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Home Depot Goes Into Deep: Explores Blue Ocean Waters With Localization Strategy

M.Bolden - Blue Ocean Strategy — Thu, 16 Oct 2008 17:52:00 GMT

Purchasing Strategy Problem
Home Depot had a problem in early 2007 – one riding mower was sold in two years in an Arizona store, and West Coast stores couldn’t keep Makita power tools in stock, according to the October 7th, 2008 edition of the Wall Street Journal. Their purchasing system was out of whack, and did not take into account regional and local customer buying preferences and patterns. This stemmed from a decision in 2001 by then-CEO Robert Nardelli to consolidate nine regional purchasing offices into a centralized buying operation at its Atlanta headquarters. This led to increased inventory for a variety of items less favored or unused by local customers, and an under-stocking of items popular with local customers.

Change To Localization Orientation Is Key
The new CEO, Frank Blake, tackled this problem, and changed Home Depot’s purchasing system which favored national uniformity at the expense of local preferences to a less centralized system. His new system balanced local demand with national efficiency. Localization of purchasing for retailers is critical for two reasons. First, it can lead directly the development of blue oceans in products and services. Secondly, from a shorter-term, more quarterly perspective, it enables a retailer’s stores to own marketspace geographically. Wal-Mart’s meteoric rise is based in creating local monopolies in “small town” America. The real explosion for retailers occurs when geography is linked to demographics and usage habits.

Wal-Mart Example: Link Geography To Demographics And Usage
Wal-Mart is beginning to understand this linkage – they created a group of 350 people around the country to better respond to local preferences. Wal-Mart also hired experts to produce more detailed demographic information about each store’s customer base. By linking demographics and customer usage to a locale or region, a retailer becomes more responsive and speedier in spotting buying trends and habits which affect an individual store’s profitability and margins. These twin metrics are even more important now during our current challenging economy as consumer sentiment and buying habits are shifting more toward value. Even Target’s usual value proposition and communication to its customers of “Expect More, Pay Less” is being skewed by them to the “Pay Less” side – truly a sign of the current tough times.

Where Wendy’s Can Develop Blue Oceans In Beverage “Waves”

M.Bolden - Blue Ocean Strategy — Sat, 27 Sep 2008 15:02:00 GMT

Hot Chocolate And Tea – Spaces To Be Owned:
Ultimately, I recommend Blue Ocean products and/or services which lead to new lines of businesses and an increased revenue stream. The hot chocolate niche is ripe for a well-resourced player like Wendy’s. Although it’s a smaller space than coffee, critically, it is an area that a large player currently does not own. They could realize a Blue Ocean in this space by developing a variety of high or mid-range quality hot chocolates with an assortment of flavors. It would be much better in this smaller space rather than having just a tiny piece and no real profile in the large Red Ocean coffee space. Also, tea is ripe in the U.S. – and is already trending up via smaller regional players throughout this country. Both hot and iced tea are not yet “owned space” of a major restaurant chain. Wendy’s could use its considerable resources to move to own this space.

Where To Go Next - And How?:
Wendy’s should considerably modify its strategy for its coffee offerings – its mid-range and long term prospects blow in the wind of too many macro and competitive factors. They should be occupying a beverage space that is less crowded, and that is “blue.” If they look hard enough, they may even find Blue Ocean seas within the fast serve coffee space, but even so, they should gravitate to other beverages like hot chocolate and tea which are wide open nationally. Then the next question for Wendy’s would be how to leverage its large resources to focus on garnering share from regional and local players. Think Wal-Mart and small “Ma and Pa” stores in the ‘50s, ‘60s, and ‘70s – that’s enough to go on. Always remember - it’s so much better to be in a calm blue bay than a huge and turbulent red ocean.

Blue Ocean Wendy's Red Ocean Hot Chocolate Tea Owned Space Turbo Tagger

Wendy’s New Coffee Offerings: Wading Into a Red Ocean Sea of Beverages

M.Bolden - Blue Ocean Strategy — Wed, 24 Sep 2008 18:11:00 GMT

Move Into Coffee And Related Drinks:
Wendy’s is currently test marketing specialized coffee drinks with a major new coffee program in Mississippi and iced-coffee in Phoenix, Pittsburgh and Kansas City, MO. It has introduced a drink called “Frosty-Cino” in Mississippi which is a less thick, coffee-flavored version of a Frosty. Unlike a Frosty, it can be drunk through a straw, and is offered in four different flavors. It sells for $3.69 per 20-ounce serving. This move into the coffee arena seems to be a reaction to a trend among fast-food chains placing more emphasis on beverages in light of Starbuck’s overall success. McDonald’s is at the front end of this trend as it plans to add lattes, cappuccinos and other upscale coffee drinks to all U.S. locations by year-end.

