Blue Ocean Strategy: Chapter Five By: Lauren Sterna, Jennifer Eccles, Collin Gillaspie, Scott Addison, Clint Chapman, & Craig Crowell

Reaching Beyond Existing Demand Two conventional strategy practices: focus on existing customers, and drive for finer segmentation for buyer differences. Focus on noncustomers and their preferences Ex. Callaway Golf: Manufactured golf clubs with larger heads to reach non-golfers that perceive golf as difficult because of the small club heads.

The Three Tiers to Noncustomers

First-Tier Noncustomers Soon-to-be noncustomers Minimally use the current market offerings as they search for something better Eager to jump ship Sit on the edge of the market

Pret A Manger 1988 British fast-food chain Professionals found that sit down restaurants were too pricey, too unhealthy, and too timely Pret took over these first tier noncustomers by opening a fast, clean, healthy, and affordable food chain Fresh ingredients were delivered each morning, and left over foods were given to homeless shelters Today, Pret sells more than 25 million sandwiches a year from its 130 stores in the U.K. The Lesson: Noncustomers tend to offer far more insight into how to unlock and grow a blue ocean than do relatively content existing customers.

Tier Two Refusing noncustomers People who do not use product or cannot afford to use the current market offerings Consumers needs were either ignored or dealt with in other ways JCDecaux, French outdoor advertising space found new ways to reach refusing customers

Third-Tier Noncustomers Unexplored noncustomers that have not been targeted or thought of as potential customers by any player in the industry. Farthest away from an industries existing customers. Their needs and the business opportunities have somehow always been assumed to belong to other markets.

Joint Strike Fighter (JSF ) Project that looked at all of the aeronautical needs of Navy, Air Force, and Marines. Created one fighter jet that would serve the needs of all three branches of the military. F-35 Reduced costs of maintaining a large diverse fleet of fighter jets. Offered a superior fighter plane at a lower cost.

Go for the Biggest Catchment Focus on the tier that represents the biggest catchment at that time Explore overlapping commonalities across all three tiers Don’t forget about your current customers, challenge your current strategies Reach beyond existing demand and formulate future strategies

Coca-Cola Tier 1 for Coke About To jump ship Unsatisfied customers, customers that have a problem with production, false rumors Tier 2 for Coke Refusing consumers Prefer Pepsi products, aren’t soft drink consumers of any kind, false rumors Tier 3 for Coke Unexplored Customers Certain countries, move into areas not in the beverage markets