Blue Ocean Strategy: Get the Strategic Sequence Right Team 4 (11am): Haylee Berner, Sofia Paredes, Dylan Hawkins, Linna Wu

Introduction: Our New Challenge: We Will Discuss: To build a robust business model that insures a healthy profit for a firm’s blue ocean idea We Will Discuss: The strategic sequence of validating blue ocean ideas to ensure commercial achievement. How to reduce business model risk by understanding the strategic sequence and assessing blue ocean ideas

The Right Strategic Sequence Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption. This allows them to build a viable business model and ensure that a company profits from the blue ocean it is creating. Companies will dramatically reduce business model risk

Testing for Exceptional Utility: The Buyer Utility Map Buyer Utility is essentially what a customer can get from your product. There are six stages of the buyer experience cycle and also six levers of utility The Buyer Utility Map outlines all the levers companies can pull to deliver exceptional utility to buyers as well as the various experiences buyers can have with a product or service Managers can identify the full range of utility spaces that product or services can potentially fill.

The Six Stages of the Buyer Experience Cycle A buyer’s experience from purchase to disposal Encompassing a wide variety of specific experiences Example of Purchasing: While you’re at a car dealership, you could also be browsing facebook marketplace for a vehicle The Six Utility Levers: Customer Productivity Simplicity Convenience Risk Fun and Image Environmental Friendliness

Ford Model T. BEFORE the debut, Automakers focused on building custom made luxury cars for the wealthy. The entire industry focused on image in the use phase; creating luxury cars for fashionable weekend outings Only one of the thirty-six utility spaces was occupied

Strategic Pricing: Understanding how to set the right strategic price firstly allows you to not only attract buyers in large numbers, but also help you to retain them. -strategic pricing sets a product’s price based on the product’s value to the customer, or on competitive strategy, rather than on the cost of production. - we defined strategic pricing as value creation. This approach recognizes that people often make purchasing decisions based more on psychology than on logic, and that what is most valuable to the customers.

Identifying the Price Corridor of the Target Mass Step 1: Identifying the Price Corridor of the Target Mass 3 alternative product/service types: Same form Different from, same function Different form and function, same objective

Step 2: Specify a Level within the Price Corridor You’ll need to determine how high a price you can afford to set within the price corridor without inviting competition to imitate your offering. You can estimate this through understanding two principles: 1. The level of legal protection through patents or copyrights. 2.the degree to which the company owns some exclusive assets or core capability. Such as unique design competence that can block imitation. Upper-level pricing appeals to companies with strong patents and hard-to-imitate capabilities. Mid-level pricing appeals to companies with uncertain patent and asset protection. Low-level pricing appeals to companies with no such protection.

Target Costing Price-minus costing, and not cost-plus pricing is a focus here. There are also three principle levers that help to hit the cost target: Streamlining operations and introducing cost innovations from manufacturing and distribution Partnering to secure needed capabilities while dropping cost structure Changing the price model of the industry; e.g. from selling to renting

Adoption Before investing in a new idea, the company must educate the fearful — the stakeholders. This includes: Employees — make them aware of the threats posed and work with them to find ways of defusing the threats Business Partners — openly discuss issues with them and convince them that they will gain more business by cooperating The Public — engage in an open discussion about why the adoption of the new idea is necessary, and don’t let others take charge of the debate

The Blue Ocean Idea Index This tool allows you to understand your blue ocean offering in relation to the sequence of utility, price, cost, and adoption.