Red Ocean Coffee Space:
This fast-serve coffee space is now a Red Ocean, and has too many large and small players trying to entrench their positions. This space’s market growth has slowed, and can not support the influx of companies offering additional supply. Most players seem to be offering imitations of Starbuck’s beverages, and are trying to compete in the premium end of the space. Wendy’s offerings are “me-too” line extension-like products. If they really want to impact revenue via coffee beverages, they should try to occupy a corner or niche within this market. I would suggest a donut shop emphasis on good, affordable basic coffee done well.

Seek To Own A Beverage Space:
If Wendy’s heart is set on beverage revenue growth, that’s not a bad strategy because drinks typically have high margins. It’s not a bad place “play.” Wherever Wendy’s ultimately decides to place its bets, it should seek to own a beverage niche or space. This will generate better brand equity, and offer a higher quality perception for its food items. Thus, it will further develop synergic increases in revenue for all its other products. It will also enable Wendy’s to charge higher relative rents for its beverages. Critically, Wendy’s would be viewed by customers as a leader in the fast food industry. This would clearly differentiate them in the crowded and competitive fast food industry, and allow them their own space in the market.

Wendy's Red Ocean Sea Coffee Drinks Coffee Beverage Space Starbuck's Turbo Tagger

Barnes & Noble: Go Beyond Books

M.Bolden - Blue Ocean Strategy — Thu, 18 Sep 2008 20:03:00 GMT

Current Situation:
Barnes & Noble experienced a 15% drop in its fiscal 2nd quarter as sales slid 1.6% to $1.22 billion. Same-store sales declined 4.7%, and without the Harry Potter final installment last year it still would have declined 1.5%. These figures are symptomatic of the assaults retailers face on many fronts. The U.S. is in the midst of a weak economy and a significant economic downturn which is exacerbated by record high gas prices. As a result, consumers have a lot less disposable income, and more importantly, less confidence in their economic well-being. However, all was not gloom and doom for Barnes & Noble, as it did beat Wall Street expectations through lowering expenses - this led them to improve margins.

Choose Best Elements of Related Players and Occupy A Unique Space:
While this was a silver lining in their profit reduction, the health of the business must be focused on growth. Barnes & Noble must address the competitive pressures and forces facing their business. They must create a Blue Ocean line of businesses. They have the resources and current substantial brand equity to be known in the marketplace as an “intellectual entertainment” provider. This would offer the opportunity to create, develop, and brand customer and business service lines along related themes. They have the opportunity to occupy a space among Blockbuster, Netflix, Amazon, and Borders. Barnes & Noble can leverage elements of the best features and benefits of all these players to create an independent and unique space with a higher utility value proposition to consumers. They can also leverage their brick-and-mortar operations with a strategy that allows them to point online customers to their stores, and store customers to their website.

Flank Amazon with “Smart Entertainment” Spacing:
Barnes & Noble should also not look to compete head-on with Amazon.com as an “everything to everybody” online seller, but should choose an alternative theme with a strong appeal to a substantial niche of consumers. They should pick a fairly significant and lucrative arena of the market where Amazon’s presence recedes. To actualize gaining market share in this area, Barnes & Noble needs to provide features and benefits to consumers that Amazon does not provide or that utilize B&N’s physical locations. Barnes & Noble’s growth depends on realizing a broader vision and branding beyond books – it can own a place in the “smart entertainment” space, and “go beyond books.”

Barnes & Noble Blue Ocean Strategy Retailers Smart Entertainment Intellectual Entertainment Amazon Turbo Tagger

Spanx Owns Marketspace Through The Blue Ocean

M.Bolden - Blue Ocean Strategy — Wed, 20 Aug 2008 19:58:00 GMT

“Blue Oceaning” A Tired Industry
Spanx has succeeded in reviving a tired industry by casting it in a fresh new light according The Wall Street Journal’s August 7th issue. A la Blue Ocean strategy, Sara Blakely and Spanx have rendered the competition irrelevant by transforming the grandmotherly product of shapewear into cool and hip. It has raised the dimensions of packaging and image, created the new dimension of invisibility and fit, and infused emotion through coolness. This has enabled Spanx to own the high-end marketspace of designer clothes wearing women.

