Apply a ‘Blue Ocean Strategy’ for Objective Business Decisions

A 2004 publication,”Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant,” describes markets as red oceans, bloody from fierce competition, or blue waters wherein a company can successfully sail toward growth and profitability without a lot of competition.

The writers, W. Chan Kim and Renée Mauborgne, are world-renowned professors of business plan. They wrote in the publication that company strategists had”developed an impressive array of tools and frameworks to compete in red oceans,” but comparatively tools existed for blue oceans. To deal with this imbalance, Mauborgne and Kim”studied businesses around the world and developed functional methodologies in the pursuit of blue oceans”

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One of those methods is to use a blue ocean strategy canvas. “The plan canvas is both a diagnostic and an action framework for building a persuasive blue ocean strategy,” Mauborgne and Kim wrote.

The Strategy Canvas

To draw a plan canvas, a company leader should first identify the variables customers are very likely to take into consideration when choosing competing goods. Think of these variables as product characteristics or customer purchasing criteria.

In”Blue Ocean Strategy,” Kim and Mauborgne use the illustration of the U.S. wine sector in the 1990s, identifying factors like price, above-the-line (mass media) advertising, and aging caliber as established purchasing standards.

These variables are usually organized in a perceived order of importance and are always positioned on the strategy canvas’s horizontal axis.

This picture shows the strategy canvas for Yellow Tail wines taken from the book”Blue Ocean Strategy.”

The y or vertical axis represents degree or performance. Thus a high priced wine could have a scatter high on this axis over”Price” while a budget wine could be relatively low on the vertical axis. A business or industry segment that spent a lot in advertising would, similarly, be high on the vertical axis.

Points positioned on the vertical axis aren’t supposed to be guesses. Instead where they are located ought to be linked to marketing data, focus group results, or similar information.

The resulting graph shows the position of companies or sections in the current marketplace — as an instance, premium wines versus budget wines.

Using this information, a company should next employ what Mauborgne and Kim call”the Eliminate-Reduce-Raise-Create grid” This grid encourages business leaders to remove some of the purchasing variables, reduce some, increase others, and even make new ones to discover a viable blue ocean marketplace.

Thus”Blue Ocean Strategy” can help companies identify market opportunities. However, the strategy canvas could be misused — in a good way — to detect brand characteristics, solve tactical conflicts, and assist a company see itself from a client’s perspective.

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I’ll handle those misuses in this post.

1. Identify Brand Characteristics

This first misuse is useful in the next scenario. Say you’re responsible for advertising or new strategy for a privately held, successful company that’s been guided by a strong, charismatic leader or founder.

Ecommerce and marketing consultants or recently hired supervisors of advertising often find themselves in this position. The provider’s brand and marketing strategy are embodied in its own leader, and they might be tough to articulate. This leader could be focused on tactics instead of strategy. So it’s tough to know how she would like to position the corporation. Here’s the solution.

  • Describe in basic terms, the strategy canvas and how it can identify priorities.
  • Request the charismatic leader to describe the business’s customer purchasing criteria.
  • Ask the leader to draw a plan canvas for her company based on these purchasing standards. This is the present state.
  • Next, have the chief draw plan canvases for five opponents.
  • Finally, ask the leader to draw a picture that shows where she’d like the company to be. This is the desirable state.

Now compare the”current state” and”desired state” In so doing, you’ll have identified which brand attributes are most important to this leader.

A pair of plan canvases showing the current state and desired state for a small business.

2. Resolve Internal Conflicts

Imagine you’re on the logistics team in a mid-market ecommerce enterprise. You and your peers are arguing over the particulars of choosing and implementing a new pick-and-pull system. A number of your colleagues prefer a”this is how we’ve always done it” approach.

You will need to transform this debate into a constructive dialog about capabilities. To attain your end, you can abuse a strategy canvas.

  • Define the services that your department’s clients — internal and external — desire. These are the variables on the x-axis.
  • Next, plot every pick-and-pull choice on the canvas according to your group’s collective experience, discussing how each option performs relative to a given variable.
  • Use the subsequent canvas to determine which option is best.

The act of talking and ranking the services that you want with objective data can defuse the conflict.

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3. Customers’ Perspective

The president of a multichannel merchant with physical retail shops, a growing online store, and robust industrial sales chose to celebrate the firm’s upcoming 60th anniversary. He wished to divert a significant part of the provider’s advertising budget for the year to cover special 60th-anniversary promotions.

This retailer’s advertising team thought it was a terrible idea to take cash from ongoing high-performing programs to cover 60th swag and anniversary occasions.

To convince the business president, the marketing team ran several focus groups and polls. Clients were asked to create a strategy canvas to represent the merchant and its competitors. The process went something like this.

  • Ask customers to specify their purchasing criteria. When they don’t contain something like”the provider’s history,” encourage them to do so.
  • Then have them draw a plan canvas in which the vertical axis represents the significance of each factor.

In comparison to price, customer support, stock selection, and place, a 60th anniversary was immaterial from the clients’ perspective. The plan canvas proved it.