1. BLUE OCEAN
STRATEGY

2. History and Background
• Book authored by W.Chan Kim and Renee
Mauborgne in 2005;
• Studied 150 strategic moves spanning more
than 100 years and 30 industries
• Blue Ocean Strategy is the simultaneous
pursuit of low cost and differentiation
• Aim is not to outperform the competition but
to make it irrelevant

3. Red Ocean vs. Blue Ocean
Red Ocean Blue Ocean
• Compete in existing market • Create uncontested market
space space
• Beat the competition • Make the competition
• Exploit existing demand irrelevant
• Make the value-cost trade- • Create & capture new
off demand
• Align strategy choice of • Break the value-cost trade-
differentiation or low cost off
• Simultaneous pursuit of
differentiation and low-cost

4. Three Tiers of Non-Customers
Third Tier : Unexplored non
customers in distant
markets
Second Tier : Refusing
noncustomers who
consciously choose
against the market
First Tier : Soon-to-be
noncustomers who are
on the edge of the
market

5. Value Innovation
Cost Saving – Eliminate & Reduce
Competing Factors
Buyer Value Lifted – Raise &
Create New Elements

6. Strategy Canvas
Graphical
Representation of
Strategy
+
Big picture View
+
Landscape Scanning
+
Relative Positioning
vs. Competitors

7. The Four-Action Framework &
The ERRC Grid
A
N
Eliminate E
W
Raise
V
A
L
U
Reduce
E
C
Create U
R
V
E

8. Successful Implementation of Blue Ocean
Strategy
LG
ELECTRONICS

9. Localization as an initial strategy
Understand the idiosyncrasies of key local markets by opening
research, manufacturing, and marketing facilities in those
countries.
Some of the localization strategies adopted in India:
 Refrigerators with larger vegetable and water-storage
compartments, surge-resistant power supplies
 Exteriors: Red color - South Indians and Green color - North Indians.
 Microwaves with dark-colored interiors to hide spices’ stains
 Television with a built-in video game for cricket fans and extra-loud
sound to listen music.

10. Why Blue Ocean Strategy
 Tough competition from local and global players
 Need for sustenance
 Create untapped market space and higher profitable growth.
 Target to be in the top 3 in the consumer electronics market by 2010.
 Plans to Double its sales volume and profit by 2010
 Focus more on high-end products
 Enter new segments of emerging markets like China, India, Middle-
east and Africa and thus creating uncontested market space.

11. Blue Ocean in India
 Strategy: Improve the product portfolio and Innovative management processes.
 Products targeting health-conscious consumer under the brand name ‘Intello’.
Planning on high-end products like Whisen range of wall-mounted AC’s, TV Dios
refrigerators and X-canvas plasma TVs.
 Planned to launch innovative products like Qiblah phone, TV refrigerators,
Swarovski crystal refrigerators and bag-less range of vacuum cleaners.

12. ERRC Grid for LGE

13. Re-construct market boundaries (1/2)
• Moving from conventional electronic products to high-end products like
big screens LCD and Plasma TVs in collaboration with Philips.
• Expanding its product portfolio by adding vacuum cleaners, MP3
Look across players, DVD payers, DVD recorders, home theatre systems, car &
Alternative portable audio equipment.
Industries
• Group of companies within an industry that pursue a similar strategy.
• Different groups for different products and different markets.
• Group of consumer electronics companies like Sony, Samsung
Look across pursuing similar strategy of digitization and innovation for gaining
Strategic market share.
Groups within
Industry
• Widen the scope of products by concentrating individually on each
segment of buyers.
• Home appliance products for housewives, young people for mobile
Look across phones and music players, high income groups for LCD TVs and
Chain of Plasma TVs.
Buyers

14. Re-construct market boundaries (2/2)
• House-hold item as free gift along with home-appliance products.
• Complementary products like CD, DVDs of popular movies for digital
Look across display division products.
Competitive • Cookery classes for its micro-wave products
products &
Service
Offerings
• Attract customer with emotional advertisments.
• "A Richer, Happier life wherever you are" for home appliance division
Look across • "Thrilling moments with HD DVR built-in Plasma TV" for HD DVR.
Functional or • "LG, caring your health in every way" for LGE's Neo Plasma Plus ACs.
Emotional
appeal to
buyers
• New Trends emerging in the market
• Adopt new and latest technology to capture the markets
Look across
Time

15. Three Tiers of non-customers for LGE
Third Tier:
"Unexplored non-
customers".
Very poor people who use
limited electronic products.
Second Tier:
"Refusing non-customers".
Can use the products but avoids
it due to improper knowledge and
information.
Customers of regular TV could
be converted into users of LDC
and Plasma TVs with right
advertising and marketing
campaigns
First Tier:
"Soon to be non-customers".
These are the customers who used the
competitors' products.
Convert them by making them aware
about features of LG's products and
services.