Connecting To A Space Through Two Dimensions: Useage and Demographics
In line with the strategies outlined in my forth-coming book, Owning Marketspace, Sara owns two space factors/dimensions: usage and demographics. The usage type and occasion of the product are key – seamlessness and shapeliness under pricey garments typically worn when “going out” or for special events. Spanx captures a younger, fashion-conscious demographic. Both these dimensions are critical to developing this Blue Ocean for this business, and Sara Blakely has deftly, coolly captured this marketspace.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

Spanx Sara Blakely Blue Ocean Strategy Owning Marketspace Shapewear High End Marketspace Turbo Tagger

Spanx: Smoothing Those Blue Ocean Waters

M.Bolden - Blue Ocean Strategy — Wed, 20 Aug 2008 18:17:00 GMT

Spanx’s Product - Shapewear
Sara Blakely created a Blue Ocean in shapewear by fashioning hosiery material which slims a woman's appearance while remaining invisible under contemporary apparel. More importantly, to many women, it provides a dramatically shapelier appearance in their eveningwear, and for others, it opens up their clothing options by opening up the back of the closet, where they pushed clothes that no longer fit but they couldn't bear to part with.

Spanx’s Business
Blakely's Spanx Inc. markets and manufactures footless pantyhose and other types of shapewear including leggings and bras. Her company exceeded $250 million in retail sales last year. By creating this unique and innovative shapewear, Sara's Blue Ocean has become synonymous with high-end shapewear.

Owning A High-End Hosiery Marketspace
Sara successfully sought to dominate and own a marketspace in the hosiery industry of high-end shapewear. From the outset, she focused on high-end department stores where women would pay a premium price for an item that would make them look better in their pricey designer clothes. This product used classic Blue Ocean Strategy, updating the image of shapewear by raising the dimension packaging and the “cool” factor. Spanx products have sassy names such as Hide & Sleek, and its packaging is slick and colorful. This is quite revolutionary in light of the sea of beige cases that other manufacturers use.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

Sara Blakely Spanx Shapewear Blue Ocean Strategy High-End Shapewear Hide & Sleek Turbo Tagger

Monopoly Rules: The Compass, You Choose a Path

M.Bolden - Blue Ocean Strategy — Mon, 18 Aug 2008 18:37:00 GMT

Not a Second Half Team – First Part is Clearly Stronger
This book seems to lose strength toward the end, and is less compelling in the later chapters. He guides the reader through five tests to determine whether you have a monopoly, and he talks about defending a monopoly. At the end, Lele writes "just enough" about discovering and uncovering our monopolies, which should be discussed rigorously – but isn’t. It really leaves the reader to use the book as just a compass and find the correct path to a monopoly by ourselves. I finished the book with the impression that Lele purposely left us readers with an implied invitation to hire his consulting firm if we want to learn more.

Ties to Blue Ocean Strategy
I enjoyed how the themes in this book tie to Blue Ocean Strategy. Blue Ocean Strategy clearly develops the idea of spaces in the market, and Monopoly Rules also addresses the implications of owning a marketspace to make the competition totally irrelevant. The goal of these two paradigms is to differentiate along key industry or product dimensions to own space and create situational monopolies. I highly recommend both of these books to small business owners as well as executives and managers at larger companies.

An Important Book – A Should Read
Overall, I think Milind Lele’s Monopoly Rules is important in today's economic climate and should be read by any person who is or wants to be involved in business. The idea of being able to charge high monopoly-type rents is a “holy grail” in any industry or business. The book has many strengths, it’s full of clear and pointed examples, and is suitable for many audiences, including those who are less strategically-oriented, new to marketing, or new to business in general. Monopoly Rules points you in the right direction – it is up to you to choose a path.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

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Monopoly Rules: Seminal Ideas and New Paradigms for Strong Profits

M.Bolden - Blue Ocean Strategy — Mon, 18 Aug 2008 18:00:00 GMT

Two Key Dimensions of Monopolies: Space and Time
Milind Lele's Monopoly Rules (2005) has very strong and applicable ideas for any business aiming to gain high profits in a given set of industry circumstances. It touts the concept of creating a "legal" monopoly through opportunistically exploiting shifts in an industry or market and competitors' blind spots. The book's major tenet? “A monopoly is an ownable space for a useful period of time.” Lele’s recognition of these two dimensions of space and time as the key to a monopoly is simple, powerful, and extremely useful to any business or organization. For this idea alone, the book is worth reading, and worth its weight in gold.

