Launch - Spring 2008 - (Page 21) Finding New Market Space According to the blue ocean strategy, when companies are willing to challenge the functionalemotional orientation of their industry, they often find new market space. Emotionally oriented industries offer many extras that add price without enhancing functionality. Stripping away those extras may create a fundamentally simpler, lower-priced, lower-cost business model that customers would welcome. Conversely, functionally oriented industries can often infuse commodity products with new life by adding a dose of emotion and, in so doing, can stimulate new demand. For example, with its wildly successful Viagra, Pfizer created a blue ocean by shifting the focus of the pharmaceutical industry’s largely functional orientation — medical treatment — to lifestyle enhancement, an emotional orientation. Consider how Ralph Lauren, the U.S. designer created a blue ocean of “high fashion with no fashion.” In creating Polo, Ralph Lauren combined the best features of haute couture (designer name, elegance of its stores and fine materials) with the best features of lower-priced classical lines (classical look, lower prices) to not only capture share from both strategic groups, but to also draw new customers into the market. That’s the second path to reconstructing markets termed “looking across strategic groups.” A Lesson From the Politicians “ They (RedBull) could have been a cola drink, but instead they coined the term “energy drink,” and put them in a new category. The iPhone did the same thing. Apple wasn’t too concerned about their competition, because their product was the first of its kind. When you get bigger, or launch a ‘me too’ company such as a dress shop, that’s when you should worry about your competitors’ reaction.” Internal Competition Competition doesn’t necessarily have to be between companies. There is also “internal competition” within companies. This idea was first introduced by Alfred Sloan at General Motors in the 1920s. Sloan deliberately created areas of overlap between divisions of the company so that each division would be competing with the other divisions. For example, the Chevy division would compete with the Pontiac division for some market segments. Internal competitiveness can improve a company’s overall performance. Businesses in Utah could learn a thing or two from the 2008 presidential race. Rhoads says when it comes to politics, the best candidate may not always win, but the winner is almost always the one who did the best job at differentiating themselves and finding their voice. They’ve determined their strengths and weaknesses and know how to capitalize on those traits. “Politicians have the best market researchers; they even have entire teams devoted to negative data about a candidate,” Rhoads says. But, like politicians, don’t get so focused on digging up dirt or creating slogans and jingles that your innovation suffers. Jolt now touts itself as the “energy drink that actually tastes good,” perhaps a jab at Red Bull when industry pundits suggested it served its market best by providing them with energy, but not necessarily the best tasting. “This is the point where it’s dangerous to chase competitors instead of focusing on innovation,” says Jeremy Hanks, chairman and co-founder of Orem-based Doba. “Yes, you need to know who they are and what they’re doing, but I like having a dedicated employee do this and summarize the information for the rest of the team.” Steven Clegg, founder of Utah-based Sharkwatch, monitors companies’ competitors. Clegg used to be a competitive analysis consultant for large corporations. He found that companies asked the same questions: Have product features changed? Has management changed? Has their pricing changed? “Back then, we did extensive reports. We hired a Ph.D. to write a complex analysis. I developed a software that monitors the Internet, search engines and blogs to capture the pertinent information you want about your competitor,” Clegg says. “Every two weeks executives get a one-page update on what’s going on with their competition. If you don’t want Google alerts filling your inbox, you can filter it out with our reports. We siphon the research down into a single tool.” $ Click here for the HTML version of this article on launchutah.com. launch spring 21 http://www.launchutah.com/article-feature1-q12008.php http://www.launchutah.com/article-feature1-q12008.php
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