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September 6th Notes

by: Callisa Ruschmeyer

September 6th Notes MKTG 3310-001

Callisa Ruschmeyer
GPA 4.0

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Comparative Advantage Blue vs. Red Ocean
Class Notes
Marketing, kincaid, comparative advantage, blue ocean
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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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