Own Space, Not a Sustainable Competitive Advantage
Lele claims that ownable space over a period of time is at the heart of every successful business, not “sustainable competitive advantage” (SCA) as Michael Porter expounds on in his book, Competitive Strategy. Lele sites that business success is not derived from unique products, strong brands, large scale, low costs, but that these factors are a means to an end, with the monopoly of capturing the marketspace for a given period of time being the true end. Starbucks, until recently, had a dominant “good-tasting-cup-of-coffee” monopoly without any SCA. Contrary to everyone’s assumptions, Southwest does not have a SCA of being a low-cost producer. It does, however, have a “cheap seat” monopoly, and thus it owns the budget traveler space. The high barriers-to-entry in the airlines industry have allowed Southwest to hold this monopoly for as long as it has. Wal-Mart’s original strategy and success was derived through being a “local monopoly,” and its large investment in small towns raised its barrier-to-entry into that area.

The Monopoly Kaleidoscope and the Dollars and Cents Value of Monopolies
This critical deduction in Monopoly Rules changes the way you can view business and what should be addressed to be successful. It is an important strategic paradigm shift, and the key strength of the book is how Lele explains his point effectively and simply through these examples. He also invests time explaining how monopolies develop through three key factors of a monopoly kaleidoscope: industry shifts, competitor shifts and customer shifts. To illustrate a company’s market value is often much higher than that of competitors in a monopolized space, he uses a simple formula of revenues per share versus share price to develop a ratio. Companies with a ratio of 3.5 or higher typically have monopolized marketspaces. In 2005, he sites Microsoft’s ratio at 8.0 and Coke at 4.5. He contrasts their success with the struggles of Revlon during this period which is reflected with a ratio of 0.61. As a University of Chicago Business School grad, I liked his quantification of the real dollars and cents’ effect a monopoly has in terms of a company’s value in the marketplace.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

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Nikon: Marketspaces, Memories and Moments

M.Bolden - Blue Ocean Strategy — Thu, 14 Aug 2008 17:25:00 GMT

Competing Against Canon and Other Players
As far as competing against its rival Canon and other players, Nikon should trade lower margins and competitive pricing for volume in marketspaces where Canon and overall competition are strong. Nikon should seek less crowded spaces or places where Canon is weak, based on the previously mentioned dimensions. In these weaker marketspaces, Nikon can leverage profitability and sales by offering a strong portfolio of accessories that cater to the needs and preferences of any photographer's lifestyle or usage occasion and type.

Emotion-Oriented Marketing and Ads
From a marketing and advertising perspective, Nikon would do well to develop strong emotion-oriented advertisement before and during the holiday seasons. They should tie ads to customers in each major strategic marketspace for the things in life that they care about; not necessarily photography-related. Nikon can make light reference to features of the camera, but the ads should focus on capturing memories and important moments.

What Do You Think Nikon Should Do?
As for Nikon’s other businesses, precision equipment, scanners, and microscopes, they should replicate the strategy-dimensionalized marketspaces, except the major focus should be usage. How would you approach Nikon’s markets? Is there anything else you would do to stem costs? Do you agree with my lifestyle and usage dimensionalization as a way to develop camera models, their features, and targeted advertisement?

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

Canon Nikon Marketspaces Useage Occasion and Type Emotion Oriented Marketing Lifestyle Dimension Turbo Tagger

Nikon’s Perfect Picture: Returning to Profitable Growth

M.Bolden - Blue Ocean Strategy — Thu, 14 Aug 2008 13:56:00 GMT

Nikon’s Current Profitability Drop
Nikon faces challenging times these days: its net profits fell in its fiscal first quarter to 17.95 billion yen from 23.45 billion yen in the previous year. According to the Wall Street Journal’s August 7th edition, Nikon had a 23% drop in net profit. Interestingly, revenue in Nikon’s camera division rose 14% to 165.2 billion yen, boosted by strong sales of single-lens-reflex (SLR) digital cameras. Unfortunately for Nikon, however, costs wiped out robust sales of its high-end digital cameras. This growth in costs are due partly to initial expenses involved in the launch of new products such as its D700 SLR digital camera and advertising costs in the U.S. Additional challenges include rival Canon, who is expanding sales to newly retired, deep-pocketed hobbyists, and people who switch to digital camera from traditional film. This is a key marketspace because many of these customers buy expensive inter-changeable lenses which lock in future profits for their cameras' manufacturer.

