Chapter 7 Chapter 5 Going Beyond Existing Needs
No company wants to find itself in a small pond after jumping out of the Red Ocean domain.The question is how to maximize the blue ocean area to be created.This brings us to the third principle of blue ocean strategy: go beyond existing needs.A key element of value innovation, this approach reduces the risk of scale posed by new markets by aggregating the greatest demand for new products.
To this end, the company has to challenge two traditional strategic thinking: one is to focus only on existing customers; the other is to conduct more refined customer segmentation.A typical way for companies to increase market share is to work to maintain and expand their existing customer base.And this often leads to further segmentation of customer preferences in order to provide tailor-made products.Generally speaking, the more intense the competition, the more obvious the specialization of products.In the process, the target market will become very narrow.
To maximize blue oceans, companies must do the opposite.Enterprises should pay attention to potential customers, not only existing customers; they should focus on the common needs of most customers instead of focusing on customer differentiation.This allows the company to go beyond existing demand and tap into a massive customer base it didn't have before.
Take Callaway Golf, for example.It amplifies new demand for products by focusing on non-customer segments.At a time when the U.S. golf industry is battling for a bigger slice of its existing customer base, Calloway created a new paradigm by examining why sports fans at country clubs and ordinary people aren't getting involved in golf. blue ocean demand.It found a strong commonality among this large group of noncustomers: They found it difficult to hit a golf ball.The head of the club is so small that you have to concentrate on the swing and have great hand-eye coordination, which takes time to master.As a result, a lot of practice makes novices quickly lose interest.
This understanding informs Calloway's approach to bringing together the needs of its clients.The resulting answer is the Big Bertha - a golf club with a big head that makes hitting the ball extra easy.Not only did the Big Bertha turn numerous non-customers into customers, it also delighted existing golfers and quickly became a bestseller.Unexpectedly, there are a large number of existing customers who have the same troubles during the practice of improving the stability of the shot.Big head clubs also reduce the difficulty of this aspect.
Interestingly, however, unlike non-customers, existing customers already acquiesce in the difficulty of the game—although they don't like it, they already automatically think that's how golf should be played.They took it upon themselves to improve their craft without complaining about their dissatisfaction to the cue maker.By focusing on the commonalities—rather than the differences—of noncustomers, Calloway found a way to pool demand and create value for a large customer and noncustomer base.
Where exactly is the focus – is it capturing a larger share of existing customers, or converting non-customers in the industry into new demand?Is it to find the strong common demands of consumers, or to satisfy the differentiation of customers through further segmentation and specialization?To go beyond existing needs, consider non-customers first, then customers; commonalities first, differentiation second; integration first, and then further segmentation.
While the existence of a large number of non-customers provides many blue ocean opportunities, few companies are acutely aware of: Who are their non-customers?How can it be developed?If you want to turn the huge potential demand into actual demand and let new customers flock to you, you need to deepen your understanding of a large number of non-customers.
According to the distance from the existing market, non-customers who can be converted into customers can be divided into three levels.As shown in Figure 5-1, the first layer is the closest to the existing market and is located on the edge of the market.Customers at this level purchase the industry's products minimally out of need and unwillingness; given the choice, they will switch to other products.However, if they can provide new value, not only will they stay in this market, but the frequency of their purchases will also increase exponentially, releasing huge potential demand.
(Illustration: Tier 1: non-customers who are about to convert, at the edge of the existing market, ready to change choices at any time;
The second layer: non-customers who are rejecting, have doubts, and choose your opposite market;
The third layer: untapped non-customers, in other markets far away from you. )
The second tier is those who refuse to use your industry's products.They also offered your product as an alternative, but ended up not choosing it.For example, the sports enthusiasts in Calloway's case, they could choose golf, but they ended up choosing other sports.
The third tier is the furthest away from your market, and they have never even thought to use your product.By focusing on the key commonalities between these noncustomer groups and existing customers, companies can figure out how to bring them into new markets.
So, let's look at these three layers of non-customers separately, and think about how to attract them and expand your blue ocean.
The non-customers who will be converted at this level are those who make do with the current market products but are looking for donkeys on donkeys.They change their minds as soon as they discover a better option.In that sense, they are on the fringes of the market.When the number of non-customers of this type increases, the market will become sluggish, and business development will also have problems.Enclosed within this level of non-customer groups, however, is a great deal of untapped demand to be unleashed.
