chapter 5 reach beyond existing demand blue ocean strategy

Chapter 5 Reach Beyond Existing Demand

Blue Ocean StrategyJohn Beddington

Scott BeardenPatrick LewisLauren Frick

Trevor McDonald

Maximizing the Size of the Blue OceanLook to non-customers; build on commonalities

and what buyers value

To reach beyond existing demand, think non-customers before customers; commonalities before difference; and de-segmentation before pursuing finer segmentation

The Three Tiers of non-customersTier one: “soon-to-be” non-customers who are

on the edge of your market, waiting to jump ship

Tier two: “refusing” non-customers who consciously choose against your market

Tier three: “unexplored” non-customers who are in markets distant from yours

Tier one: “soon-to-be” non-customersPret: British fast food chainThe lesson: non-customers tend to offer far

more insight into how to unlock and grow a blue ocean than do relatively content existing customers

Look for the commonalities across their responses. Focus on these, and not on the differences between them. You will glean insight into how to de-segment buyers and unleash an ocean of laten untapped demand

Tier two: “refusing” non-customersJCDecauxSolution: provide street furniture for

everyone that firms could use to advertise on at a low cost

Look for commonalities across their responses. Focus on these, and not on their differences. You will glean insight into how to unleash an ocean of latent untapped demand

Tier three: “unexplored” non-customersU.S. Defense Aerospace industry: JSFSolution: build one aircraft to accommodate

the needs of multiple branches of the militaryTier three customers are not targeted by

firms in the industry because they believe the customers belong to other markets

Three tiers and AmazonTier one: people looking to buy books and

electronics on-line now offered one website for all their needs

Tier two: Amazon offers value-added services to encourage “refusing” non-customers to buy from them

Tier three: Amazon offers such a wide array of products that it appeals to people not looking to buys books (unlike Barnes & Noble website)

TakeawaysUnderstand the three tiers of non-customers

Tier one: “soon-to-be”Tier two: “refusing”Tier three: “unexplored”

“The Biggest Catchment”: don’t focus on a single tier, explore whether there are overlapping commonalities across all three tiers of non-customers