Focus On Customers’ Lifestyle and Usage
What can Nikon do to stem this profitability slide? Focus products, advertising, and marketing resources around lifestyle and usage dimensions. From a lifestyle perspective, Nikon can focus on people who are newly retired, young parents, avid vacationers, special event recorders, party throwers or goers, etc. From a usage perspective, they can also focus on professional photographers, beginners, outdoor events, indoor events, portrait pictures, action or sporting events, night shots, kids, etc. The importance of this orientation is to gear and develop models and features based upon strategic and key lifestyle and usage dimensions, and then target given marketspaces. Equally as important, targeted marketspace selection will minimize ad costs and optimize market coverage. Similar to its first fiscal quarter this year, Nikon can absorb a substantial ad cost hit initially to develop brand equity among strategic buyer groups, but these costs can and will be lower once the market has been developed.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

NIkon Nikon's Profitability Drop High-End Digital Cameras Canon Lifestyle and Usage Dimensions Marketspaces Turbo Tagger

Game Changers: Real Solutions For GM and Ford’s Crossover Sales

M.Bolden - Blue Ocean Strategy — Tue, 12 Aug 2008 18:03:00 GMT

Budgeting Marketing Resources
In the short-term time horizon, Detroit automakers should gear 65 to 70% of their marketing budgets and resources for crossovers toward the price inelastic geographical/regions based on demographical factors. They should devote a “trailing” amount of marketing resources of 30 to 35% to price elastic buying segments in given geographies and regions.

Game Plan Adjustments: Mid Range Structural Solutions
Detroit automakers, GM and Ford, can solve this ailment structurally in the mid-term by making adjustments to their “game plans”. They should look to design and build smaller or mini-crossover vehicles to address the permanent and endemic outlook of substantially higher fuel prices and buffer against less discretionary spending in the mid-term future for Americans. From a classic Blue Ocean perspective, they need to raise the dimensionality of gas efficiency dramatically for crossovers, and moderate or lower the sales price by making “light” crossover vehicles. It can achieve this by building them with even lighter chasses. Also, classically Blue Ocean, they can reduce the engine horsepower to minimum acceptable threshold level. It’s likely that consumers are willing to accept a lower amount of horsepower relative to increased fuel efficiency and a lower sales price.

By operating from a holistic perspective, GM and Ford can change the game by developing a wider range of these vehicles focused around various buyer groups according to lifestyle and usage. They should offer a portfolio of core crossover vehicles with 1 to 2 models for each categorized buyer group.

Can you think of anything else that you would do the increase crossover sales in the short term and mid term? How would you categorize the major buyer groups based on lifestyle and usage? Would you even use different categorization criteria?

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

Detroit Automakers Price Inelastic Price Elastic Blue Ocean Strategy Crossover Sales GM and Ford Turbo Tagger

From Disappointment to Delight: How GM and Ford Can Rev-up Crossover Vehicle Sales

M.Bolden - Blue Ocean Strategy — Tue, 12 Aug 2008 17:37:00 GMT

Drop In Crossover Sales
Crossover vehicle sales were booming as we entered 2008, but have dropped dramatically as consumers flocked to smaller, less expensive, and more fuel-efficient cars. According to the Wall Street Journal on August 4th, crossover sales were down 11% in July 2008, compared to July 2007. Many consumers who were looking to replace their traditional trucks saw those vehicles lose a huge chunk of their resale value. As a result, these buyers have been pushed out of the relatively expensive crossover market and into the compact and mid-size car market. Here, for example, in the GM arena, they find the Saturn Astra, a small hatchback, costs $16,000, versus $29,000 for the Outlook, Saturn's crossover vehicle.

Likewise, SUV owners have not been able to balance their resale losses when attempting to purchase crossover vehicles. Ford has found its silver lining in the Focus, where sales increased 16% in July (26% year-to-date). Unfortunately for Ford, its margins are very thin for these cars, as they don’t make nearly the same amount as they do for crossovers or larger vehicles.

What They Can Do Now! “Cherry Pick”
GM and Ford can remedy, overcome and mitigate these ails by using a Blue Ocean strategy of looking at business from a different time horizon from competitors in the crossover market and take a mid-range view of 2 to 4 years. However, they must stop the short-term bleeding. Essentially, GM and Ford need to “cherry pick” the customers who are less effected or less sensitive to losses in the resale value in their SUV’s. For this strategy to work, they must understand who wants to trade down from large SUV’s. They must identify sub-groups or spaces within this population which are more price inelastic segments, and devote a critical mass of marketing resources and dollars to these regions where the driving critical factors skew toward favorable demographics and lifestyle. They should also not forget to identify the “straight-up” crossover buyer groups which are also inelastic.

