SM PRESENTATIONSM PRESENTATION

BHORANIYA DARSHAN BHORANIYA DARSHAN DATTANI PRATIKDATTANI PRATIK

DAVRA NIKUNJKUMARDAVRA NIKUNJKUMARPIMR PIMR MBA MBA

MARKETING –AMARKETING –ATOPIC- Blue Ocean StrategyTOPIC- Blue Ocean Strategy

WHAT IS BOS ?WHAT IS BOS ?

• Blue ocean strategy describes how organizations should try and find a way to work in a marketplace that isn't bloodied by the competition and is free of competitors.

DEFINITION OF 'BLUE OCEAN'A slang term for the uncontested market space for an unknown industry or innovation. Coined by professors W. Chan Kim and Renee Mauborgne in their book "Blue Ocean Strategy: How to Create Uncontested Market Space and the Make Competition Irrelevant" blue oceans are associated with high potential profits.

• While businesses are always looking for ways in which they can better contend with their competitors, one theory suggests they would be better off looking for ways in which they are competing against no one but themselves. This is known as the blue ocean strategy.

Blue Oceans of appleBlue Oceans of apple

A good example of a Blue Ocean Strategy is Apple’s iTunes. In 2003 Apple moved into the digital music space as a provider and distributor of content – and signalled the end of the previous innovation, the CD. Apple created iTunes as an online service where people could download legal, high quality songs for a very reasonable price.

Apple observed the flood of illegal music file programs such as Napster and LimeWire had created a network of Internet savvy music lovers freely, yet illegally, sharing music. By 2003 more than two billion illegal music files were traded every month and the recording industry fought to stop the cannibalisation of physical CDs.

Apple’s strategy was also unique in that the success of iTunes fed into Apple’s other hot product, the iPod. People would go to iTunes and download music onto their iPods. Apple provided the content, the means of acquisition and distribution, and the device. A great Blue Ocean!Another reason for Apple’s success is that it is more a design-driven company rather than a technology-driven company, putting customers at the centre of its product innovation. In doing so, Apple created the need for its products and then exploited its newly created market share quickly, making it very difficult for competitors to grab a piece of the pie.

STRATEGYSTRATEGY

• Compete in existing Compete in existing market spacemarket space

• Beat the competitionBeat the competition

• Exploit existing demandExploit existing demand

• Make the value-cost Make the value-cost trade-offtrade-off

• Align the system with Align the system with differentiation differentiation OROR low low costcost

• Create uncontested Create uncontested market spacemarket space

• Make the competition Make the competition irrelevantirrelevant

• Create and capture new Create and capture new demanddemand

• Break the value-cost Break the value-cost trade-offtrade-off

• Align the system in Align the system in pursuit of differentiation pursuit of differentiation ANDAND low cost low cost

Blue oceanRed ocean

New Market SpaceNew Market Space

• Red oceans and blue oceans make up Red oceans and blue oceans make up market universemarket universe

• RedRed oceans: all industries in existence oceans: all industries in existence• = known market space= known market space• BlueBlue oceans: all industries not in existence oceans: all industries not in existence• = unknown market = unknown market

spacespace

RedRed OceanOcean Vs. Vs. BlueBlue OceanOcean • Compete in existing Compete in existing

market spacemarket space• Beat the competitionBeat the competition• Exploit existing demandExploit existing demand• Make the value-cost Make the value-cost

trade-offtrade-off• Align the whole system Align the whole system

of a firm’s activities of a firm’s activities with its strategic choice with its strategic choice of differentiation or low of differentiation or low costcost

• Create uncontested market space

• Make the competition irrelevant

• Create and capture new demand

• Break the value-cost trade-off

• Align the whole system of a firm’s activities in pursuit of differentiation and low cost

RedRed OceansOceans represent all industries in existence represent all industries in existence today. today.

They have defined rules, competitors, and market They have defined rules, competitors, and market boundaries. boundaries.

Key words might include Key words might include competitioncompetition, , price warsprice wars, , market sharemarket share, , commoditization, benchmarking, commoditization, benchmarking,

strategic positioning, value addstrategic positioning, value add..

Blue OceansBlue Oceans represent all industries represent all industries NOT NOT

in existence today.in existence today.

This is undefined market space, otherwise known This is undefined market space, otherwise known as OPPORTUNITY.as OPPORTUNITY.

Key words might be Key words might be value innovation, focus, value innovation, focus, differentiation, creation of demand, new differentiation, creation of demand, new

marketplacemarketplace

The premise is simpleThe premise is simple::

To win in the future, companies must stop To win in the future, companies must stop competing with each other.competing with each other.

The only way to beat the competition is to The only way to beat the competition is to stop stop tryingtrying to beat the competition. to beat the competition.

Value innovationValue innovation is the “new” strategic logic is the “new” strategic logic behind behind Blue OceanBlue Ocean Strategy. Strategy.

Instead of focussing on beating the competition, Instead of focussing on beating the competition, you focus on you focus on making it irrelevantmaking it irrelevant by creating a by creating a

leap in value for buyers and creating leap in value for buyers and creating uncontested market space.uncontested market space.

Formulating and Executing Formulating and Executing Blue Ocean StrategyBlue Ocean Strategy

Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy– Reconstruct market boundariesReconstruct market boundaries– Focus on the big picture, not the numbersFocus on the big picture, not the numbers– Reach beyond existing demandReach beyond existing demand– Get the strategic sequence rightGet the strategic sequence right– Overcome key organizational hurtlesOvercome key organizational hurtles– Build execution into strategyBuild execution into strategy

THANK YOUTHANK YOU