Getting the Strategic SequenceBlue ocean Strategy, CH.6Team 4, John shonkBob OdgersDon Ewalt

Right Strategic Sequence

Right Strategic Sequence1.Exceptional Utility, Strategic pricing,

Target cost - Pricing aimed at giving a company a competitive

advantage over its rivals

= failure!

too many tools people not understand what its purpose was. No tagline.

Right Strategic Sequence

Ford model T:1. Convenience (no practical on dirt/mud road)2. Risk (luxury, and expensive to fix)3. Exceptional utility for the masses

Exceptional Utility to Strategic Pricing

Set the right price◦Volume generates higher returns◦Value may be closely tied to number

of users (all or nothing)◦Free riding ◦Excludability

Price Corridor of the Mass (Identify)

Comparing new product to alternative products◦Different form, same function◦Different form and function, same

objective

Price Corridor of the Mass (Specify)

High, middle◦Legally protected◦Exclusive asset

Low◦High fixed costs◦Attractiveness depends on network

externalities◦Cost structure benefits from steep

economies of scale and scope

Strategic Pricingto Target Costing

Strategic Price – Desired Profit Margin= Target CostStrategic profile: divergence and

focus3 levers to hit cost target

◦Streamlining operations and cost innovations

◦Partnering◦Changing price model of the industry

AdoptionWhen entering a blue ocean a

company must acknowledge 3 main stakeholders:

1. Employees2. Business partners3. The general public

Blue Ocean Idea (BOI) IndexUtility Is there exceptional utility? Are there

compelling reasons to buy your offer?

Price Is your price easily accessible to the mass of the buyers?

Cost Does your cost structure meet the target cost?

Adoption

Have you addressed adoption hurdles up front?

Phillips CD-I and Motorola IridiumNeither company created

exceptional buyer utilityNeither company had a price that

was accessibleNeither company’s cost structure

met the target costBut, Motorola did have support

for the adoption

NTT DoCoMo and I-modeOffering internet on cell phones

6 Months 2 Years 4 Years0

5,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,000

Subscribers

Why the success?A reasonable price to allow

impulse purchasesMade great win-win partnershipsc-HTMLOpen discussion about the

adoptionPublic was eager

Right Strategic Sequence

http://www.forbes.com/2009/02/25/netflix-microsoft-blockbuster-personal-finance-investing-ideas_movie_rentals.html

http://www.youtube.com/watch?v=x4AavyoGijo