September 6th Notes
September 6th Notes MKTG 3310-001
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This 2 page Class Notes was uploaded by Callisa Ruschmeyer on Thursday September 8, 2016. The Class Notes belongs to MKTG 3310-001 at Auburn University taught by MICHAEL KINCAID in Fall 2016. Since its upload, it has received 5 views. For similar materials see PRINCIPLES OF MARKETING in Marketing at Auburn University.
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Date Created: 09/08/16
th September 6 Notes Chapter 3- Competitive Advantage Blue vs. Red Oceans The Wii occupied the Blue Ocean, which means it was uncontested o Added females o Added elders o Targeted families o Differed the way of playing = motion o Not about controllers but about the magic wand o Interaction became key Southwest gave us transportation in the air at the price of the bus; eliminated the unnecessary perks and have you more value instead, and for cheaper Innovation is always followed by imitation Blue oceans eventually turn into red oceans o Red Ocean strategies are not worthless Strategy- avoid competition if you can o Skimming- you created the demand that didn’t exist, so you can charge whatever you want and 'skim' all the benefits off the top Blue Ocean vs. Red Ocean Strategy Uncontested market space- look at all markets and see if there is some utility you can add to your target market Blue oceans make competition irrelevant where Red ocean try and beat the competition Capture new demand instead of exploiting existing demand Blue Ocean- you create the demand; you are the only occupant in the market space Red Ocean o Basis of competition is trying to get a bigger share in the same defined market o Boundaries are defined and accepted o Competitive rules of the game are well-known and predefined Blue Ocean o All the industries not in existence today o You create the demand rather than fight over it o You define the rules for competition o You are the ONLY player in such a market Strategic Sequence of Blue Ocean Strategy Buyer utility- is there exceptional buyer utility in your business idea? Price- is your price easily accessible to the mass of buyers? Cost- can you attain your cost target to profit at your strategic price? Adoption- what are the adoption hurdles in actualizing your business idea? A commercially viable blue ocean idea Four Action Framework Eliminate what the industry takes for granted; reduce cost Or reduce those elements; reduce cost below the industry's standard Raise the level of factors that you value above what the market thinks is important; add value Create new factors that the industry doesn’t find important, but you do; add value that the industry has never offered th September 6 Notes Elements that strategically reduce cost: reduce and eliminate Elements that strategically provide investment: raise and create Value Innovation Value innovation places equal emphasis on value and innovation Value innovation is a new way of thinking about and executing strategy that results in the creation of a blue ocean The creation of blue oceans is about driving costs down while simultaneously driving value up for buyers Example that added form and promotion utility o Yellow Tail wine o Nintendo Wii o Cirque du Soleil Buyer Utility Map Compares the six stages of the buyer experience cycle to the utility levers Strategic Canvas Looking for where the curves diverge Diverge is how your product differs Diverging factors occur because of the four action framework Divergence in either direction is good- but you want high divergence in what matters to the consumer and may have to sacrifice divergence in other areas o What I mean by that: Wii had high divergence in family oriented but also had high divergence in cost because the new system was more expensive- the benefits of family oriented outweighed the negatives of the higher cost Possession Utility 1. Identify the price corridor of the mass o Look at three alternative product/service types Same for Different form but same function Different form and function but same objective 2. Specify a price level within the price corridor o Upper-level pricing: high degree of legal and resource protection; difficult to imitate o Mid-level pricing: some degree of legal and resource protection o Lower-level pricing: low degree of legal and resource protect; easy to imitate Competitive Advantage Requires delivering more value and satisfaction to target consumers than competitors Competitive marketing strategies- how companies analyze their competitors and develop value- based strategies for profitable customer relationships
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