Formative Assessment #1: BOS Definition

Ma Emma Luanne Vailoces

Sep 17
Yes. According to Kim and Mauborgne, it is possible to pursue both differentiation and cost leadership
by implementing the Blue Ocean Strategy. Under Porter’s generic strategies, competitive advantage can
only be achieved by either providing premium value at a higher cost (differentiation) or cutting cost
which may affect the product quality (cost leadership). Blue Ocean Strategy, however, is about breaking
this so-called “value-cost trade-off” by tapping the unknown and opening up a new market space, thus
pursuing differentiation and low cost simultaneously. Also, this creation of uncontested new market
space made the competition irrelevant thus companies implementing the Blue Ocean Strategy are the
ones who set the game rules in their industry and price wars are negligible.

Joanna Marie Manglo

Sep 18
Yes, I agree to the idea of Kim and Mauborgne about Blue Ocean Strategy. Because on Blue Ocean
strategy, the demand is created. Companies and businesses are the one making the demand rather than
competing with the existing market. They Identify hidden constraints and turn it to opportunities.
Entities who will use this strategy do not need to invest much on the materials, sacrifice the quality of
their products and invest on marketing campaigns to attain cost leadership or differentiation since there
will be no competition.
Joanna Marie MangloSep 18
Companies and businesses should consider the risk this strategy entails. Using this strategy does not
guarantee that tapping the untapped market means high-level profitability. It may sound simple to
identify opportunities or finding the “blue ocean”. Choosing the right blue ocean strategy must be
backed up by the right research. Strategy execution is important too.
Ma Emma Luanne VailocesSep 18
Yes, I agree that products stemmed from Blue Ocean Strategy can reduce its cost by using
cheaper/lower quality materials, labor, and any cost-reducing tactics that the company can think of to
come up with a new and unique product (eg. Nintendo Wii). However, I think that these companies
should still invest on marketing/advertising in order for them to position their brand in the market and
maximize customer relevancy thus higher chances for profitability. Just my two cents. Thanks! :)
Liezel CruzSep 22
+jpmanglo@[Link] Companies are actually not the ones making the "demand" for a certain product.
Product demand must be looked at from the perspectives of the customers. Thus, I agree with you on
the importance of market research as this will give you a deeper understanding of what your customers
really need, want and even desire.
I just would like to comment on your statements about companies (1) not needing to invest in premium
materials and marketing campaigns; (2) sacrificing quality to reduce your cost; and (3) having no
competition. In BOS, the ultimate consideration is the customers. If the customers need premium
quality materials, companies have to address that and give them what they desire, thus increasing your
cost. If customers do not know about your product, then the company has to invest in marketing or
promotional campaigns to do just that (again this might lead to higher expenses). In BOS, you provide
what the customers need or what they "VALUE". Hence you pursue value-adding activities but at the
same time, you also pursue activities that reduce cost by looking at what customers don't need or don't
VALUE. By looking at product features that do not provide value to customers and by eliminating these,
companies earned "extra" resources which they can use to build the "differentiation" or "value" that
customers need.
Again, this emphasizes the need for research. Knowing the pain points of your customers... their
barriers, irritants, disappointments and annoyances or BIDA, will provide the company the necessary
information to raise and create what customers value while at the same time eliminating or reducing the
elements of your product or service offering that they can do without. There are tools provided in the
succeeding lectures and modules to help us identify these features that are important to the customers.
Lastly, in all industries, there will always be competition. However, if you have the first-mover advantage
to a certain industry, you are able to reap the full benefits of being first in that certain category. This
would, in fact, lead to new entrants who would want to partake of the robustness of the market. Once
the industry becomes saturated with a lot of new entrants or market players, it then becomes a red
ocean again. Note, though, that being first does not necessarily mean concentrating in coming up with
technologically-advanced products (this is what the 1st assignment is all about) nor is it about coming up
with entirely new product (something that was never thought of before). A BOS idea can sprout from an
existing product or service offering but servicing different market or new buyers.
Eric Luis CabridoSep 18
WIth implementing Blue Ocean Strategy, a company can actually reduce the cost of a product or service
by using cheaper/lower quality materials or labor.
Liezel CruzSep 22
+efcabrido@[Link] Reducing the cost of a product is just the half of the story. In BOS, what is
equally important is being able to look for the resources that would allow the company to create and
raise features that customers need and value. By eliminating or reducing the unappreciated product
features that customers don't need, they can have the resources to improve their product offering. The
2nd part should be channeling these resources into meaningful features that customers really value and
need.

Hi Eric. This is a good discussion on the discovery of penicillin by Alexander Fleming.

In your opinion, is this a value or technological innovation?

Eric Luis CabridoSep 25

The discovery of penicillin by Sir Alexander Fleming is an example of value innovation, the cornerstone
of Blue Ocean Strategy, where both value and innovation is high.
This gives value to buyers, customers and non-customers, and company/organization.

Of course, the first manufacturer involved in producing penicillin (Merck & Co.) back then (1942) was on
blue ocean. Seeing the high demand during World War II, many pharmaceutical companies
manufactured penicillin making the industry
another red ocean.
Liezel CruzSep 25
Hi Eric. Thank you for expounding your answer. Yes, what was once a blue ocean when penicillin was
discovered became a red ocean when other pharma companies saw the high profitability of producing
the drug.