16. Mission of LG: Digital Design that
makes Customer’s Dream come True
Analyzing Concept
Product Value Creation
Technical Innovation/Efficiency
Customer Value/Brand Value/Environmental Value
•Needs
Value
Design •Desire
Innovation
•Dream
Entertainment & Enjoyment/Convenience &
Efficiency/Communication & Information
Analyzing
Lifestyle
Customer’s
creation
needs

17. Benefits to LG by adopting Blue Ocean Strategy
 LG implemented Blue Ocean Strategy from 1st January 2007 for its
mobile communication and digital display divisions.
 The positive statistics for the first quarter of 2007, especially for its
mobile communication and digital display division reinforces LGE
confidence about its Blue Ocean Strategy.
 Mobile communication division grew by 14.7%.
 Revenues increased by 17.8% with sales of 15.8 million of Chocolate
series phones.
 Digital Display division including plasma display panels and flat panel
TVs and monitors grew by 1.5%.

18. Successful Implementation of Blue
Ocean Strategy
KAUN BANEGA
CROREPATI

19. KBC – Background
• The challenge - 'a program idea that will have as much
viewership as an Indo-Pak cricket match on a Sunday’.
• Adaptation of a successful program in the US, Who Wants
To Be A Millionaire.
• Created a new era in TV shows entertainment as a reality
TV show by bringing the viewers as participant in the TV
shows.
• KBC did leave all the saas-bahu serials behind:
– 1. KBC Star Plus 2130-2200 5.6
– 2. KBC Star Plus 2100-2130 4.9
– 3. Kahaani Ghar Ghar Kii Star Plus 2200-2230 4.7
– 4. Kyunki Saas Bhi Kabhi Bahu Thi Star Plus 2230-2300 4.5
– 5. Kasautii Zindagii Kay Star Plus 2030-2100 3.7

20. What KBC did differently?
The Red Ocean of The Blue Ocean of
Saas-Bahu serials KBC
Demand from – Housewives mostly Demand from – All sections across age
groups
Repetitive & Monotonous – Similar Each episode – fresh, content
theme across serials and channels differentiation
Passive viewing Very Active viewing, audience could act
as ‘helpline’…could win prizes…could
test their own knowledge
Absence of any Mega Star Brought in ‘Amitabh Bachchan’ – huge
charisma, mass appeal
No knowledge imparted Enhanced the General
Knowledge/Awareness of audience

21. KBC - Four Actions Framework
Reduce
Advertisement
Expenditure
Create A New Eliminate
Viewer Value The stereotype
Participation Curve Family Drama
Raise
A Superstar
Host

22. KBC – The Strategy Canvas

23. Successful Implementation of Blue Ocean
Strategy
INDIAN
PREMIER
LEAGUE

24. Cricket before IPL
Test Cricket
One-Day
Spectator Time Class and Predictability Entertainment Pace of the game Flexibility in Indefiniteness of
Technique timings Result

25. ERCC Grid
Reduce
Spectator Time
Technique
Predictability
Create
Confluence of
Eliminate
players
A New
Value Curve Indefiniteness
City Loyalty
of Result
Open to Dummies
Raise
Entertainment
Pace of the game
Flexibility in timings

26. Three Tiers of non-customers
• Working Executives
First Tier
Second Tier • Women
Third Tier • Families

27. New Strategy Canvas
Test Cricket
One-Day
IPL

28. Misconceptions
• Blue Ocean Strategy is a customer-
oriented strategy
• Blue Ocean Strategy is like an old
wine in a new bottle, as it is just a
modified version of differentiation
strategy

29. Blue Ocean v/s Differentiation
Differentiation Blue Ocean
• Choice between • Blue Ocean Strategy is not
differentiation and cost about making a trade-off
leadership between differentiation and
• Competes within existing low cost,
boundaries • But about breaking the
trade-off between the two
• Looks across conventional
boundaries of competition

30. Blue Ocean v/s Customer Oriented
Customer Oriented Blue Ocean
• Tend to focus on existing • Creates new demand
customers of the company through exploring the
and the industry industry’s non-customers
• Companies make • Discover the paths for
adjustments and reconstructing market
modifications over existing boundaries and
value elements

31. Thank You