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1.Exceptional Utility, Strategic pricing, Target cost - Pricing aimed at giving a company a competitive advantage over its rivals = failure! too many tools people not understand what its purpose was. No tagline.
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Getting the Strategic SequenceBlue ocean Strategy, CH.6Team 4, John shonkBob OdgersDon Ewalt
Right Strategic Sequence
Right Strategic Sequence1.Exceptional Utility, Strategic pricing,
Target cost - Pricing aimed at giving a company a competitive
advantage over its rivals
= failure!
too many tools people not understand what its purpose was. No tagline.
Right Strategic Sequence
Ford model T:1. Convenience (no practical on dirt/mud road)2. Risk (luxury, and expensive to fix)3. Exceptional utility for the masses
Exceptional Utility to Strategic Pricing
Set the right price◦Volume generates higher returns◦Value may be closely tied to number
of users (all or nothing)◦Free riding ◦Excludability
Price Corridor of the Mass (Identify)
Comparing new product to alternative products◦Different form, same function◦Different form and function, same
objective
Price Corridor of the Mass (Specify)
High, middle◦Legally protected◦Exclusive asset
Low◦High fixed costs◦Attractiveness depends on network
externalities◦Cost structure benefits from steep
economies of scale and scope
Strategic Pricingto Target Costing
Strategic Price – Desired Profit Margin= Target CostStrategic profile: divergence and
focus3 levers to hit cost target
◦Streamlining operations and cost innovations
◦Partnering◦Changing price model of the industry
AdoptionWhen entering a blue ocean a
company must acknowledge 3 main stakeholders:
1. Employees2. Business partners3. The general public
Blue Ocean Idea (BOI) IndexUtility Is there exceptional utility? Are there
compelling reasons to buy your offer?
Price Is your price easily accessible to the mass of the buyers?
Cost Does your cost structure meet the target cost?
Adoption
Have you addressed adoption hurdles up front?
Phillips CD-I and Motorola IridiumNeither company created
exceptional buyer utilityNeither company had a price that
was accessibleNeither company’s cost structure
met the target costBut, Motorola did have support
for the adoption
NTT DoCoMo and I-modeOffering internet on cell phones
6 Months 2 Years 4 Years0
5,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,000
Subscribers
Why the success?A reasonable price to allow
impulse purchasesMade great win-win partnershipsc-HTMLOpen discussion about the
adoptionPublic was eager
Right Strategic Sequence
http://www.forbes.com/2009/02/25/netflix-microsoft-blockbuster-personal-finance-investing-ideas_movie_rentals.html
http://www.youtube.com/watch?v=x4AavyoGijo