Description
It compares conventional logic and blue ocean logic. It also differentiates between red ocean and blue ocean strategy.
1. DESIGN SCHOOL
2. PLANNING SCHOOL
3. POSITIONING SCHOOL 4. ENTREPRENEURIAL SCHOOL 5. COGNITIVE SCHOOL 6. LEARNING SCHOOL 7. POWER SCHOOL 8. CULTURAL SCHOOL 9. ENVIRONMENTAL SCHOOL 10. CONFIGURATION SCHOOL
THE PRESCRIPTIVE SCHOOLS
THE DESCRIPTIVE SCHOOLS
THE INTERGRATIVE SCHOOL
?
High profit growth at low risk
?
Industries not in existence today Untapped market demand
Unknown market space
2
?
?
The American Wine Industry
3
Premium Wines
Polarised Strategic Groups
Budget Wines
Massive Choice
4
? ?
3rd largest in world: worth $20 billion Californian makes 66% - the rest is from Italy, France, Spain, Chile, Argentina, Australia Exploding number of new wines – new vineyards in Oregon, Washington, New York Customer base stagnant 31st in the world in per capita consumption!
?
? ?
5
?
Top 8 producers had 75% of the market; 1600 had the remaining 25%
$ millions spent in marketing - Titanic battles – intense competition Severe price pressure The dominant growth strategy was towards premium wines – more complexity, better image, more prestigious vineyards, number of medals won at wine festivals.
6
?
? ?
Premium Wines
Very high
Offering Level versus Wine Drinkers’ Expectations
High
Normal
Low
Very low
Nonexistent
7
Premium and Budget Wines
Very high
Offering Level versus Wine Drinkers’ Expectations
High
Normal
Low
Very low
Nonexistent
?
“It is too confusing and complex”
? ? ? Wine descriptions and terminology The shopping experience The lack of clear guidance on what to buy and drink
?
Thus, massively intimidating for „noncustomers? (the large majority of the US population who were not wine drinkers)
9
Premium
Creating a Blue Ocean
Budget
10
? ?
Only 2 types initially – Chardonnay and Shiraz Fruity, soft on palette, sweet-ish – great for those who had not drunk wine before Same bottle for red and white – low logistics costs Simple vibrant packaging – lower case letters/kangaroo Un-intimidating They were selling “The essence of a great land … Australia” – ie they were not selling the wine Australian clothing for the retail staff – they enthusiastically promoted a wine they could understand.
? ? ? ?
?
11
?
Eliminated: Oenological terminology and distinctions, Aging qualities, Above the line marketing Reduced: Wine complexity, Wine range, Vineyard prestige Raised: Price versus Budget Wines, Simplicity of retail store environment, Enthusiasm of Sales People Created: Easy drinking, Ease of selection, Sense of fun and adventure
12
?
?
?
Yellow Tail Value Curve
“The Essence of a Great Land”
Very high
High
Three Tests of a Blue Ocean Strategy: 1) Focussed 2) Divergent 3) Compelling Tagline
Normal
Low
Very low
Nonexistent
13
? ?
No. 1 imported wine (outsells France and Italy) Fastest growing imported wine in the history of the USA industry
? New consumers of wine ? Jug drinkers trade up
? Premium wine drinkers trade down
? ?
Industry criticizes them mercilessly at first Now wine press blurb gives it a “best buy” for value; winning wine awards.
14
Conventional Logic Industry Assumption
Strategic Focus
Blue Ocean Logic
Industry conditions are Industry condition can given be shaped.
Build competitive Create a quantum leap advantages to beat the in buyer value to competition. dominate the market.
Customers
Retain and expand the customer base through further segmentation and customization. Think in terms of embracing customer differences.
Go for the mass of buyers and willingly let some existing customers go. Think in terms of embracing key customer value commonalities.
15
Conventional Logic Think in terms of a company?s existing assets and capabilities. Build on what it has. Think in terms of products/services offered by the industry. Seek to maximize the value of these offerings.
Blue Ocean Logic Think free from a company?s existing assets and capabilities. Ask, what if we start anew? Think in terms of buyers? solution even if that transcends the industry. Seek to solve buyers? major bottlenecks/chief compromises in using the products/services of the industry.