GM and Ford should also identify the elastic buyer segments, taking the lower margin hit in the short-term by encouraging these customers to trade down to the smaller cars. In the short term, margins will suffer, but sales volume losses will be minimized or remain even. More importantly, production capacity will be utilized at the same level and not be taken off-line. They should offer substantial “game changing” incentives, rebates, and holistic service amenities.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

Crossover Sales SUV Owners Blue Ocean Strategy Inelastic Segments Elastic Buyer Segments GM and Ford Turbo Tagger

Chartering Dell's Course To Blue Ocean Sailing

M.Bolden - Blue Ocean Strategy — Mon, 11 Aug 2008 15:46:00 GMT

Looking for Blue Oceans but Sailing in the Wrong Direction
I am encouraged by Dell's attempt to follow Blue Ocean thinking, but they are treading in the wrong direction. Dell’s proposed MP3 player is the right idea of using software as a service enabler, but to find a Blue Ocean, Dell should look at other consumer-oriented areas that wrap services around hardware. Potential markets include techno-phobic consumers within emerging hardware and software technologies—these groups require simplified solutions. Dell could look to ancillary products or services for less-contested consumer spaces and develop services that integrate user-friendly hardware or software solutions – Apple’s whole business orientation is predicated on this paradigm.

Exploring Commercial Blue Ocean Space
As for Dell’s core market, there are still many Blue Oceans which await in the commercial space. Dell can still look to commercial-user problem areas that would benefit from software and service solutions. This space has many holes: Microsoft is a generic provider of software, and consultancies such as Accenture offer expensive and highly customized solutions. A niche for Dell to explore might be small and medium businesses seeking a hybrid solution of customized applications and services. Michael Dell pioneered this business model with customized PCs to start Dell. As Michael Dell visits more Blue Seas to continue Dell’s growth, he may discover that the closest Blue Water is a commercial Blue Ocean. His search for "consumer” Blue Oceans may eventually prove fruitful if he sails in the right direction.

Do you think it is a trip he should take? Should Dell navigate a safer path into the other regions of the “commercial sea”? Which way would you go? Or would you split the armada and explore both directions?

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

Blue Ocean Thinking Dell's MP3 Player Apple Dell Commercial Blue Ocean Michael Dell Turbo Tagger

Dell to Re-Enter iPod Arena – Blue Ocean Intentions, Red Ocean Waters

M.Bolden - Blue Ocean Strategy — Mon, 11 Aug 2008 15:27:00 GMT

Dell’s MP3 Player
Recently, Dell has been testing a digital music player that ties to software for a range of portable PCs and lets users download and organize music and movies from various online sources. According to the Wall Street Journal’s July 30th Market Section, the software would connect the device to an online subscription service that Dell expects to launch later this year. The key advantage of Dell’s MP3 Player will be that it allows consumers to download songs and movies, and then move them between devices like PCs and cell-phones. Apple’s digital music strategy doesn’t always allow this functionality. Michael Dell is trying to move out of the Crimson Red Ocean of PCs into a broader range of consumer markets. The problem is that he has picked an Ocean within this space which is also red, and not blue.

Apple Owns the MP3 Player Marketspace
Companies that dominate other arenas, such as Sony and Microsoft, have tried to move into the MP3 Player marketspace, and they have failed miserably here. Quite simply, Apple owns this marketspace! According to the industry analyst NPD Group, Apple owned 71% of the MP3 player market in the 1st quarter of 2008. Its closest rival, SanDisk, had 11%, while software heavyweight Microsoft had a 4% market share with the Zune. This is textbook domination and the type of market share I discuss in my forth-coming book, Owning Marketspace.

Because Apple is so dominant in this market, even a peripheral attack is inherently a Red Ocean. If Dell wants to think Blue Ocean via consumer markets, it should look elsewhere. While the MP3 player market is a large and lucrative space, it’s maturing quickly and is blue only to Apple. Moving into it and competing with Steve Jobs will require a massive amount of resources, especially in marketing – an area where Apple excels.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

Dell's MP3 Player Dell MP3 Players Red Ocean Michael Dell Apple Turbo Tagger

Southwest Continues To Fly The Blue Ocean Skies

M.Bolden - Blue Ocean Strategy — Thu, 07 Aug 2008 15:28:00 GMT

Profitable Again, Away from the Red Ocean
In the midst of a Red Ocean industry, Southwest continues to remain profitable and growing. It posted a 15% increase in profits in the 2nd quarter, reporting a net income of $321 million (compared to $278 million a year ago). This happened in spite of rising costs (e.g., fuel, which for Southwest grew by 35%, of which 80% of its fuel bill was smartly hedged). Nearly all other domestic airlines are facing huge losses, and as a result, they are raising ticket prices, slashing unprofitable routes, and charging various fees such as checking baggage.