See what Pret A Manger does.This is a fast food restaurant chain that opened in 1988, and it has expanded its blue ocean by satisfying the huge potential demand of the first-level non-customer group.Before it, office workers in the city center in Europe generally had lunch in restaurants, the quality of the food and the environment were good; however, the number of non-customers on the first floor is increasing day by day and is on the rise.The growing concern for healthy eating has led people to eat out of restaurants; office workers don't always have the time to sit down and eat slowly, and going to restaurants every day is expensive.Therefore, more and more people are either rushing to make ends meet, bringing meals from home, or simply saving lunch.
These first-tier non-customers are actually looking for a better solution.Although their requirements may seem different, three things are consistent: fast food, fresh and healthy, and reasonable price.
This cognition clearly shows how "Laiyike" opens and gathers untapped demand.It's simple, it uses the best ingredients to make fresh sandwiches every day that are comparable to the quality of restaurants; it sells faster than restaurants, even faster than fast food; the packaging is neat and the price is fair.
Think about what it looks like to have a guest.Stepping into Lai Yike is like entering a bright art deco studio.Along the walls are clean refrigerated offerings stacked with more than thirty varieties of ice cream (average price $4-$6) made with that morning's new ingredients.Guests can also choose other fresh products, such as salads, yogurt, ice cream, mixed juices, sushi, etc.Each store has its own kitchen, and non-fresh products are produced by high-quality manufacturers.Even in the store in New York, the French bread of "Laiyike" comes from Paris, the crescent moon bread comes from Belgium, and the Danish pie comes from Denmark.All the food will not be put on the next day, and all the leftovers on the day will be given to the homeless.
In addition to providing fresh, healthy sandwiches and other fresh foods, "Laiyike" also speeds up the customer's consumption cycle: queue up fast food - order - pay the bill - wait - pick up - sit and eat The cycle becomes browse-self pick-up-payment-leave.It only takes an average of 90 seconds for customers to leave from queuing. The reason for this speed is that "Laiyike" uses a highly standardized production line to mass-produce finished sandwiches and other products, and does not greet and serve customers; customers are completely self-service, just like in a supermarket. the same.
When ordinary restaurants are suffering from low demand, "Lai Yike" turns non-customers who are about to be converted into core customers who flock to them. These customers come to "Lai Yike" even more than the original restaurant More times than that.Like Calloway's example, in addition to customers who originally liked to take out, customers who liked to eat in restaurants also gathered in "Laiyike".Restaurant lunches would have been acceptable, but the three key commonalities of the first-tier non-customers also appealed to them, although unlike those non-customers who were about to convert, it did not occur to them to question their lunch habits.The bottom line: non-clients offer a much better opportunity to research, develop and nurture blue oceans than existing clients who are more comfortable with the status quo.
Today, Lai Yi Ke sells more than 25 million sandwiches a year in 130 stores in the UK, and recently opened new stores in New York and Hong Kong. In 2002, its sales revenue exceeded 100 million pounds, and its growth potential tempted McDonald's to buy its 33% stake in the company.
What are the root causes of non-customers re-selecting products at the first level?It is their common need.Focus on the commonalities, not the differences, and you will slowly realize how to bring together consumers and unleash a large number of potential unmet needs.
This type of customer is a rejecting non-customer who either finds the product unacceptable or is too expensive to afford it.Sometimes their needs are met in other ways, and sometimes they are completely ignored.However, in such a customer group, there is still a great need to be developed.
See how JCDecaux, an outdoor advertising company, is luring rejecting non-clients into its market.Before JCDecaux put forward the new outdoor advertising concept of "road facilities" in 1964, there were only two forms of outdoor advertising: billboards and vehicle advertisements.Billboards are often set up on the outskirts of cities, or on both sides of busy roads; vehicle advertisements are usually printed on buses or taxis, and people just glance at them as they pass by.
For many companies, outdoor advertising is not a popular medium for commercial activities because of its short visual dwell time and low repeat visit rate.For companies that are not well-known in the first place, because this kind of advertisement cannot carry a lot of information about the company's brand and products, the effect is greatly reduced.Therefore, many companies refuse to adopt this form of advertising, thinking that the value created is too low, or the relative price is too high.
