Market Creating Strategies

Discovering Blue Oceans

Estuardo Lu
Good companies will meet
market needs, great companies
will create markets

Phillip Kotler
 Blue Ocean
Kim Chan & Renee Mauborgne

Well watch this video

http://www.youtube.com/watch?v=7SQDGBSjty4
 Create markets without rivals ... we don't
worry about the competition.

Unlike what we usually think,

the best strategy to beat the
competition... is to stop
worrying about it.

How?
 Leaving aside destructive competition and
instead: Innovate

Expand the market horizons

through innovation.
 A competitive world: 2 Oceans

Red oceans
The competitive world is
composed of two types of
ocean.
Blue oceans
Red oceans represent all the industries that exist
today.

Red oceans are the known market space. The

borders of the industries are defined, accepted and
know the rules of the game.

Companies try to outperform their rivals in order to

take greater market share. Red
As the space of the market is saturated, reduces Oceans
profitability and growth prospects.

The products become generic goods and the fierce

competence, tinges with blood the water of the
ocean.
Blue oceans represent all the industries that do not
currently exist.

It is unknown market space.

These are the markets that have not yet been exploited
by creating demand and opportunity for highly profitable
growth. Blue
Most comes from red oceans by expanding the Ocean
boundaries of existing businesses.

In blue oceans, competition lost validity because the

rules do not yet exist.
Create blue oceans

The industries are not static, but in

constantly evolution.

To succeed, companies would have to

stop competing..

Focus on the red ocean is, denying the

strength that distinguishes the business
world: the ability to create new spaces
without competition.

To achieve new opportunities for growth

and profitability, companies must
constantly create blue oceans.
 RED OCEAN Vs. BLUE OCEAN
Compete in existing market
place
Beat the competition.
Exploit existing demand in the
market.
Choose between the dilemma
of value or cost.
Align the whole system of a
company's activities with the
strategic decision of
differentiation or low cost.
Create a space without
competition in the market.
The competition is
completely unimportant
Create and capture new
demand.
Break the dilemma of value or
cost.
Align the whole system of a
company's activities in order
to achieve differentiation and
low cost.

http://www.youtube.com/watch?v=7SQDGBSjty4
BLUE OCEANS MARKET ARE MORE PROFITABLE

Chan & Maubourgne (2005)

FIND A BLUE OCEAN IS GOING BEYOND
EXISTING DEMAND

Blue Ocean Conventional

Strategy Strategy
Observe non-clients Reduced Target Markets

Identify common elements that all Fixing strategy only in the existent
buyers value, rather than differences. clients. Refined market segmentation.

Levels of Not-clients

Close to the market. They buy in minimum

quantities and for need.

Its 2nd Dont like what the Industry offers

1 St 3rd
Market Level Level Level
They never have contemplated their products
as an alternative to what the market offers.
 RECONSTRUCTING MARKET BOUNDARIES TO EXTEND
Identify buyers and that new value is generated if exchange group buyers

THEM AND CREATE MORE MARKET - I

(SIX WAYS TO EXPLORE FOR CREATING A BLUE OCEAN)

1. Alternative Industries
Identify products of other industries that cover the same need.
Ex. Entertainment: Cinemas, Restaurants.

2. Strategic groups within the sector

Analyze companies that are specialized strategic relationships
and apply a similar strategy to different types of consumers within
a same industry.
Ex. Drinking: Milk, Juices, Energizers, Aromatic

3. Chain of Buyers
Identify buyers and what new value is generated if we change the
group of buyers.
RECONSTRUCTING MARKET BOUNDARIES TO EXTEND
THEM AND CREATE MORE MARKET - II
(SIX WAYS TO EXPLORE FOR CREATING A BLUE OCEAN)

4. Complementary Products and Services Offers

Create new value curves with tolos and investigate how they affect
the total solution.

5. Functional or emotional appeal for buyers

Identify functional or emotional elements used by the industry to be
cleared and make the turn.

6. Time Dimension
Analyze standard or trends and their causes and identify
positive/negative element that affect the industry for future impact of
new trends.
 Starbucks

Considered by Fortune magazine as one

Caso 1. Starbucks
of the largest companies in the world.

