A discussion in CiteHR http://www.citehr.com/284226-blue-ocean-strategy.htmlThe Book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant’ was written by W. Chan Kim and Renée Mauborgne, two professors from INSEAD. Blue Ocean is referred as the untapped market requiring demand creation with highly profitable growth. This strategy creates uncontested market space, rejects competition by redefining service, Focus on non-customer , create and capture new demand , maximises the value return for the customer by minimising the cost, aligns the goals towards differentiation and lower costs . This theory presented a framework which ensure that as the value increases for the customer the cost of the product or service should decrease to a point where the coincides . The diagnostic tool have the range of factors in which the industry competes on horizontal axis. The offering level at which the buyer receives across the entire key competing factor on the vertical axis. The company’s relative performance across the industry factor for competition is represented by the graphic depiction of Value curve.
In order to understand the implementation, we take a look at how Air Deccan became an industry leader using this strategy. Air Deccan wrote history with what they implemented. To begin with, the tickets had several categories including value fliers, value flier plus, super flier and super flier plus. Air Deccan, priced the tickets as low as Rs 1 during the off-peak season and higher during the peak seasons. The tickets were bundled for a family of four encouraging loyalty to the extent of offering flying for free. The concept was promoted through the R.K. Laxman’s Common Man. They further pioneered online ticket booking system to curb the travel agency cost to the customer. Furthermore the maintenance, repair and overhaul facility was targeted to set in India along with the BPO to support customer service. This was done to keep the maintenance cost low, internally. The four factors were Eliminate unnecessary services, reducing the ticket prices, creating more routes and raising the service efficiency through all sources including selling on tickets online. It reached beyond the three tier non-customer by targeting the common man for whom the airline service was way beyond the reach. The six path framework was followed by looking for alternative industries by targeting the customer travelling by train. Looking across the strategic groups but differentiating not just on service but on price. They looked across the chain of buyers by promoting the individual customer not just corporate. They looked across the complementary products and service offering through the online ticketing and selling ticket through the HPCL petrol pump kiosks and mobile van. This was done to target the direct customer. The company advertised R. K. Laxman’s Common Man thus looking across the functional or emotional appeal to the buyer. So far airlines used Maharaja and celebrities to promote the brand as premium. Finally looking across time was targeted by scaling the offering over a longer period of time.
To continue reading http://www.citeman.com/10804-sailing-with-blue-oceans-strategy/
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