Reach beyond existing demand. When a company wants to grow their share of the market they will try to expand their existing customer base.
Once a company creates a blue ocean, it then wants to maximize the size of the blue ocean being created. The bigger the new market is, the smaller the risk becomes in tooling up to serve that market. The key to achieving this is for companies to find ways to reach beyond existing customers and appeal to noncustomers.
There are three tiers of noncustomers that can be transformed into customers. They differ in their relative distance from the Your current market.
The first tier are those people sitting on the edge (soon-to-be noncustomers) of your current market – and who will be happy to jump ship as soon as something better comes along. If you can offer these people a leap in value, they will buy more frequently, potentially unlocking a huge amount of demand. First-tier noncustomers also include those people who buy from you at minimal levels until they are convinced nothing better is available. If you can find commonalities rather than differences amongst noncustomers and fringe customers, you have something to focus on. Find out what they like about what you’re currently doing and provide more. Find out what solutions they would like and gear up to provide just what’s required.
The second tier is the people who “refuse” to use your industry’s current offerings – because they are too expensive or too elaborate for their needs. If you take the time and effort to find out why these people don’t buy, (what are their true “gain” and “pain”) you may gain some excellent insights into how you can grow your market. Look for commonalities in the reasons why noncustomers don’t presently buy
The third tier is the people who have never thought of your industry’s offering (unexplored noncustomers) as an option – because their needs and the corresponding business opportunities have always assumed to belong to other markets. When you reach beyond existing demand, a very large ocean of latent demand waiting to be untapped can be accessed.
The best example from this third tier approach is Apple. Coming from the computer industry they first entered the digital music (non customers) market with iPod/iTunes and later the smartphone (non customers) market with the iPhone. And … they might attack the smart-electric automobile (non customers) market during the coming years.
By focusing on key commonalities across these noncustomers and existing customers, companies can understand how to pull them into their new market.
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The Strategy Check Canvas is a core strategic tool used in Blue Ocean Strategy. It was created by Prof. W. Chan Kim and Prof. Renee Mauborgne.
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