached -Need for wifi to -support time
connect
anywhere (airports, etc.) -response time to
-remote client software emails (Global)
• Rapid Response Time to Emails instalation
• Eliminated need for Laptop and wifi RAISE CREATE
connection to check email /
-Battery Life -Security
Browse / Chat
-Durability (Bulletproof -”Push Technology”
Material) -Redundancy of Email
-Reliability / Synchronization
-Speed of -QWERT Keyboard
send/receive email -Real Time Chat
-Browsing Capability Capability
-integration of voice,
PDA, Tools, Email
Author: R.Nepomuceno Blue Ocean Strategy_RBN_v1
