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Reconstructing Market Boundaries

Reconstructing Market Boundaries. Michael Seymour Matt Anderson. Reconstruct Market Boundaries. The First Principle of Blue Ocean Strategy. Approaches to Reconstruction. There are six basic approaches to reconstructing market boundaries: Define Industry & Strive to be the best within it

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Reconstructing Market Boundaries

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  1. Reconstructing Market Boundaries Michael Seymour Matt Anderson

  2. Reconstruct Market Boundaries • The First Principle of Blue Ocean Strategy

  3. Approaches to Reconstruction • There are six basic approaches to reconstructing market boundaries: • Define Industry & Strive to be the best within it • Look at Industry through lens of strategic group • Focus on Same buyer group • Define scope of Products/Services Offered • Accept Industry’s Functional/Emotional Orientation • Focus on the same point in time when formulating strategy

  4. Path 1: Look Across Alternative Industries • Alternatives: Have different form & function but same purpose (“Substitutes”) • Buyers weigh alternatives (often unconsciously) in EVERY purchase decision

  5. Path 2: Look Across Strategic Groups • Strategic Group: Group of Companies within an industry that pursue a similar strategy • Can be generally ranked by 2 dimensions: • Price • Performance

  6. Path 3: Look Across the Chain of Buyers • There is a chain of 3 buyers Directly or Indirectly involved in EVERY buying decision • Purchaser: Pays for product/service • User: Consumes product/service (Often different from purchaser) • Influencer: Sway users and purchasers

  7. Path 4: Look Across Complementary Product/Service Offerings • Complement: Product or Service that adds value to another (ex: Movie theater with a day care for kids) • EX: Airport, Movies, Philips, Barnes & Noble

  8. Strategy Canvas of the US Municipal Bus Industry High NABI

  9. Path 5: Look Across Functional/Emotional Appeal to Buyers • 2 Basic types of appeal • Rational (Price & Function) • Emotional (Feelings) • Appeal of MOST products/services is often a mix of both • Companies can often find new market space by challenging the orientation of their industry • EX: QB House, Cemex, Starbucks

  10. Path 6: Look Across Time • All industries are subject to External Trends • Analyzing these trends with the right perspective can help create Blue Ocean opportunities • Work back from vision of B.O.S. • EX: Apple’s IPOD & I-Tunes, CNN

  11. From Head-to-Head Competition to Blue Ocean Strategy

  12. To Sum it Up… Think across conventional boundaries of competition Managers are engaged in a structural process of reordering market realities in a new way Tomorrow’s chapter: focuses on ‘The Big Picture, Not the Numbers’

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