Reach Beyond Existing Customers By: Andy Rogers Bowie Wynne Miller Peaden Richard Kelly

Formulating a Blue Ocean Strategy How do you maximize the size of the blue ocean you are creating? Companies must challenge two strategy practices Focusing on existing customers Drive for finer segmentation Greater the competition = Greater customization How to maximize your blue ocean Look into your noncustomers

Three Tiers of Noncustomers First Tier: closest to your market (want an electric vehicle) Second Tier: refuse to use your industry’s offerings (gas only vehicles) Third Tier: In markets distant from ours (never heard of tesla or don’t drive)

First Tier Noncustomers “Soon to be” These noncustomers are on the edge of our market They are ready to jump ship They minimally use the current market, but search for options The first tier is an ocean of untapped demand waiting to be released Customers who want an electric vehicle, but are waiting for Tesla to create a vehicle that better fits their needs. Ex:Cheaper, longer distances, faster charging If Tesla can create something to accommodate their needs they will become customers.

Second Tier Noncustomers “Refusing” noncustomers who consciously choose against your market Either do not use or cannot afford to use the current market offerings People refusing the change in technology. Older people who are basically denying the change of the world. Possible customers that can’t afford the high end models Model 3 starting at $30,000 Newly released Model Y starting at $47,000 but will have a cheaper standard model in a few years listed at $39,000. Customers seeking further range capability Tesla Model S 100D has a 335 mile range which is the highest of any electric vehicle. This also had a price tag starting at $133,000. ($94,000) A lower price high range model

Third Tier Noncustomers “Unexplored” noncustomers who are in markets distant from yours They are the furthest from your market and have never even thought of your markets products as an option. This is because their needs and the business operations associated with them have, in some way, assumed to belong to other markets. These are people who may not own a car or ever plan on buying one. Though they might not be in the car industry, Tesla has a few subsidiaries that they might be interested in, such as SolarCity or Maxwell Technologies. (Motorcycle owners, pedestrians, public transportation users)

Go for the biggest Catchment There is no rule to suggest which tier of noncustomers to target, or when to do it By figuring out and comparing the needs of potential customers, you want to incorporate the biggest common traits in order to reach 3rd tier Focus on the needs of the consumer Determine the commonalities of the consumer In order to reach beyond existing demand you have to think about Non-customers over the existing customers “You should focus on the tier that represents the biggest catchment that your organization has the capability to act on”

Questions?