Blue Ocean Strategy - How Can You Get Customers To Pay Well Above Industry Standards?

Blue Ocean Strategy - How Can You Get Customers To Pay Well Above Industry Standards?

Why would anyone call a washing machine their ‘baby’? A principal premise of Blue Ocean Strategy is that you can achieve high customer satisfaction AND high profitability simultaneously. The two are not mutually exclusive, in fact if you get it right, the two go hand in hand.

The key of course is a switch in strategic orientation from incremental value improvement to value innovation, in which you create such a compelling and irresistible value package that customers are happy to pay a premium. And the best part is that you can do this in any overcrowded or saturated market (also known as Red Oceans).

Consider the story on the Norwegian furniture company Stokke entitled 'Hotweels' from Fast Company (May 2005). Stokke just introduced the Xplory baby stroller in the U.S., priced at a hefty $749, yet it sold in the first nine weeks what it had planned to sell over six months! Why are parents eager to pay so much above market standards for the Xplory? Because it offers a package of unprecedented attributes: It’s flexible design makes life easier for parents by allowing the seat to be raised to eye-level, to face either forward or backward, and enabling the stroller to navigate any terrain. It’s flashy, futuristic form creates a strong emotional bond. Even fathers are happy to ‘drive’ it around.

Another example is Whirlpool’s front-loading washer-dryer combo called the Duet, which the company introduced to a well-saturated market in 2001. The Duet was tagged at $2,300, vs. $600 a pair for most existing models, yet it became a sensation. Why? Because the Duet had features never seen before: It could wash big loads yet used very little water and electricity, and cleaned better. It could also handle silks, lace, and comforters. But best of all, it inspired real affection among women who called it their ‘buddy’ or ‘baby’. They said that it changed their lives because it saves them time and gave back some of their freedom, doing laundry in record time.

Wow, getting your customers to call a household appliance their baby, now that’s pretty impressive! Find out how to effectively create Blue Oceans and eliminate the competition with Blue Ocean Strategy and Value Innovation expert Gabor George Burt. You can get in touch with him at the email address above.