Stay the Course into Blue Waters
Southwest, already a Blue Oceaner, is a prime example of a company that can do well to follow its current course. The overall outlook of its management must continue a Blue Ocean tenet of not focusing on the same point in time as the other carriers. Other airlines live by a short-term time horizon. Southwest should maintain a mid to long range focus and; do not charge additional fees for baggage, continue hedging fuel costs, and in particular, do not raise ticket prices too quickly on less competitive routes. This last point is very pertinent because capacity in Southwest’s markets have decreased by 15% – the industry norm is 10%. With a weak economy forecasted to continue in 2009, management has prudently lowered its growth plans. Although this is forecasted and its load factor is down this summer, Southwest should focus mid-term and long-term on building share where competitors are retreating.

Emotional Orientation as a Key Differentiating Factor
Lastly, Southwest should retain its focus on another of its Blue Ocean traits: maintain the emotional orientation that distinguishes its identity from the other domestic airlines. Continue the momentum of friendly service and attitude of its employees, its corporate culture, and paramountly, the quality of customer treatment at every touch point. This momentum begins with the internal culture, at the very start, with its attitude-focused hiring and screening process.

What else do you think Southwest can do to maintain its Blue Ocean? What would you do if you were running American or United?

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

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How Chipotle Can Find Bluer Oceans

M.Bolden - Blue Ocean Strategy — Mon, 04 Aug 2008 16:07:00 GMT

Counter-Intuitive Locations Will Lead to Bluer Seas
An important way to target groups willing to trade up in price is to locate more stores in demographic areas that have high concentrations of these buyer groups. While this sounds obvious, the tactics of this strategy for Chipotle’s value proposition are counter-intuitive. Restaurant industry logic typically clusters competitor outlets in similar and close proximity. Running counter to this logic, Chipotle would be better suited near a mid-range restaurant, rather than near a fast food restaurant. Likewise, it should strategically positioned and pitched as THE "mid-range" option among fine and upscale dining establishments, not the "expensive" place passed by the fast-food strip.

How to Out-Maneuver Three Major Types of Restaurants
For all three of these types of restaurants, the Blue Ocean Value Canvas diverges favorably for Chipotle. The fast food restaurant will be irrelevant because it won’t be in proximity, the mid-range restaurant will lose twice on price and quality, and the fine dining restaurant will be beat via a trificta of convenience/speed, price, and value. The trick is that the buyer group who is willing to trade up price for quality will also act as an enabler to create a new restaurant categorization and value proposition.

Winning Through Strategic Day Part Offerings
Within these demographically-favorable locations and near these up-scale restaurants, Chipotle must continue to target the lunch times and early evening/pre-dinner times. For lunch times, they should stick to their guns of high food quality/minimum service, and focus on value to retain repeat customers. This is particularly important for their restaurants located near corporate corridors and education centers. For evenings, pre-dinner should offer an indirect “flank” to direct head-to-head competition with the fine dining establishments. During the day, Chipotle can increase offerings – not necessarily service – by expanding the menu items for higher-end food and maybe even cocktails (they already offer beer). Can you think of some other types of offering which you think Chipotle could do? How else do you think Chipotle can expand it Blue Ocean?

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

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The Case of Chipotle's Blue Ocean Burrito

M.Bolden - Blue Ocean Strategy — Sat, 02 Aug 2008 15:25:00 GMT

Chipotle’s Current Situation
Chipotle Mexican Grill is a highly successful, midsize restaurant chain in the U.S. that serves large portions of burritos and tacos in minimally decorated shops and markets its ingredients as natural. According to The Wall Street Journal’s July 25th edition, Chipotle's sales growth softened through July, while its costs for cheese, avocados and tortillas ate into profits. On the flip side of this news, Chipotle’s revenues rose 24% to $340.8 million in the second quarter. Higher ingredient costs will probably be a restaurant industry norm as we move forward due to ever-increasing global demand for food and fuel.

Chipotle's Blue Ocean – Similar to Curves
Chipotle’s success can be seen through its charting a Blue Ocean strategy of maximizing or raising the consumers’ desire for high quality food while minimizing the additional resources typically spent on service and ambience. This strategy markedly diverges from the typical restaurant paradigm of reducing ingredient costs and spending resources on service and decorum. Chipotle’s Blue Ocean also allows buyer groups to "trade up" to higher quality food without the expense of better service or atmosphere. It is classic Blue Ocean nearly identical to the Curves women’s gym example cited in the book, Blue Ocean Strategy. Curves avoided many of the big health club frills, opting instead to focus on a specific buyer group in a small facility: they focus on women in a women-only setting with core equipment offerings. Both Chipotle and Curves have traded fancy resource-laden atmospheres to focus on their core offerings, and they have done so successfully.