After in-depth research on the common ground of rejecting customers, JCDecaux found that the key reason why outdoor advertising cannot develop is due to the lack of fixed advertising posting points in the downtown area.When looking for a solution, JCDecaux believes that municipal facilities, such as bus stations, are good choices for fixed advertisement posting points, where people tend to wait for a minute or two to browse the advertisements and accept the influence of the advertisements .JCDecaux concluded that if they could use these locations for outdoor advertising, they could convert second-tier non-customers into customers.
JCDecaux then came up with an idea: free maintenance and maintenance of road facilities.As long as the advertising sales revenue exceeds the maintenance cost of road facilities, and can maintain a considerable profit margin, the company can enter the development track of strong profit growth.Advertisements on road facilities emerged as the times require, expanding the customer base of outdoor advertisements.
In this way, JCDecaux has brought breakthroughs in value to non-clients, the city government and itself at the second level.The free products and services provided by JCDecaux make the municipal government save a sum of expenses for municipal facilities. In return, JCDecaux has obtained the franchise right to advertise on urban road facilities.By publishing advertisements in the city center, the time spent on viewing advertisements and the rate of repeated visits are significantly increased, which also makes the content of advertisements richer and more refined.Not only that, as a maintenance provider of municipal facilities, JCDecaux can also help customers complete advertising within two or three days, while it would take half a month to make billboards.
JCDecaux's value creation has brought many non-customers of rejection to this industry market.Road facilities have become the fastest growing market in the display advertising industry. From 1995 to 2000, the amount of road facility advertisements grew at a rate of 60%, far exceeding the 20% growth rate of the entire industry.
By signing an 8-25-year contract with the municipal government, JCDecaux has obtained the long-term franchise of road facility advertisements.In addition to the initial investment, JCDecaux’s annual expenditure during the contract period is limited to the maintenance and renewal of facilities. The profit margin of operating road facilities is as high as 40%, far exceeding the 14% of billboards and 18% of vehicle advertisements. %.Franchise contracts and high profit margins create a stable long-term revenue and profit stream for JCDecaux.With this model, JCDecaux successfully created great value for itself while creating value for clients.Today, JCDecaux is the world's leading supplier of road furniture advertising, with 283,000 billboards in 33 countries.
By carefully studying the second-tier non-customers and carefully considering the key common points of their needs, JCDecaux also increased the original customers' demand for outdoor advertising in the industry.The original customers were concerned about the location of the billboard and the route of the bus, the time when the advertisement will be launched, and how much money it will cost.They think this is one of the few options available to them.With the help of the analysis of non-customers, we once again realized that by questioning and redefining the mindset of the industry and existing customer groups, value can be improved for all parties at the same time.
What are the key reasons non-customers refuse to use products and services in your industry?Look for commonalities in their responses.Focusing on the commonalities, not the differences, gives a sense of how you can unleash a vast unmet need.
Non-customers in the third tier differ most from existing customers in the industry.These customers are undeveloped, and companies in the industry do not regard these customers as target customer groups or potential customer groups.The needs of these customers, and the business opportunities associated with them, are generally considered to belong to other markets.
Companies would go crazy if they knew how many customers they lost because of this.For example, there is such a long-standing notion that cleaning teeth is a service provided exclusively by dentists.Until recently, oral care consumer goods companies have not realized that this is their market too.When they started to pay attention to this market, they found that not only there is a broad market space, but also they have the ability to provide safe, high-quality, low-cost dental cleaning service solutions.The market exploded because of this.
This potential non-customer principle applies to most industries.Take the US defense aviation industry as an example. It is said that the inability to control the cost of aircraft manufacturing is a weakness of the long-term US military power; Difficult to replace an aging fighter fleet.Military leaders fear that the United States will not have enough aircraft to effectively defend its national interests if nothing else is done.
Traditionally, the Navy, Marine Corps, and Air Force each have different requirements for fighter jets and have designed and built their own aircraft.The Navy's planes need to be strong enough to withstand the impact of landing on the deck of a mothership; the Marine Corps needs planes that can take off and land quickly; and the Air Force wants the fastest, most sophisticated planes.
