Alternative Industries

Blue Ocean Strategy Glossary - Alternative Industries

Alternative Industries reflect the different choices buyers make across the market universe. Alternative industries embrace substitutes, that is, products and services that have different forms but the same functionality or core utility. Cars and buses, for example, are substitutes because they have the same function: going from one place to another quickly. Alternatives also embrace products and services that have different functions and forms but the same objective. For example, cinemas and restaurants are alternatives because they have neither the same form nor the same function: cinemas provide visual entertainment, while restaurants provide conversational and gastronomical pleasure. However, cinemas and restaurants have the same objective: enjoying a night out. When trying to reconstruct market boundaries, companies should look across alternative industries. This is because they are competing not only with products or services from the same industry: customers make trade-offs across offerings from alternative industries. By focusing on the key factors that lead buyers to trade across alternative industries and by eliminating or reducing everything else, a company can create a blue ocean of new market space. See Six Paths Framework.

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