Ocean Becoming Less Blue
Due to higher ingredient costs, Chipotle’s Blue Ocean is becoming less blue. While it is not yet red, it is vital that they recharge and head further out to sea. But they must choose the right direction. The wrong strategy could take them into a Red Ocean of fast food restaurants like Taco Bell, KFC, etc., or it could take them into the mid-range class of restaurants such as Chili’s, TGIF, Red Lobster, Olive Garden, etc. Chipotle must continue to target “niche” customer groups who are willing to trade up food quality for a higher price. This can be achieved in two distinct ways: more strategic location selection and usage occasion strategies.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

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How Sara Lee Can Focus

M.Bolden - Blue Ocean Strategy — Tue, 29 Jul 2008 15:23:00 GMT

Sara Lee needs to create focus messages around strategic groups of like-businesses based on a number of different factors. It can be for same main ingredient commodity items, similar types of products or services, or geographical focus. Then, a group of like businesses or individual businesses can “camp out” a position based on high quality/premium, low cost, or differentiated niche. The focus messages in turn will then cultivate and strengthen the relationships between the brands, items, and targeted groups.

As for the “bonus round” after or during this refocusing for Sara Lee, they can look to rev-up growth and profits even more by acquiring synergic businesses for strategically important businesses that are currently lagging. Any company, and especially Sara Lee, can look first look to identify candidates that blend well with its identity or brand’s position, as well as offer a value proposition for its customers. Sara Lee should look for businesses that offer wide margins well over their 12% desired target, in addition to businesses in growth niches. Any company they acquire should provide the 2 + 2 = 5 effect: the acquired company's business lines must complement the products and services of a Sara Lee business and should positively synergize sales such that “the sum of the whole is greater than the sum of the parts.”

So, again, I ask you Sara Lee, “Where is your intensity?”

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

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Would You Like Some Cheesecake with that Shoe Polish? – Sara Lee’s Dilemma

M.Bolden - Blue Ocean Strategy — Tue, 29 Jul 2008 15:04:00 GMT

Of course you wouldn't. But Sara Lee has a dueling dilemma of high commodity costs and a lack of focus among its portfolio of businesses as outlined in the July 23rd edition of The Wall Street Journal’s Marketplace Section. Sara Lee’s CEO Brenda Barnes is facing significant cost inflation for commodities in categories that don’t respond well to price increases. If this problem wasn't enough, Ms. Barnes has inherited a conglomerate of a variety of businesses that lack focus, as Sara Lee's product portfolio ranges from cheesecake to underwear to shoe polish. Sara Lee’s margins for its food products are among the lowest at 7.7%, compared to 17.5% for General Mills and 15.5% for Heinz. Although sales grew by 10% in its fiscal 3rd quarter, Brenda Barnes is still concerned about its sagging stock price, which is down 35% since she became the CEO.

Remember Cameron Diaz in Any Given Sunday? As the owner of a professional football team in Miami, she barks at Al Pacino, the team's long time coach, “Where’s your intensity?!” I ask Sara Lee, “Where’s your intensity? Where’s your focus? Where are you going?" Because General Mills and Kellogg have strong brands, they “have been able to weather high commodity costs without hurting volume and margins as much.” Both these brands have a high quality/good value focus, and they communicate this proposition to their targeted consumer groups effectively. Sara Lee is just as capable of creating focus and value around their brands, but how?

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Another Blue Ocean For Safeway - Tiered Marketspace Presences

M.Bolden - Blue Ocean Strategy — Sat, 26 Jul 2008 16:37:00 GMT

In my forthcoming book, Owning Marketspace, I outline four key types of factors for determining how to target and define a space in a given market or segment: demographics, geography, lifestyle, and usage. For Safeway and its store brands to address the shift in buying away from national or premium brands to private label store brands, a tiered clustering localization presence according to demographics and lifestyle would be highly advantageous. For Dominick’s, Vons, Tom Thumb, and Safeways', they can position the merchandising, store decorum, overall in-store experience, and premium or non-premium services along the lines of demographics and lifestyles which are premium/high, mid-range/middle of the road, and economical/low cost. A comprehensive re-positioning of each chain is not necessary, but rather the development of upper-tier oriented stores on the affluent end of the demographical and lifestyle spectrum and focusing on price point, essentials, and basic value-added service for the economical-oriented areas and buyer. Future articles will address market portfolio strategies for organizations and how those strategies relate to Blue Oceans.

I am willing to talk with blog participants live via phone for free consultations. I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities. For any of these request, E-mail me . I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire. Author of forth coming book, "Owning Marketspace". Available for consulting and speaking engagements.

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