1. Chapter 3: Reconstruct MArket
Team 6: Andrew Platter, Charles Nell, Collin Voyles, Brice Freedle

2. Patterns to create blue ocean
Six Path's Framework
Out with old ways of thinking
Every thought must be out of the box, away from the norm
Must break the six fundamental assumptions most companies use to find Blue Ocean markets

3. Six typically used assumptions
1.) Closely relate to company currently in Blue Ocean 2.) Look at industry categories in the same way as everyone else 3.) Look at Buyer groups in the same way as everyone else 4.) Follow industry standards for scope of company products 5.) Stick to their company's direction 6.) Focus on competitor's when forming new strategy

4. New way of thinking 6 phases to creating a Blue Ocean Market
Think differently
Break up common thoughts and industry standards

5. Phase 1- Look across alternative industry
No substitutes, creating ALTERNATIVES (CPA, Financial Software, Pencil Paper)
Alternative ( Movie Theater/ Restaurant)
Buyers constantly look at alternatives in the market
Sellers must consider to create Blue Ocean

6. NetJets
Recognized majority of commercial travel has to do with business
Recognized flaws in both Private jets and commercial airlines
Created an alternative that pulls positives within both industry's

7. Do co mos I-mode Recognized flaws in computers and phones
Created first smart phone
Accommodated parts of both to create great success

8. Smaller examples
Home Depot- Making advice and DIY projects cheaper and less difficult with help of hired professional advisors
Southwest Airlines- Affordability of car travel
Quicken- Cheap alternative to do company financial books

9. QUESTIONS TO ASK ABOUT YOUR COMPANIES
What are the alternative industries in your industry?

10. Path 2: Look Across Strategic Groups within industries
Strategic group: a group of companies within an industry that pursue a similar strategy
Price & Performance
Competitive position
BMW
Mercedes
Jaguar

11. Curves
Built its blue ocean by drawing on the strengthens of two strategic groups
Traditional health clubs
Home exercise programs

12. Strategy Canvas

13. QUESTIONS TO ASK ABOUT YOUR COMPANIES
What are the strategic groups in your industry?
Why do customers trade up for the higher group, and why do they trade down for the lower group?

14. Path 3: Look across the Chain of “Buyers”
Purchasers
Ex: corporate purchasing departments
Users
Ex: direct customers
Influencers
Ex: doctors

15. Novo Nordisk Created a blue ocean in the insulin industry
Shifted the focus from influencers to users

16. Bloomberg
Created a blue ocean in the online-financial information industry
Shifted the focus from purchasers to users

17. QUESTIONS TO ASK ABOUT YOUR COMPANIES
What is the chain of buyers in your industry?
What buyer group does your industry typically focus on?

18. Path 4: Look Across Complementary Product and Service Offerings
Few products and services are used in a vacuum. Untapped value is often hidden in complementary products and services. 
The key is to define the total solution buyers seek when they choose a product or service. (What happens before, during, and after your product is used?)
NABI (Hungarian Bus Company)
Shifted their focus away from offering a low initial purchase price in exchange for cheaper life-cycle costs.
Substituted fiberglass for steel, making body repairs faster, cheaper, and easier. Busses were also 30-35% lighter cutting fuel costs, and making them more environmentally friendly.
Higher purchase price allowed NABI to make their busses more comfortable for consumers, increasing ridership by more than 30%.
Dyson

19. Path 5: Look Across Functional or Emotional Appeal to Buyers
Industry competition converges on two bases of consumer appeal:
Rational: Compete principally on price and utility
Emotional: Compete on feelings
The appeal of most products or services is a result of how companies have competed in the past.
Important questions for companies to think about:
Does your industry compete on functionality or emotional appeal?
If you compete on emotional appeal, what elements can you strip out to make it functional?
If you compete on functionality, what elements can be added to make it emotional?
When companies are willing to challenge the functional/emotional orientation of their industry, they often find new market space.

20. Quick Beauty House: Emotional to Functional
Traditional Barbershop Industry in Asia: 
Focused on emotional appeal
Involved ritualistic processes performed by the barber including hot towels, massages, beverages, and special hair or skin treatments
Customers paid $27-$45 for a haircut, which took an hour on average to complete.
QB House:
Stripped away emotional service elements and focused on basic cuts
Created “air wash” and “traffic light” system 
Reduced price of a haircut to only $9 and hourly revenue earned per barber increased by nearly 50%.
By shifting the appeal of the Japanese barbershop industry from emotional to highly functional, Quick Beauty House created a blue ocean.
One outlet in 1996 to over 200 shops in 2003.
Increased number of visitors from 57,000 in 1996, to 3.5 million in 2002.

21. Cemex: Functional to Emotional
Cemex created a blue ocean in the Mexico cement industry by shifting the perception of cement from a functional building material to a “gift of dreams”. 
“Patrimonio Hoy” Program
After Cemex launched with this new emotional appeal, demand for its cement soared and they have received several awards.

22. QUESTIONS TO ASK ABOUT YOUR COMPANIES
Does your industry compete on functionality or emotional appeal
What elements can we strip from our emotional appeal to be more functional or add to our functional appeal to be more emotional.

23. PHASE 6: LOOK ACROSS TIME
EXTERNAL TRENDS AFFECT BUSINESSES OVER TIME
MANAGERS FOCUS ON PROJECTING IN WHICH DIRECTION THESE TRENDS WILL EVOLVE
MANAGERS GAIN MANY OF THEIR KEY INSIGHTS FROM FROM BUSINESS INSIGHTS
HOW THE TREND WILL CHANGE VALUE FOR CUSTOMERS
HOW WILL IT IMPACT THE COMPANY BUSINESS MODEL

24. ASSESSING TRENDS ACROSS TIME
THREE PRINCIPLES TO ASSESSING TRENDS
(TRENDS MUST )
1. BE DECISIVE TO YOUR BUSINESS
2. BE IRREVERSIBLE 
3. HAVE A CLEAR TRAJECTORY

25. APPLE ILLEGAL DIGITAL MUSIC DOWNLOADS HIT AN ALL TIME HIGH IN 2003
NAPSTER, KAZZA, LIMEWIRE
2 BILLION ILLEGAL FILES EVERY MONTH
THE MUSIC INDUSTRY WAS CANABALIZING ITSELF
APPLE DEVELOPED A LEGAL MUSIC DOWLOADING PLATFORM 
THEY DEVELOPED INOVATIVE DEVICES AND SUPERIOR SEARCH FUNCTIONS
THEY WERE THE FIRST TO SELL INDIVIDUAL TRACKS

26. ITUNES ITUNES ONLINE MUSIC STORE OPENED IN 2003
ITUNES NOW ACCOUNTS FOR %60 OF THE DIGITAL MUSIC MARKET WITH OVER 32 MILLION SONGS, MOVIES TV SHOWS AND PODCASTS. 
ITUNES DEVELOPED ITS ONLINE STORE WHILE ALSO PROMOTING ITS COMPLIMENTARY PRODUCT THE IPOD

27. LESSER EXAMPLES CISCO SYSTEMS CNN
THEY SAW A NEED FOR HIGH SPEED DATA EXCHANGE
THEY CREATED FASTER ROUTERS AND TECHNICAL EQUIPMENT 
CNN
SAW A TREND FOR AN INCREASE IN GLOBALIZTION
CREATED THE FIRST 24 HOUR GLOBAL NEWS NETWORK

28. QUESTIONS TO ASK ABOUT YOUR COMPANIES
What trends have a high probablity of impacting your industry?
How will these trends impact your industry?
How can you open up unprecedented customer utility?

29. Conceiving new market space

30. Questions??