I would like to offer my opinion on whether it was a value or technological innovation during the time of
its discovery by Alexander Fleming. Fleming's chance discovery of penicillin was on 1928 which was a
great innovation that revolutionized the medicine industry. However, Fleming, together with his two
young colleagues failed to "stabiliize and purify" penicillin but highlighted its clinical potential as
antiseptic and antibiotic. It was actually a team of scientists from University of Oxford led by Howard
Florey who was able to convert penicillin as a usable drug for use during World War II (1939-1945).
While it was true that Fleming was given the credit for its discovery, during the time of its invention, it
was just a technological innovation with a very huge potential. It was only later that it became a value
innovation when it was mass produced as antibiotic during Work War II.

This example just showed that a promising product with high potential would remain a technological
innovation if its discovery would remain in the lab. Only when it would be mainstreamed and use by its
market/customers would it became a value innovation.

Liezel CruzSep 29
1. You are right on your observation that classical music classical music industry was shrinking for a lot of
reasons. Your observation of the changing tastes in music (rock n' roll and pop music) was a strong
factor.
2. You nailed it when you stated that the high costs of tickets would be a strong deterrent to
"patronizing" classical music. But even if you can afford it, if it does not suit your taste - the music, the
atmosphere the whole experience itself, you would not want to go watch a classical concert. When we
refer to pain points, these are feelings of disappointments, irritants, annoyances that customers felt
toward a particular product or service. Thus, your number 2 answer could be partially right.
3. I would like to commend you for a thorough analysis on the strategic move of Andre Rieu. He
addressed the negative feedbacks/ pain points (stuffy, pretentious, elitist. etc.) by looking across other
entertainment industries such as pop music / rock n' roll. It eliminated some features that noncusotmers
did not like or value and channeled these resources to raising and creating new features that potential
customers would love and value.

Formative Assessment #2: Market Segmentation

Ma Emma Luanne Vailoces

Oct 2
I think that the authors Kim and Mauborgne of the Blue Ocean Strategy disapproved of segmenting or
creating niche markets.

Ma Emma Luanne VailocesOct 2

The main point of the BOS is finding and exploiting uncontested markets. If companies usually tend to
focus on targeting the right consumers and divide them to niche markets to customize their products
based on those segments’ needs, Blue Ocean Strategy however takes a different approach. Instead of
looking at the consumers demographics and their differences, their focus is on the commonalities of
these buyer groups that will eventually open up a new demand. Therefore, the Blue Ocean Strategy de-
segments/collapses any established market conditions to give way for blue oceans of new demand.

Liezel CruzOct 6
+mpvailoces@[Link] Well-said Emma. BOS aims to de-segmentize the market instead of segmenting
or dissecting them which is what we are taught to do in Marketing. BOS looks for similarities while
marketing look at the differences. When we focus on the similar features and characteristics of our
buyers, we are able to cut across buyers group and find new demand/markets.

Eric Luis Cabrido

Oct 2
The authors of BOS approved of segmenting or creating niche markets. Path 1: look across alternative
industries
and Path 2: look across strategic groups within industries are the authors' guide approving market
segments.

Outcompeting rivals to improve a company's position within their strategic group or market segment is
what most companies focus on.

Understanding what factors determine buyers’ decision to trade up or down from one strategic group to
another is the key to a blue ocean shift.

Eric Luis CabridoOct 2

With this, one will be able to distinguish between the range of factors on which strategic groups
compete, and the decisive few that drive buyers’ decisions to choose one over the other. The focus here
is why they trade up or down across strategic groups and not on why buyers choose one particular
organization over another.

Liezel CruzOct 6
+efcabrido@[Link] Hi Eric. BOS aims to de-segmentize the market instead of segmenting or
dissecting them which is what we are taught to do in Marketing. BOS looks for similarities while
marketing looks at the differences. When we focus on the similar features and characteristics of our
buyers, we are able to cut across buyers group and find new demand/markets which is what BOS is all
about.

Eric Luis CabridoOct 6

Ma'am, what I meant with the authors approving the creation of market segments is that they approve
the idea of this new demand/market which caters/focus on the similar features and characteristics of
our buyers. Yes, I agree that they disapprove the existence of the current market segments alone, but
eventually the newly created market segment (blue ocean) will also be in the mainstream market
segments (red ocean).

Thank you Emma and Eric for turning in your answers for DF#2.

Please see the main takeaways when comparing the marketing's strategy to segmentize the market and
BOS:

BOS is the exact opposite of Marketing's segmentation. Instead of differentiating the customers to get a
niche or "smaller chunk of the market", BOS aims to look for the commonalities/similarities among
buyers group. Instead of getting narrower, it aims to expand the market so it can cut across buyers
group.

Market segmentation is the 1st step to marketing’s STP strategy. When we do market segmentation
(Segmenting), it leads us to a particular target market (Targeting) and we position (Positing) all our
activities based on the characteristics, likes, motivations and desires of this particular target market.

Before, hair dyes or hair color products were normally sold to salons where professionals were
incentivized to “convince” their customers to use hair colors. However, now, these same products could
be used directly by end-consumers without the “help” of the professionals. The same goes for hardware
products. Before, construction companies were the typical “buyers” of these products who provide
“expert’s” opinion on what the best cement or paint products to use. But nowadays, Wilcon and other
companies target end-users directly, bypassing the “experts”.

In order to be able to use BOS, one must cut across buyers group. One must be able to identify the
“typical” from “potential” buyers. To do a BOS, one must be able to challenge the status quo and instead
of targeting the “typical” and “usual” buyers, one must “expands” buyer base by looking at different
types of buyers of your product. They can be the purchasers, users, influencers, disposers etc.