16
Assets & Capabilities
Product/ Service offerings
Key Blue Ocean Creations
Automobiles
Was the Blue ocean created by a new entrant or an incumbent
Was it driven by technology pioneering or value pioneering
At the time of the blue ocean creation was the industry attractive or unattractive
Ford Model T Unveiled in 1908, the model T was the first mass-produced car, priced so that many Americans could afford it GM’s “Car for every purse & purpose” GM created a blue ocean in 1924 by injecting fun & fashion into the car Japanese fuel-efficient autos Japanese auto makers created a blue ocean in the mid 1970’s with small, reliable lines of cars Chrysler Minivan With its 1984 minivan, Chrysler create a new class of automobile that was easy to use as a car but had the passenger space of a van.
New Entrant
Value pioneering * (Mostly existing technologies)
Value pioneering (Some new technologies)
Unattractive
Incumbent
Attractive
Incumbent
Value pioneering (Some new technologies)
Unattractive
Incumbent
Value pioneering (Mostly existing technologies)
Unattractive
17
Key Blue Ocean Creations
Was the Blue ocean created by a new entrant or an incumbent
Was it driven by technology pioneering or value pioneering Value pioneering (Some new technologies) Value pioneering (650:Mostly existing technologies)
At the time of the blue ocean creation was the industry attractive or unattractive
COMPUTERS
CTR’s tabulating machine In 1914, CTR created the business machine industry by simplifying, modularizing and leasing tabulating machines. CTR later changed its name to IBM IBM 650 electronic computer & System/360 In 1952, IBM created the business computer industry by simplifying & reducing the power and price of existing technology. And it exploded into the blue ocean created by the 650 when in 1964 in unveiled the system/360, the first modularized computer system.
Incumbent
Unattractive
Incumbent
Value and technology pioneering (System/360: New & Existing technologies) Value pioneering (Mostly existing technologies)
Non-Existent
Apple personal computer Although it was not the first home computer, the all-inone, simple-to-use Apple II was a blue ocean creation when it appeared in 1978 Compaq PC Servers Compaq created a blue ocean in 1992 with its ProSignia server, which gave buyer twice the file & print capability of the mini computer at 1/3 the price Dell Built-to-Order Computers In the mid-1990’s , Dell created a blue ocean in a highly competitive industry by creating a new purchase and delivery experience for buyers
New-Entrant
Unattractive
Incumbent
Value pioneering (Mostly existing technologies) Value pioneering (Mostly existing technologies)
Non-Existent
New-Entrant
Unattractive
18
Key Blue Ocean Creations
Movie Theatres
Was the Blue ocean created by a new entrant or an incumbent
Was it driven by technology pioneering or value pioneering
At the time of the blue ocean creation was the industry attractive or unattractive
Nickelodeon The first Nickelodeon opened its doors in 1905, showing short films around –theclock to working-class audiences for 5 cents Palace Theatres Created by Roxy Rothapfel in 1914, these theatres provided an operalike environment for cinema viewing at an affordable price AMC multiplex In the 1960’s, the number of multiplexes in America’s suburban shopping malls mushroomed. The multiplex gave viewers greater choice while reducing owners’ costs. AMC Megaplex Megaplexes, introduced in 1995, offered every current blockbuster and provided spectacular viewing experiences in theatre complexes as big as stadiums, at a lower cost to theatre owners.
New Entrant
Value pioneering (Mostly existing technologies)
Non-Existent
Incumbent
Value pioneering (Mostly existing technologies)
Attractive
Incumbent
Value pioneering (Mostly existing technologies)
Unattractive
Incumbent
Value pioneering (Mostly existing technologies)
Unattractive
19
Red Ocean Strategy Compete in existing market space Beat the competition Exploit existing demand Make value/cost trade-off Align the whole system of a company?s activities with its strategic choice of differentiation or low cost
Blue Ocean Strategy Create uncontested market space Make the competition irrelevant Create and capture new demand Break value/cost trade-off Align the whole system of a company?s activities in pursuit of differentiation and low cost
20
Raise
What factors should be raised well beyond the industry standard?
Eliminate
What factors should be eliminated that the industry has taken for granted?
Create
What factors should be created that the industry has never offered?
Reduce
What factors should be reduced well below the industry standard?