Traditionally, it has been taken for granted that the requirements differ among the three separate arms into which defense aviation is composed.The Joint Fighter Program (JSF) challenges this industry conventional wisdom.The plan believes that: the high-performance, low-cost fighter market is a new market to be integrated, and the three independent arms are potential, untapped customers in this market.Instead of embracing the established market segmentation and offering products with different specifications and characteristics to different branches of the military, the Joint Fighter Program questions its distinctions and seeks long-underappreciated gaps between the three branches. key commonalities.
After research, it was found that among the aircraft of the three arms, the two most expensive components are the same: electronic equipment and engines.Sharing these components will greatly reduce costs.Furthermore, although each branch has a long list of individual requirements, the aircraft mostly fulfill the same mission.
The Joint Fighter Team is beginning to understand how many of these individual characteristics will determine the purchase of the service.Interestingly, the Navy's answer does not have too many unshakable factors, only two are required: durability and ease of maintenance.With the aircraft sitting on the aircraft carrier thousands of miles away from the maintenance hangar, the Navy wanted the fighter to be easy to maintain; and durable like the Mack truck, able to cushion the shock of carrier landings and withstand the corrosive effects of constant exposure to high-salt air.It was fear that these two requirements would be overlooked in procurement by the Marine Corps and Air Force that led the Navy to decide to purchase the aircraft itself.
The requirements of the Marine Corps are also different from those of other arms, but there are only two most important reasons for self-procurement: short-distance/vertical take-off and landing and strong confrontation capabilities.To support troops at great distances and in harsh conditions, the Marine Corps needs aircraft that can behave like fighter jets while hovering like helicopters.In addition, due to the low-altitude and long-distance flight required to perform missions, it is easy to become the target of ground forces. The Marine Corps requires their aircraft to be equipped with a variety of countermeasures—such as flash bombs, electronic jamming equipment, etc.—to avoid enemy ground. Air missile attack.
The Air Force's mission to maintain global air superiority requires aircraft that are faster and more operationally flexible than all enemy aircraft.The Air Force also needs stealth aircraft to avoid enemy missiles and fighter jets by using materials and structures that absorb radar waves and avoid exposure to radar.Since neither aircraft is available in the other two arms, the Air Force never considered co-purchase.
This knowledge of non-customers makes the Joint Fighter program feasible.The goal of the plan is to integrate key factors, reduce and remove those factors that are taken for granted by various arms but have no practical use, and those factors that are over-designed for comparison, so as to manufacture the same aircraft for the three arms, As shown in Figure 5-2, about 20 factors from the three arms were eliminated or simplified.
In this way, the Joint Fighter Program was able to create a vehicle that could be used by all three arms.The result has been a drastic reduction in costs and, of course, the price of the aircraft has dropped dramatically.For the three arms, the performance of the aircraft has also been greatly improved.Specifically, the Joint Fighter program would reduce the cost per aircraft from $190 million at the time to $33 million, and at the same time, the Joint Fighter (now known as the F-35) would outperform all three of the best aircraft in the service: The Air Force's F-22, the Marine Corps' AV-8B and the Navy's F-18.Figure 5-3 fully demonstrates this point. (Legend: 1. Price; 2. Special requirements for design; 3. Special requirements for weapons; 4. Special requirements for missions; 5. Flexibility; 6. Stealth; 7. Ease of maintenance; 8. Durability; 9. Resistance ;10, STTO/VTOL)
As shown, the F-35 roughly retains the obvious advantages of the F-22 - flexibility and stealth - while also having better ease of maintenance, durability, countermeasures and short takeoff/vertical The main advantages required by the Navy and Marine Corps such as takeoff and landing.These are advantages the Air Force never imagined being able to possess.By focusing on these factors and excluding other special requirements (i.e. design special requirements, mission specific requirements, weapon special requirements), the joint fighter program can produce a fighter with superior performance at a lower cost.
By breaking beyond existing customers and expanding the market to the three military branches, the Joint Fighter Program brings together previously fragmented requirements. In the fall of 2001, Lockheed Martin received its largest order ever, surpassing Boeing.Delivery of the first of the $200 billion F-35s is scheduled for 2010.At present, the Pentagon believes that this project is a success, not only because of the value it creates, but also because the project has the joint support of the three defense departments.