Over 30 years, they have opened more

than 8,000 stores in the United States,
Canada, Europe, Middle East, Asia and
Latin America

It is the leader in the sale of brewed

coffee through a distribution system in
which the coffee tasting an excellent
quality in a comfortable and friendly
atmosphere, served by an expert team,
which has become a concept business
known as "Starbucks Experience
Traditional cafes Value Proposition
 Scheme of the 4 actions

Reduce
Low cost What variables should
be reduced well below
the industry
standard?

Eliminate Create
What variables, that A new What variables must
the industry takes for value be created because
granted, should be curve the industry has never
eliminated? offered?
Increase
What variables should
be increased well
above the industry
norm? More
value
 ERIC Matrix (Starbucks)
How to create a new value curve?

Eliminate Increase
Table service Variety of gourmet beverages.
Transit place The price related to the common coffee

Reduce Create
Menu of food/sweets Comfortable place to stay with friends
and family (Third Place)
Variety of gourmet coffee
Specialization in the Coffee topics
Coffee beans to bring
Cultural entertainment
Strategic graphic after applying the scheme
of the 4 actions

Focus
Cirque du Soleil
Value Attributes of Circe du Soleil
 Practical implementation of the strategy

Application Steps:

The current strategic framework

Scheme of the 4 actions
The matrix "eliminate-reduce-
increase-create"
The desired strategic framework
Three characteristics of a good
strategy:
- Focus
- Divergence
- Strong message
Get ready to innovate and create
your own blue ocean!!!
Creativity and Innovation
 Business has only two
functions:
marketing and
innovation.

Peter Drucker
IDENTIFYING OPPORTUNITIES TO INNOVATE:
PROCEDURES FOR GENERATION OF IDEAS

A. INTUITIVE METHODS - CREATIVE TECHNIQUES TO

GENERATE IDEAS
1. IDENTIFICATION OF ATTRIBUTES
2. CHECKLIST
3. PROVOCATION OF IDEAS (BRAINSTORMING)
4. PROVOCATION OF RESPONSES
5. FORCED RELATIONS
6. MORPHOLOGICAL ANALYSIS
7. SYNTHETIC SOLUTION

B. INTENTIONED SEARCH PROCEDURES

1. QUALITATIVE RESEARCH.
2. ANALOGY TO FOREIGN MARKETS.
3. MARKET OPPORTUNITY ANALYSIS - BASELINE STUDY
LINKS WITH CREATIVES TECHNIQUES EXAMPLES
ATTRIBUTES CHECK LIST
http://www.neuronilla.com/desarrolla-tu-creatividad/tecnicas-de-
creatividad/85-listado-de-atributos.html
CHECK LIST (SCAMPER) PAG 13
BRAINSTROMING PAG 14
FORCING RELATIONS PAG 16

http://es.scribd.com/doc/25816273/Tecnicas-para-generar-
ideas#scribd
ANSWER PROVOCATION, PAG 30 MANUAL PDF
CREATIVITY TECHINQUES
MORPHOLOGIC ANALYSIS
http://crealogar.blogspot.com/2008/09/aplicacin-de-anlisis-
morfolgico.html
LA SOLUCION SINTETICA, PAG 120 PDF CREATIVIDAD E
INTELIGENCIA
A phrase to think

If you want
different results ,
do things
differently .

Albert Einstein
 Creativity is in the mind.

Left Right
Hemisphere Hemisphere
Functions Functions
Verbal
Acts Spatial
Reasoning Intuitive - Future
Logic and Holistic
Mathematics
Analytics Integration
Quantitative Synthesis
Lineal sequence Imagination
Organize Interpersonal
Detail Feelings
Planning Musical Direction
Spoken and written Artistic Direction
language
Scientific Skill Kinesthetic

http://www.youtube.com/watch?v=zO2LdDpx-Tc
 LOOK AT THE EYES

INVENTS REMEMBERS
CREATES IMAGES IMAGES
 INNOVATIVE THINKING

ABILITY TO DEVELOP NEW AND BEST WAYS TO

BUILD BUSINESS FOR A BRAND,
BASED ON A HIGHER KNOWLEDGE OF THE
CONSUMERS AND CUSTOMERS

It is not the same as creativity, not need an internal

inspiration, but take an existing idea and
replicate in our business
 INNOVATIVE THINKING

GO BEYOND ACCEPTED IDEAS ...