21
22
doc_925744252.pptx
It compares conventional logic and blue ocean logic. It also differentiates between red ocean and blue ocean strategy.
1. DESIGN SCHOOL
2. PLANNING SCHOOL
3. POSITIONING SCHOOL 4. ENTREPRENEURIAL SCHOOL 5. COGNITIVE SCHOOL 6. LEARNING SCHOOL 7. POWER SCHOOL 8. CULTURAL SCHOOL 9. ENVIRONMENTAL SCHOOL 10. CONFIGURATION SCHOOL
THE PRESCRIPTIVE SCHOOLS
THE DESCRIPTIVE SCHOOLS
THE INTERGRATIVE SCHOOL
?
High profit growth at low risk
?
Industries not in existence today Untapped market demand
Unknown market space
2
?
?
The American Wine Industry
3
Premium Wines
Polarised Strategic Groups
Budget Wines
Massive Choice
4
? ?
3rd largest in world: worth $20 billion Californian makes 66% - the rest is from Italy, France, Spain, Chile, Argentina, Australia Exploding number of new wines – new vineyards in Oregon, Washington, New York Customer base stagnant 31st in the world in per capita consumption!
?
? ?
5
?
Top 8 producers had 75% of the market; 1600 had the remaining 25%
$ millions spent in marketing - Titanic battles – intense competition Severe price pressure The dominant growth strategy was towards premium wines – more complexity, better image, more prestigious vineyards, number of medals won at wine festivals.
6
?
? ?
Premium Wines
Very high
Offering Level versus Wine Drinkers’ Expectations
High
Normal
Low
Very low
Nonexistent
7
Premium and Budget Wines
Very high
Offering Level versus Wine Drinkers’ Expectations
High
Normal
Low
Very low
Nonexistent
?
“It is too confusing and complex”
? ? ? Wine descriptions and terminology The shopping experience The lack of clear guidance on what to buy and drink
?
Thus, massively intimidating for „noncustomers? (the large majority of the US population who were not wine drinkers)
9
Premium
Creating a Blue Ocean
Budget
10
? ?
Only 2 types initially – Chardonnay and Shiraz Fruity, soft on palette, sweet-ish – great for those who had not drunk wine before Same bottle for red and white – low logistics costs Simple vibrant packaging – lower case letters/kangaroo Un-intimidating They were selling “The essence of a great land … Australia” – ie they were not selling the wine Australian clothing for the retail staff – they enthusiastically promoted a wine they could understand.
? ? ? ?
?
11
?
Eliminated: Oenological terminology and distinctions, Aging qualities, Above the line marketing Reduced: Wine complexity, Wine range, Vineyard prestige Raised: Price versus Budget Wines, Simplicity of retail store environment, Enthusiasm of Sales People Created: Easy drinking, Ease of selection, Sense of fun and adventure
12
?
?
?
Yellow Tail Value Curve
“The Essence of a Great Land”
Very high
High
Three Tests of a Blue Ocean Strategy: 1) Focussed 2) Divergent 3) Compelling Tagline
Normal
Low
Very low
Nonexistent
13
? ?
No. 1 imported wine (outsells France and Italy) Fastest growing imported wine in the history of the USA industry
? New consumers of wine ? Jug drinkers trade up
? Premium wine drinkers trade down
? ?
Industry criticizes them mercilessly at first Now wine press blurb gives it a “best buy” for value; winning wine awards.
14
Conventional Logic Industry Assumption
Strategic Focus
Blue Ocean Logic
Industry conditions are Industry condition can given be shaped.
Build competitive Create a quantum leap advantages to beat the in buyer value to competition. dominate the market.
Customers
Retain and expand the customer base through further segmentation and customization. Think in terms of embracing customer differences.
Go for the mass of buyers and willingly let some existing customers go. Think in terms of embracing key customer value commonalities.
15
Conventional Logic Think in terms of a company?s existing assets and capabilities. Build on what it has. Think in terms of products/services offered by the industry. Seek to maximize the value of these offerings.
Blue Ocean Logic Think free from a company?s existing assets and capabilities. Ask, what if we start anew? Think in terms of buyers? solution even if that transcends the industry. Seek to solve buyers? major bottlenecks/chief compromises in using the products/services of the industry.
