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Blue Ocean Strategy Chapter 6: Get the Strategic Sequence Right. Team 3 Sarah Ellens Coleman Crook Ashton Davis Jessica Crumpton Kevin Levesque. The Right Strategic Sequence. Buyer Utility Price Cost Adoption. Steps. Utility- is there a reason to buy it? If no, Park idea or rethink
Phillips CD-I –”imagination Machine” video machine, music system, game player and teaching tool
Do not assume leading technology equals sales (Virgin space flight)
Value innovation does not mean technological innovation
Outlines levers companies can pull to deliver exceptional utility to buyers as well as experiences can have with the product or service
Identify range of spaces product of service may fill
From purchase to disposal
Each stage managers can ask a set of questions to gauge quality of experience
Purchase- how long to find? Placement? Secure transaction environment? Timely?
Delivery- Time? Unpack/Install difficulty? Arrange delivery/difficulty?
Use- Training? Storage? Effective? Bells and whistles?
Supplements- Need other parts/costs? Time? Pain?
Maintenance- Required? Upgrade easy? Cost?
Disposal- Create waste? Disposal easiness? Legal issues? Cost?
Utility Levers: the ways companies can unlock exceptional utility for buyers.
Fun and image
The Buyer Utility Map
The buyers experience broken down into six stages.
Supplements – gas, airport, and human resources
Maintenance – product needs continual check-ups
Disposal – Planes need space and time
This provides a straightforward way to identify where the mass of target buyers is and what prices these buyers are prepared to pay for the products and services currently in use.
Degree to which the product or services is protected legally through patents or copy rights
Degree to which the company owns some exclusive asset or core capability, such as an expensive production plant, that can block imitation.
To maximize the profit potential of a blue ocean idea, a company should start with the strategic price and then deduct its desired profit from the price to arrive at the target cost.
Addresses the profit side of the business model
Strip out costs
Model T – Assembly line
Three principal levers to hit the cost target
Introducing cost innovations from manufacturing to distribution
Partnering with other companies
Trying to carry out all activities themselves
Fast and effective securing of capabilities
Sometimes these first two levers are not enough to hit target cost
Changing the pricing model of the industry
Videotapes– from selling to renting
Even after target cost is met, pricing innovation may still be pursued
No matter the business model success isn’t guaranteed in a blue ocean idea. Fear and resistance may arise from:
Explain the changes to the employees, address potential threats and how those will be resolved.
Those that have a vested interest want to know how the implementation of a new business idea will effect current revenues from existing offerings.
Hesitation among the general public can be triggered by a product that is very new and innovative; therefore threatening social or political norms.