Blue Ocean Strategy Branding Tool PDF

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Summary

The blue ocean strategy can be used by brands to effectively differentiate themselves in the market...

Description

This tool helps to: ● ● ●

Dodge competitors, rather than face them head on. Reinvent the rules of the game by switching up the accepted norm of success factors. Create a ‘value innovation’, i.e. a strategy of differentiation & low-cost.

About the tool: ●

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Kim, C. & Mauborgne, R. argue that competing head-on in today’s overcrowded industries results in nothing but a ‘bloody red ocean’ with rivals fighting over a shrinking pool of profit. It creates new demand and competitors become irrelevant. For example, Apple created a new market space by teaming up with the music companies to offer legal online music downloading. A peak blue ocean strategy combines a differentiated products with a low cost, thus creating value innovation.

6 Principles for creating and capturing blue oceans: 1. 2. 3. 4. 5. 6.

Reconstruct market boundaries Focus on the big picture Reach beyond existing demand Get the strategic sequence right Overcome organisational hurdles Build execution into strategy

How to Use the Tool: Pioneer-Migrator-Settler Map

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Settler segments - Where you are a ‘me-too’ player. Migrator segments - Where your competitive position is strong. Pioneer segments - Where you offer distinctive value.

-If your portfolio consists mainly of settlers, you are playing in a red ocean with little prospect of a sustainable & profitable growth.

-If your portfolio consists of settlers & migrators, your growth may be reasonable but you are at risk of losing out to a pioneer. How to go about searching for pioneer segments: ● Which KSFs that the industry takes for granted should be eliminated? ● Which KSFs should be reduced well below the industry’s standard? ● Which KSFs should be raised well above the industry’s standard? ● Which KSFs that the industry has never offered should be created?

When to Use this Tool: ● ● ● ●

Use a Blue Ocean Strategy when your Red Ocean Strategies seem set to lead to unexciting growth prospects. When you need to change the KSFs of the game. Blue ocean markets may exist, but they are riskier. New products to new markets carry a degree of risk orders of a magnitude higher than new products to existing markets, or existing products to new markets.

Tesla Motors Example ●

Took Tesla Motors 10 years (&30,000 vehicles) to pass the market valuation of carmaking giant Fiat, reaching half the value of General Motors.

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Company has recent announcements to connect the car to the Internet and build the world’s largest Gigafactory for batteries, with its market capitalisation rising to $30bn. “Tesla may be in a position to disrupt industries well beyond the realm of traditional auto manufacturing” - Adam Jonas Vision: to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles (EVs).

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Tesla’s journey has been a jolty one accompanied by; liquidity issues, supply uncertainty, & skepticism about its long-term viability in an immature market with looming competition.

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“Secret” master plan: Enter at the high end of the market, where customers are prepared to pay premium, and then drive down the market as fast as possible to achieve higher unit volume & lower prices with each successive model.

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Tesla aims to provide zero-emission power-generation options. Tesla has taken groundbreaking decisions that deviate from traditional business models in the automobile industry. However, profits have been marginal. Tesla’s business concept may turn out to be a revolution or a big bust. Musk and his team have to answer pressing questions such as; “How to reap arising opportunities in a radically changing business landscape, and position the business for future growth?”

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Background ● Founded in Silicon Valley by Martin Eberhard & Marc Tarpenning in 2003. ● Soon joined & funded by Elon Musk, who became chairman in 2004. ● Musk (co-founder to PayPal, SpaceX, and SolarCity) was well exposed to entrepreneurial endeavors. ● The company’s initial goal was to produce fully electric sports cars not for ultimate cost, but rather for performance, aesthetics, and sex appeal. ● Musk took a decisive role in developing the first prototypes of Tesla’s Roadster , introduced to the public in 2006. ● 2008, Musk takes over as CEO. ● At this point, Tesla was selling fewer than 200 Roadsters and filling a niche in an industry that churns out millions of vehicles a year. ● The Roadster became the launchpad for the Tesla Model S, a stylish four-door sedan which would seat 7. As a hybrid between an SUV & a Sedan, musk was pointing to an opportunity to design something new. ● ● ● ●

Tesla’s cash reserves hit a critical level during the economic crisis of 2008. Musk, who was disabled to invest further due to his SpaceX venture, managed to secure financing at the last possible hour to keep the business going. In 2009, Musk utilised a strategy of selling battery packs to finance Tesla’s operations. The prototype Model S was unveiled which led to an acquisition by Daimler. This gave Tesla urgently needed capital and gave the company a net worth of over $500m.

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Three months later the federal government granted Tesla an alternative vehicle loan of $465m to market this new model, bringing the company another step closer to mass production. Musk bought car manufacturing facilities from Toyota which were dimensioned for 500,000 vehicles a year. Unlike the Roadster, the Model S was developed as a flexible platform to allow for multiple variations.

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January 2010, Tesla Motors announced it was filing for an Initial Public Offering (IPO), making it the first American automaker to go public since Ford in 1956. Tesla & Toyota formalised an agreement to jointly develop an electronic version of Toyota’s RAV4. Toyota also announced the purchase of $50m worth of Tesla stock.

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6 months later Tesla placed its share well above the expected range at $17. Despite this, shares surged 41% on the first day of the IPO and closed at $23.89. Tesla was now valued at $2bn, and managed to raise nearly $230m of fresh capital. June 2012, Tesla delivered its first Model S after 3 years in development.

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Early in 2012, Tesla unveiled an early prototype for the Model X crossover. The company also announced it would soon begin to add lower-priced vehicles.

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In 2013, Tesla sold 22,477 units of its Model S, thus outperforming all forecasts. The Model S came with a variety of battery pack options, with corresponding prices. Model S provides a lower cost of ownership compared with other vehicles in its class, taking into account purchase price, cost of fuel & and cost of maintenance.

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Tesla also plans to launch the Model E, a compact car with a range of perhaps 400 miles that would cost just $35,000.

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The Electric Vehicle Market Split into 3 segments: 1. Hybrid Electric Vehicles (HEVs): Vehicles that generate all their electric energy onboard the vehicle. HEVs include all varieties of hybrids that use electric motors for traction, including series hybrids, parallel hybrids, through the road hybrids, and mild hybrids. 2. Plug-in hybrid electric vehicles (PHEVs): Vehicles that are propelled by an electric motor that receives power from the grid but also have an ICE to extend the range of the vehicle. 3. Battery Electric Vehicles (BEVs): Vehicles that use energy sourced from the grid. They get all their power from battery packs and thus have no internal combustion engine....