When should we focus on which level of non-customers? There is no easy, quick way to do this.Because the blue ocean scale of non-customers at all levels will change in different industries and in different periods, it is necessary to focus on finding the customer level that can bring the most benefits at that time.At the same time, it is also necessary to investigate whether there are overlapping common points among the three levels of non-customers, so that the potential needs can be released and processed as much as possible.That being the case, we should not only focus on non-customers at one level, but should consider everything and strive to maximize the benefits.
For many companies, it is a natural strategic choice to maintain existing customers while seeking opportunities in more market segments, especially in the face of the pressure of market competition.This may be useful for gaining a competitive advantage and increasing market share, but it is difficult to create a blue ocean of new markets and new demands.The point of this chapter is not to argue that it is wrong to focus on existing customers and market segments, but to question current strategic orientations that are taken for granted.We suggest: In order to expand the blue ocean field as much as possible, when formulating future development strategies, we should transcend existing needs, look at non-customer groups, and integrate market opportunities.
If you don't find market opportunities in non-customer groups, you can also consider finding differentiated needs among existing customers.But it must be pointed out that the consequences of such a choice may be that the company is forced to land in a small market space.However, if competitors successfully carry out value innovation, customers will give up their differentiated needs and enjoy the benefits of value enhancement, and a large number of existing customers may be lost.
It is necessary to expand the blue ocean area as much as possible, but it is not enough. It is also necessary to create a win-win situation, which will bring continuous profits.The next chapter will explain how to build a viable business model to create and maintain profit growth in the blue ocean field.
(Illustration: Tier 1: non-customers who are about to convert, at the edge of the existing market, ready to change choices at any time;
The second layer: non-customers who are rejecting, have doubts, and choose your opposite market;
The third layer: untapped non-customers, in other markets far away from you. )
The second tier is those who refuse to use your industry's products.They also offered your product as an alternative, but ended up not choosing it.For example, the sports enthusiasts in Calloway's case, they could choose golf, but they ended up choosing other sports.
The third tier is the furthest away from your market, and they have never even thought to use your product.By focusing on the key commonalities between these noncustomer groups and existing customers, companies can figure out how to bring them into new markets.
So, let's look at these three layers of non-customers separately, and think about how to attract them and expand your blue ocean.
The non-customers who will be converted at this level are those who make do with the current market products but are looking for donkeys on donkeys.They change their minds as soon as they discover a better option.In that sense, they are on the fringes of the market.When the number of non-customers of this type increases, the market will become sluggish, and business development will also have problems.Enclosed within this level of non-customer groups, however, is a great deal of untapped demand to be unleashed.
See what Pret A Manger does.This is a fast food restaurant chain that opened in 1988, and it has expanded its blue ocean by satisfying the huge potential demand of the first-level non-customer group.Before it, office workers in the city center in Europe generally had lunch in restaurants, the quality of the food and the environment were good; however, the number of non-customers on the first floor is increasing day by day and is on the rise.The growing concern for healthy eating has led people to eat out of restaurants; office workers don't always have the time to sit down and eat slowly, and going to restaurants every day is expensive.Therefore, more and more people are either rushing to make ends meet, bringing meals from home, or simply saving lunch.
These first-tier non-customers are actually looking for a better solution.Although their requirements may seem different, three things are consistent: fast food, fresh and healthy, and reasonable price.
This cognition clearly shows how "Laiyike" opens and gathers untapped demand.It's simple, it uses the best ingredients to make fresh sandwiches every day that are comparable to the quality of restaurants; it sells faster than restaurants, even faster than fast food; the packaging is neat and the price is fair.
Think about what it looks like to have a guest.Stepping into Lai Yike is like entering a bright art deco studio.Along the walls are clean refrigerated offerings stacked with more than thirty varieties of ice cream (average price $4-$6) made with that morning's new ingredients.Guests can also choose other fresh products, such as salads, yogurt, ice cream, mixed juices, sushi, etc.Each store has its own kitchen, and non-fresh products are produced by high-quality manufacturers.Even in the store in New York, the French bread of "Laiyike" comes from Paris, the crescent moon bread comes from Belgium, and the Danish pie comes from Denmark.All the food will not be put on the next day, and all the leftovers on the day will be given to the homeless.
