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Blue Ocean Strategy Get the Strategic Sequence Right. Group 4 : Katy Neely Matt Tevis Hunter Pond Andrew McDonald Shelly Brown. The Sequence of Blue Ocean Strategy. Testing for Exceptional Utility. Phillips’ CD-I “Imagination Machine” Buyer Utility Map. 6 Utility Levers.
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Blue Ocean StrategyGet the Strategic Sequence Right Group 4: Katy Neely Matt Tevis Hunter Pond Andrew McDonald Shelly Brown
Testing for Exceptional Utility • Phillips’ CD-I “Imagination Machine” • Buyer Utility Map
6 Utility Levers • Purchase, delivery, use, supplements, maintenance, and disposal. • Ford model T
Strategic Pricing • Two reasons for change: • Volume generates higher returns than in past • To a buyer, value of a product/service may be closely tied to the total number of people using it. • Nonrival good • Excludability
Target Costing • Three principle levers • IBM • Slice-share • Pricing innovation • Article: “Target Cost Management” by Louise Ross
Pricing Innovation? • “Taking a cue from Hellman's Mayonnaise, who recently redefined the quart as 30 ounces instead of 32, the approach is simple. Hours are now 54 minutes long instead of 60.” • Goal: corporate profits during economic downturn
iPhone Pricing Strategy • “The early adopters of Apple's iPhone paid $599 for the privilege of being the first to have the hot new consumer product when it was launched in June of 2007. But by September, Apple announced that it was slashing prices on its most expensive iPhone by a third. As the early adopters complained about the $200 price cut, Apple shares fell 8.6 percent, losing almost $11 billion in market value in the three days following the announcement. The iPhone illustrates both the challenges of getting pricing right for new products and the dynamic changes in pricing that are needed as the market is developed.” • "When you have something new about the product, such as the sleeker design and touch-screen technology for the iPhone, it is a little harder to price it... Apple may have mispriced the product in the first place and then had to make painful, costly adjustments."—Z. John Zhang, Professor of Marketing, The Wharton School