BREAK PARADIGMS
NOT BECAUSE IT HASNT BEEN
DONE BEFORE
MEANS THAT IT CAN NOT BE DONE

https://www.youtube.com/watch?v=UJYLe7qPNzY
 Thinking

https://www.youtube.com/watch?v=5Uh1KxcpWz0
SOURCES OF INNOVATION OPPORTUNITIES

THE UNEXPECTED
THE INCONGRUENCE
THE INNOVATION
CHANGES IN THE STRUCTURE OF THE
INDUSTRY OR MARKET
DEMOGRAPHIC CHANGES
CHANGES IN PERCEPTION
STATE OF MOOD OR SENSE
NEW KNOWLEDGE

https://www.youtube.com/watch?v=NugRZGDbPFU
Brainstorming

Group of people think without

impediment and without self-
censorship in the modification of a
product or solving a problem.
INNOVATIVE THINKING STEPS TO FOLLOW

1.- DEFINE THE PROBLEM

IN A PRECISE, CLEAR AND FOCUSED WAY.

2.- LEARN MORE, RESEARCH

THE CHALLENGE IS ADAPT, ATTEND TO FOCUS
GROUPS, TALK TO CUSTOMERS

3.- GENERATE IDEAS

BRAINSTORMING AND CHECKLISTS

3.- SELECT THE BEST

EFFECTIVE IDEAS TO BUILD A BUSINESS AND
EFFICIENT IN COSTS.

4.- CONVERT THE IDEA INTO A PLAN OF ACTION

BRAINSTORMING RULES

Suppress criticism.

The free manifestation is

welcome and weird ideas are
accepted.

High quantity of ideas is

desirable and better.

Combination and improvement

are encouraged.
VERBS OF GENERATION OF INNOVATIONS - ERIC

Eliminate
Remove, Replace Increase
Extend,
Employing different Add, Increase
Another use, Investing, Composing, Mixing
View opposite, Diverge Modify
Connect, Adapt
Change, Not in principle

Value Creation
Reduce Create
Decrease Different view, Inferring
Reset Merge, Mix
Reorganize Modify, Transform
Accommodate See it from another angle
Regroup The opposite, Disrupt
Extrapolate, Derive
.
Questions to stimulate the Generation of Ideas
Substitude - What if we substitute or change,
things, people, places, ideas, process... ?

Combine - And if we combine thems, concepts, ideas,

emotions...

Adapt - How is it in. ? Adapt ideas of others contexts,

times, persons, schools, etc.

Modify - Add an idea or transform, How?

Pourpouse change - Extract hidden posibilities...

Eliminate - Substract concepts, parts, elements of the

problem
Reorder - What if we could invert elements, places, roles
http://www.youtube.com/watch?v=G8w0rJhztJ4
 OBSTACLES OF CREATIVITY
Emotional Perceptual
Equivocation, Trouble to see relationships
Fear of ridicule Do not use all senses
Clinging to an idea Failures in the definition of the
Prejudice, Rigidities problem
Desire to easy win Neglecting the obvious
Insecurity, low self-esteem
Lack of training
Fear of the unknown perceptualPerceptuales

Cultural Organizational
A bit of curiosity Price of being wrong.
Too much faith in logic Predictions of frustration.
Inhibitions and myths Lose reputation
Limit fantasy
About management
Educational models
Pressure to produce
Customs and traditions
Family roots Lack of incentives

http://www.youtube.com/watch?v=6SQ79cgdUzs
 Who moved my cheese?
Spencer Johnson

https://www.youtube.com/watch?v=sF5bxwVcO6E
 Get out of your comfort zone!
The comfort zone is the set of beliefs and actions to which we are
accustomed, and we are comfortable
Unconscious

Comfort Landing
Distraction Anguish
Routine
Competent Incompetent

Security Practical
Ability concern

Conscious

https://www.youtube.com/watch?v=i07qz_6Mk7g
Human Creativity Components

Way of
thinking Creativity is
generating new
and useful ideas
T. Amabile (1990)

Internal
Resources
motivation
Another phrase for think

"Genius is one percent

inspiration and
ninety-nine percent
perspiration.

Thomas Alva Edison