In addition to providing fresh, healthy sandwiches and other fresh foods, "Laiyike" also speeds up the customer's consumption cycle: queue up fast food - order - pay the bill - wait - pick up - sit and eat The cycle becomes browse-self pick-up-payment-leave.It only takes an average of 90 seconds for customers to leave from queuing. The reason for this speed is that "Laiyike" uses a highly standardized production line to mass-produce finished sandwiches and other products, and does not greet and serve customers; customers are completely self-service, just like in a supermarket. the same.
When ordinary restaurants are suffering from low demand, "Lai Yike" turns non-customers who are about to be converted into core customers who flock to them. These customers come to "Lai Yike" even more than the original restaurant More times than that.Like Calloway's example, in addition to customers who originally liked to take out, customers who liked to eat in restaurants also gathered in "Laiyike".Restaurant lunches would have been acceptable, but the three key commonalities of the first-tier non-customers also appealed to them, although unlike those non-customers who were about to convert, it did not occur to them to question their lunch habits.The bottom line: non-clients offer a much better opportunity to research, develop and nurture blue oceans than existing clients who are more comfortable with the status quo.
Today, Lai Yi Ke sells more than 25 million sandwiches a year in 130 stores in the UK, and recently opened new stores in New York and Hong Kong. In 2002, its sales revenue exceeded 100 million pounds, and its growth potential tempted McDonald's to buy its 33% stake in the company.
What are the root causes of non-customers re-selecting products at the first level?It is their common need.Focus on the commonalities, not the differences, and you will slowly realize how to bring together consumers and unleash a large number of potential unmet needs.
This type of customer is a rejecting non-customer who either finds the product unacceptable or is too expensive to afford it.Sometimes their needs are met in other ways, and sometimes they are completely ignored.However, in such a customer group, there is still a great need to be developed.
See how JCDecaux, an outdoor advertising company, is luring rejecting non-clients into its market.Before JCDecaux put forward the new outdoor advertising concept of "road facilities" in 1964, there were only two forms of outdoor advertising: billboards and vehicle advertisements.Billboards are often set up on the outskirts of cities, or on both sides of busy roads; vehicle advertisements are usually printed on buses or taxis, and people just glance at them as they pass by.
For many companies, outdoor advertising is not a popular medium for commercial activities because of its short visual dwell time and low repeat visit rate.For companies that are not well-known in the first place, because this kind of advertisement cannot carry a lot of information about the company's brand and products, the effect is greatly reduced.Therefore, many companies refuse to adopt this form of advertising, thinking that the value created is too low, or the relative price is too high.
After in-depth research on the common ground of rejecting customers, JCDecaux found that the key reason why outdoor advertising cannot develop is due to the lack of fixed advertising posting points in the downtown area.When looking for a solution, JCDecaux believes that municipal facilities, such as bus stations, are good choices for fixed advertisement posting points, where people tend to wait for a minute or two to browse the advertisements and accept the influence of the advertisements .JCDecaux concluded that if they could use these locations for outdoor advertising, they could convert second-tier non-customers into customers.
JCDecaux then came up with an idea: free maintenance and maintenance of road facilities.As long as the advertising sales revenue exceeds the maintenance cost of road facilities, and can maintain a considerable profit margin, the company can enter the development track of strong profit growth.Advertisements on road facilities emerged as the times require, expanding the customer base of outdoor advertisements.
In this way, JCDecaux has brought breakthroughs in value to non-clients, the city government and itself at the second level.The free products and services provided by JCDecaux make the municipal government save a sum of expenses for municipal facilities. In return, JCDecaux has obtained the franchise right to advertise on urban road facilities.By publishing advertisements in the city center, the time spent on viewing advertisements and the rate of repeated visits are significantly increased, which also makes the content of advertisements richer and more refined.Not only that, as a maintenance provider of municipal facilities, JCDecaux can also help customers complete advertising within two or three days, while it would take half a month to make billboards.
JCDecaux's value creation has brought many non-customers of rejection to this industry market.Road facilities have become the fastest growing market in the display advertising industry. From 1995 to 2000, the amount of road facility advertisements grew at a rate of 60%, far exceeding the 20% growth rate of the entire industry.
