Bess Luker Alicia Estrada Ryan Dupriest Taylor Watts Mamie Dupre

 Get the strategic sequence right  Fleshing out  Validating blue ocean ideas

 Fail to deliver exceptional value  Philips’ CD-I ◦ “Imagination Machine” ◦ Video machine ◦ Music System ◦ Game Player ◦ Teaching Tool ◦ LACKED ATTRACTIVE SOFTWARE TITLES

 Bills and whistles of the new technology  Bleeding-edge technology is equivalent to bleeding-edge utility

 Create a strategic profile  Assess where and how the new product/service will change the lives of its buyers  Less a function of its technical possibilities and more a function of its utility to buyers

 Utility Levers ◦ Simplicity ◦ Fun and Image ◦ Environmental Friendliness

 Removed the greatest blocks to utility  The thirty-six spaces

 Convenience in the use phase  Risk in the maintenance phase

 Set the right strategic price ◦ Buyers will want to buy your offering ◦ A compelling ability to pay for it  Many companies take reverse course ◦ Testing the waters ◦ Over time they drop prices ro attract mainstream buyers

1. Volume generates higher returns than it used to ◦ Knowledge intensive 2. Value of a product/service ◦ Ex. eBay ◦ Network externalities

 Rival good  Non-rival good  Excludability  Strategic Pricing

 Setting price  Products and Services in two categories ◦ Different form, same function ◦ Different form and function, same objective

 How High the Price  Two principal Factors: ◦ Degree to which the product is protected by patents ◦ Degree to which the company owns some exclusive asset or core capability  Upper Boundary Strategic Pricing  Mid-to-lower-boundary strategic pricing  Price Corridor of the mass

 Target costing is the next step in the strategic sequence, addresses the profit side of the business model  Start with strategic price then deduct its desired profit margin from the price to get to the target price  Price-minus cost and not cost-plus pricing ◦ Essential if you arrive at a cost structure that is both profitable and hard for potential follower to match

 If companies give in to the tempting route of either bumping up the strategic price or cutting back of utility they are not on the path to lucrative blue waters

 To hit the cost target  First: streamlining operations and introducing cost innovations from manufacturing to distribution ◦ High cost low value added activities in your value chain be significantly eliminated reduce of outsource  Second: partnering ◦ Secure needed capabilities fast and effectively while dropping their cost structure

 Third: changing the pricing model of the industry ◦ If the cost of the market is to high find another way to make your product easier for customers to get your product

 Three main stakeholders:  Employees  Business Partners  General Public  Before moving forward and investing in the new idea, the company must first overcome such fears by educating

 Failure to address concerns of employees about a new business idea can be expensive  Before going public communicate so employees are aware  Work with employees to find ways to make everything less confusing

 Partners who fear that their revenue streams or market position are threaten  Be open to discussion  Let executives convince on positives

 If the idea is very new and innovative it can effect the public not just the company  Educate public of benefits  Encourage open discussion