BLUE OCEAN STRATEGY
“Quarter-inch drill bits are selling well doesn't necessarily mean customers want Quarter-inch drills.”
"Just because quarter-inch drill bits are selling well doesn’t mean customers want the drills themselves; they want quarter-inch holes. This highlights the difference between a product's features and its value. Understanding this distinction is key to the concept of value in Blue Ocean Strategy. By focusing on value, you can tailor your offerings to meet your customers' specific needs, increasing value while lowering costs—this is the essence of the 'Blue Ocean' approach."
WHAT IS THE BLUE OCEAN STRATEGY?
Optimizing Value Components to Meet Customer Needs
When Southwest Airlines redesigned their service for short-haul travelers, they considered various travel options—bus, car rentals, and other airlines—and compared the pros and cons. By doing so, they identified key value components, like fast boarding and frequent point-to-point flights at reasonable prices, and optimized these to meet their customers' needs.
Blue Ocean Strategy takes a similar approach, tailoring products to specific customer needs by analyzing the value components of existing market options. By understanding the values customers consider, such as price, comfort, travel time, and safety, you can create a unique product offering that meets these needs. The goal is not just to study existing products, but to understand the decisions customers make to solve their problems.
HOW DO I APPLY THE BLUE OCEAN STRATEGY?
Designing Solutions Based on Customer Values, Not Just Features
In one of my product development projects, I misapplied the Blue Ocean Strategy by focusing on product features rather than customer value. I aimed to create a unique, cost-effective product by enhancing features like portability and lower shipping costs, but overlooked what my target market truly valued.
As a result, the product failed to stand out in terms of value, leading to high marketing costs to make up for it. This experience taught me a key lesson: understanding and addressing customer needs is essential. Features and price should enhance value, not define it. Aligning product value with customer needs is critical before scaling production or launching a service for market success.