16
Assets & Capabilities
Product/ Service offerings
Key Blue Ocean Creations
Automobiles
Was the Blue ocean created by a new entrant or an incumbent
Was it driven by technology pioneering or value pioneering
At the time of the blue ocean creation was the industry attractive or unattractive
Ford Model T Unveiled in 1908, the model T was the first mass-produced car, priced so that many Americans could afford it GM’s “Car for every purse & purpose” GM created a blue ocean in 1924 by injecting fun & fashion into the car Japanese fuel-efficient autos Japanese auto makers created a blue ocean in the mid 1970’s with small, reliable lines of cars Chrysler Minivan With its 1984 minivan, Chrysler create a new class of automobile that was easy to use as a car but had the passenger space of a van.
New Entrant
Value pioneering * (Mostly existing technologies)
Value pioneering (Some new technologies)
Unattractive
Incumbent
Attractive
Incumbent
Value pioneering (Some new technologies)
Unattractive
Incumbent
Value pioneering (Mostly existing technologies)
Unattractive
17
Key Blue Ocean Creations
Was the Blue ocean created by a new entrant or an incumbent
Was it driven by technology pioneering or value pioneering Value pioneering (Some new technologies) Value pioneering (650:Mostly existing technologies)
At the time of the blue ocean creation was the industry attractive or unattractive
COMPUTERS
CTR’s tabulating machine In 1914, CTR created the business machine industry by simplifying, modularizing and leasing tabulating machines. CTR later changed its name to IBM IBM 650 electronic computer & System/360 In 1952, IBM created the business computer industry by simplifying & reducing the power and price of existing technology. And it exploded into the blue ocean created by the 650 when in 1964 in unveiled the system/360, the first modularized computer system.
Incumbent
Unattractive
Incumbent
Value and technology pioneering (System/360: New & Existing technologies) Value pioneering (Mostly existing technologies)
Non-Existent
Apple personal computer Although it was not the first home computer, the all-inone, simple-to-use Apple II was a blue ocean creation when it appeared in 1978 Compaq PC Servers Compaq created a blue ocean in 1992 with its ProSignia server, which gave buyer twice the file & print capability of the mini computer at 1/3 the price Dell Built-to-Order Computers In the mid-1990’s , Dell created a blue ocean in a highly competitive industry by creating a new purchase and delivery experience for buyers
New-Entrant
Unattractive
Incumbent
Value pioneering (Mostly existing technologies) Value pioneering (Mostly existing technologies)
Non-Existent
New-Entrant
Unattractive
18
Key Blue Ocean Creations
Movie Theatres
Was the Blue ocean created by a new entrant or an incumbent
Was it driven by technology pioneering or value pioneering
At the time of the blue ocean creation was the industry attractive or unattractive
Nickelodeon The first Nickelodeon opened its doors in 1905, showing short films around –theclock to working-class audiences for 5 cents Palace Theatres Created by Roxy Rothapfel in 1914, these theatres provided an operalike environment for cinema viewing at an affordable price AMC multiplex In the 1960’s, the number of multiplexes in America’s suburban shopping malls mushroomed. The multiplex gave viewers greater choice while reducing owners’ costs. AMC Megaplex Megaplexes, introduced in 1995, offered every current blockbuster and provided spectacular viewing experiences in theatre complexes as big as stadiums, at a lower cost to theatre owners.
New Entrant
Value pioneering (Mostly existing technologies)
Non-Existent
Incumbent
Value pioneering (Mostly existing technologies)
Attractive
Incumbent
Value pioneering (Mostly existing technologies)
Unattractive
Incumbent
Value pioneering (Mostly existing technologies)
Unattractive
19
Red Ocean Strategy Compete in existing market space Beat the competition Exploit existing demand Make value/cost trade-off Align the whole system of a company?s activities with its strategic choice of differentiation or low cost
Blue Ocean Strategy Create uncontested market space Make the competition irrelevant Create and capture new demand Break value/cost trade-off Align the whole system of a company?s activities in pursuit of differentiation and low cost
20
Raise
What factors should be raised well beyond the industry standard?
Eliminate
What factors should be eliminated that the industry has taken for granted?
Create
What factors should be created that the industry has never offered?
Reduce
What factors should be reduced well below the industry standard?
21
22
doc_925744252.pptx