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Reach Beyond Existing Demand

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  1. Reach Beyond Existing Demand CHAPTER 5– Blue Oceans Strategy Victoria Smith Caitlin McPherson Kevin Langford Devin Newman Nick Capodagli

  2. Reaching Beyond Existing Demand • Main question: “How do you maximize the size of the blue ocean you are creating?” • To achieve this, companies should CHALLENGE 2 conventional strategy practices: • Focus on existing customers • Finer segmentation • Companies should focus on NONCUSTOMERS

  3. Callaway Golf Example

  4. Reach Beyond Existing Demand • “To reach beyond existing demand, think noncustomers before customers; commonalities before differences; and desegmentation before pursuing finer segmentation.”

  5. The 3 Tiers of Noncustomers • 1st– “Soon-to-be” • Closest to your market • 2nd– “Refusing” • Consciously choose against you • 3rd–” Unexplored” • Distant from your market

  6. First-Tier Noncustomers • Soon-to-be noncustomers who minimally use the current market offerings to get by as they search for something better.

  7. Pret A Manger

  8. Pret A Manger • First-tier noncustomers shared 3 commonalities: • Wanted a fast lunch • Wanted it fresh and healthy • Wanted it at a reasonable price Pret offers restaurant quality sandwiches made fresh every day from only the finest ingredients, and it makes the food available at a speed that is fast than that of restaurants and even fast food. It also delivers this in a sleek setting at reasonable prices. Avg. Price $4-$6

  9. Pret A Manger

  10. Second-Tier Noncustomers • Refusing noncustomers • “Street Furniture” • Bus Stops • Cheaper and higher value

  11. Third-Tier Noncustomers • Unexplored Customers- have not been thought of as customers by any player in the industry. Needs assumed to belong to other markets (ex. Tooth whitening industry) • Navy, Marines, Air Force faced similar dilemma (Joint Strike Fighter) • Needs were different for each branch • Maneuverability, short take off, stability, maintainability

  12. Go for the Biggest Catchment • Three Tiers • The rule… and a companies focus • Searching for opportunities

  13. Boston Brew Company • Original Stock Offering • Twisted Tea Brewing Company • Hardcore Cider