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Blue Ocean Strategy

Blue Ocean Strategy. Paul C. Godfrey Mark H. Hansen Brigham Young University. What is a Blue Ocean?. Red Ocean Strategy. Blue Ocean Strategy. Create uncontested market space Competition irrelevant Create new demand Deny the Value-Cost tradeoff

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Blue Ocean Strategy

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  1. Blue Ocean Strategy Paul C. Godfrey Mark H. Hansen Brigham Young University

  2. What is a Blue Ocean? Red Ocean Strategy Blue Ocean Strategy Create uncontested market space Competition irrelevant Create new demand Deny the Value-Cost tradeoff Align around differentiation and low cost • Compete in existing markets • Beat the competition • Exploit existing demand • Live the Value-Cost tradeoff • Align around differentiation or low cost

  3. How do you get there? Reconstruct market space

  4. Traditional airlines are true substitutes • Fractional jet ownership an alternative industry • Reduces executive costs of travel • Hotels • Dead time • 70% market share in new industry, 2010* • 8% growth in 2010, 2% decline in 2009 for commercial carriers * http://www.netjets.com/Learn_More/Press_Releases/2010/pr2010_08_16.asp

  5. What do women want? • Gyms vs. Home Exercise? • The two M’s they don’t want: • Men • Mirrors • Circular arrangement facilitates socialization • Low membership fees • Low capital investment • $25,000 vs. $500,000 • Crossed strategic groups to create customer value

  6. NN changed the buyer group for diabetes • Doctors and pure product • Patients and easy administration • NovoPen—a pen with measured doses of insulin • Innovo—using technology to better manage delivery times • From insulin provider to diabetes care company

  7. Busses typically sell on low cost of vehicle • NABI created lifetime low cost product • Fiberglass busses • Cut preventative maintenance • Body repairs cheaper, faster • Light weight cuts fuel consumption • Environmentally friendly • Lower powered engines and axles • Blue oceans come through rescoping products/markets

  8. Took a product known for its emotional appeal and made it purely functional, no-nonsense • Took a product known for its functionality and added emotional appeal Blue ocean strategies rethink the relationship between the company and customer

  9. The trend in music was web-based delivery • Napster, Kazaa, Limewire as pirates • Apple teams with Sony, Universal, MBG, EMI, and Warner Brothers • Legal downloads- $0.99 • Better sound quality • Ease of browsing, downloading • Blue Ocean means spotting a trend and getting there first

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