These lessons were drawn from the book, ‘Blue Ocean Strategy’
Authors W. Chan Kim and Renee Mauborgne defined a Blue Ocean Market as a marketplace where the company has a unique differentiation that separates them from all their competitors, allowing them to stand out, charge more and dominate the blue ocean market. Whereas the red ocean market is a marketplace where a company fights along and against all its competitors, from the product offering to the pricing.
A blue ocean is where most companies dream to be, but only a few manage to create.
So how can you create your own blue ocean market?
Here are 2 exercises that can aid you in creating your own blue ocean market where your company will stand out against all other competitors, granting you the monopoly in your niche.
1. Map out your Strategy Canvas
Your strategy canvas will give you an overview of your industry.
By mapping this out, you will discover the ‘baseline’ of how the game is being played in your industry.
Some questions to think about when you are mapping your strategy canvas:
- Where are your competitors investing in currently?
- What are some factors that they industry are competing on?
- What the customer receives from the existing competitive offerings in the market?
2. Creating your Value Curve
With the Strategy canvas in hand, you can design your value curve using the insights that you have gained.
Authors Kim and Mauborgne developed the 4 actions framework which can be used to plan and create the value curve.
The 4 steps of actions are to Eliminate, Reduce, Raise, and Create
Consistent with the style used in the mapping for the strategy canvas, they provide 4 thought provoking questions that focus on each of the 4 action steps.
The first 2 questions will challenge your understanding of your industry.
Focusing on Elimination and Reduction will require you to dig deep and identify factors in your industry that are frequently present and over delivered but with little value to the customer or to your revenue.
The questions are:
Which factors that are taken for granted by your industry, should be eliminated?
Which factors should be reduced well below your industry’s standards?
The next 2 questions will focus on Raising and Creation. These 2 questions are the key to creating your differentiation and potentially your ‘blue ocean’.
They will require you think out of the box and look for any reason for dissatisfaction amongst the current consumers and even consumers who should but would not consumer from your industry. (more on this in another post)
Which factors should be raised well above your industry’s standards?
Which missing factors should be created in your industry?
By doing these 2 exercises, you will gain an insight into your industry and identify potential gaps that could lead to the creation of your ‘blue ocean’.
Let’s take a look at how Casella Wines created the Value Curve by implementing the 4 actions framework to their wine range: [yellow tail]
[yellow tail] is a wine from Casella Wines that was marketed in such a way that allowed Casella Wines to create a blue ocean of its own.
[yellow tail] originated at a time when premium wine was seen as a confusing and difficult to understand beverage with a high barrier of entry for consumers.
Instead of pushing another product into the already competitive premium wines industry, Casella Wines positioned [yellow tail] as a fun and ‘social’ wine that was easy to drink.
Starting with the product, [yellow tail] was crafted with sweeter tones and a refreshing aftertaste which was a taste easily accepted by new wine consumers.
Casella Wines eliminated the usual features in premium wines – complexity, oak, etc. Because of this, most wine competitors see the [yellow tail] wine as an inferior product due to the lack of taste tones that were present in aged wines. However, these complex tones were the very reason that confused and turn away the new wine consumers and the masses.
By eliminating these, Casella Wines was able to reach out to a whole new market segment that was previously untouched.
To ensure that [yellow tail] was easily accepted by the masses, Casella Wines removed majority of the wine choices and started the [yellow tail] series with just 2 choices – Chardonnay (most popular white wine in the US) and Shiraz (a red wine).
Casella Wines has gone on to increase the product offering of the [yellow tail] wine range.
Instead of simply listing wine jargons on its labels, Casella Wines focused on creating simple and attractive designs with vibrant attractive colors.
It’s your turn.
1. Map your industry’s strategy canvas using the 3 questions provided above.
2. Using the strategy canvas, design your value curve by thinking about the 4 action framework.
These lessons were drawn from the book, ‘Blue Ocean Strategy’. Read it and you might find deeper lessons related to your business.
If you have enjoyed this post, and would like to jumpstart your business whether online or offline, follow TheSubtleLessons by inserting your email below.