Reach Beyond Existing Demand

Reach Beyond Existing Demand Bryson Bell Ian Walraven Jordan Jones Philip Winfield Stephanie Light Tyler Buschman Dana Cook Austin Bastian

Reaching Beyond Existing Demand • Three tiers of noncustomers • Focusing on the biggest catchment • Maximizing Blue Oceans • How to successfully reach beyond existing demand

Three Tiers of Non-customers • First Tier • Closest to your company’s market • Customers that sit on the edge of you market and basically dip their toe in the water • Buyers that minimally purchase in your market, but are mentally not customers of your industry’s offerings • If offered an increase in value, these noncustomers will stay around and more frequently purchase in your industry’s offerings

Three Tiers of Non-customers • Second Tier • In between the first and third tier • Non-customers that know what your industry’s offering is and actively choose to not to make a purchase • Example: people that are members of a country club that actively choose to play tennis exclusively rather than golf. They are aware that they could easily play golf, but choose not to

Three Tiers of Non-customers • Third Tier • Furthest away from your market • These non-customers have never thought of your industry’s offerings as an option • By better understanding the commonalities that non-customers share with existing customers, we can better understand how to pull these non-customers into the market

First-Tier Noncustomers • “Soon-to-be” noncustomers, who minimally use the current market offerings to get by as they search for something better. • Sit on the edge of the market • Eager to jump ship

First-Tier Noncustomers • Case Study: Pret A Manger • Look for the commonalities across their responses • The lesson: Noncustomers tend to offer far more insight into how to unlock and grow a blue ocean than do relatively content existing customers

Second-Tier Noncustomers • Refusing noncustomers • People who either do not use or cannot afford to use the current market offerings • Refusing noncustomers have an ocean of untapped demand waiting to be released

JCDecaux • French outdoor advertising vendor • Pulled a mass second-tier non customers by creating the concept of “street furniture” • Increased exposure time to advertisements with stationary downtown locations • Signed contracts with municipalities to gain exclusive long-term rights for displaying ads

JCDecaux • Number one street furniture ad space provider world wide • Created a steady source of long-term revenue and profits with exclusive contracts and high operating margins

JCDecaux

Third-Tier Noncustomers • Farthest away from an industry’s existing customers • Their needs and the business opportunities associated with them have been assumed to belong to other markets • Example: tooth whitening

Example: The U.S. Defense Aerospace Industry • Hard to replace the aging fleet of fighter aircraft because of high costs and a limited budget • The Navy, Marines, and Air Force had different qualifications they wanted for their ideal fighter planes • The Joint Strike Fighter (JSF) program looked at these differences and then searched for commonalities across the three branches

Example: The U.S. Defense Aerospace Industry (cont’d) • They found the two highest costs to be avionics (software) and engines • Then, the JSF looked at the customized features that influenced the branches’ purchase decision • They combined the key factors and reduced or eliminated everything else to make one aircraft for all branches

Example: The U.S. Defense Aerospace Industry (cont’d) • Results: A dramatic drop in costs and an increase in performance of all three branches • Achieved this by reaching beyond existing customers of the three branches and then aggregating demand previously divided among them • The first JSF-35 is set to be delivered in 2010

Go for the Biggest Catchment • Focus on the tier that represents the biggest catchment at that time • Explore overlapping commonalities across all three tiers of noncustomers • Expand the range of hidden demand • Reach beyond existing demand to noncustomers while formulating future strategies • If no opportunities are found, then you can further develop strategies to existing customers. But beware!

Under Armour • Looking at their noncustomers • Women’s apparel is less successful than men’s line • First tier- athletic women who have need for UA’s offerings • Only purchase out of necessity • Third tier- women weren't initially targeted in advertising, unexplored market. • Second tier- are still women who think UA is too pricey • This market is still untapped because UA has not changed their pricing strategy • All tiers of customers have commonalities in needing comfortable, beneficial athletic wear • UA commercial

Reach Beyond Existing Demand