By signing an 8-25-year contract with the municipal government, JCDecaux has obtained the long-term franchise of road facility advertisements.In addition to the initial investment, JCDecaux’s annual expenditure during the contract period is limited to the maintenance and renewal of facilities. The profit margin of operating road facilities is as high as 40%, far exceeding the 14% of billboards and 18% of vehicle advertisements. %.Franchise contracts and high profit margins create a stable long-term revenue and profit stream for JCDecaux.With this model, JCDecaux successfully created great value for itself while creating value for clients.Today, JCDecaux is the world's leading supplier of road furniture advertising, with 283,000 billboards in 33 countries.
By carefully studying the second-tier non-customers and carefully considering the key common points of their needs, JCDecaux also increased the original customers' demand for outdoor advertising in the industry.The original customers were concerned about the location of the billboard and the route of the bus, the time when the advertisement will be launched, and how much money it will cost.They think this is one of the few options available to them.With the help of the analysis of non-customers, we once again realized that by questioning and redefining the mindset of the industry and existing customer groups, value can be improved for all parties at the same time.
What are the key reasons non-customers refuse to use products and services in your industry?Look for commonalities in their responses.Focusing on the commonalities, not the differences, gives a sense of how you can unleash a vast unmet need.
Non-customers in the third tier differ most from existing customers in the industry.These customers are undeveloped, and companies in the industry do not regard these customers as target customer groups or potential customer groups.The needs of these customers, and the business opportunities associated with them, are generally considered to belong to other markets.
Companies would go crazy if they knew how many customers they lost because of this.For example, there is such a long-standing notion that cleaning teeth is a service provided exclusively by dentists.Until recently, oral care consumer goods companies have not realized that this is their market too.When they started to pay attention to this market, they found that not only there is a broad market space, but also they have the ability to provide safe, high-quality, low-cost dental cleaning service solutions.The market exploded because of this.
This potential non-customer principle applies to most industries.Take the US defense aviation industry as an example. It is said that the inability to control the cost of aircraft manufacturing is a weakness of the long-term US military power; Difficult to replace an aging fighter fleet.Military leaders fear that the United States will not have enough aircraft to effectively defend its national interests if nothing else is done.
Traditionally, the Navy, Marine Corps, and Air Force each have different requirements for fighter jets and have designed and built their own aircraft.The Navy's planes need to be strong enough to withstand the impact of landing on the deck of a mothership; the Marine Corps needs planes that can take off and land quickly; and the Air Force wants the fastest, most sophisticated planes.
Traditionally, it has been taken for granted that the requirements differ among the three separate arms into which defense aviation is composed.The Joint Fighter Program (JSF) challenges this industry conventional wisdom.The plan believes that: the high-performance, low-cost fighter market is a new market to be integrated, and the three independent arms are potential, untapped customers in this market.Instead of embracing the established market segmentation and offering products with different specifications and characteristics to different branches of the military, the Joint Fighter Program questions its distinctions and seeks long-underappreciated gaps between the three branches. key commonalities.
After research, it was found that among the aircraft of the three arms, the two most expensive components are the same: electronic equipment and engines.Sharing these components will greatly reduce costs.Furthermore, although each branch has a long list of individual requirements, the aircraft mostly fulfill the same mission.
The Joint Fighter Team is beginning to understand how many of these individual characteristics will determine the purchase of the service.Interestingly, the Navy's answer does not have too many unshakable factors, only two are required: durability and ease of maintenance.With the aircraft sitting on the aircraft carrier thousands of miles away from the maintenance hangar, the Navy wanted the fighter to be easy to maintain; and durable like the Mack truck, able to cushion the shock of carrier landings and withstand the corrosive effects of constant exposure to high-salt air.It was fear that these two requirements would be overlooked in procurement by the Marine Corps and Air Force that led the Navy to decide to purchase the aircraft itself.
The requirements of the Marine Corps are also different from those of other arms, but there are only two most important reasons for self-procurement: short-distance/vertical take-off and landing and strong confrontation capabilities.To support troops at great distances and in harsh conditions, the Marine Corps needs aircraft that can behave like fighter jets while hovering like helicopters.In addition, due to the low-altitude and long-distance flight required to perform missions, it is easy to become the target of ground forces. The Marine Corps requires their aircraft to be equipped with a variety of countermeasures—such as flash bombs, electronic jamming equipment, etc.—to avoid enemy ground. Air missile attack.
The Air Force's mission to maintain global air superiority requires aircraft that are faster and more operationally flexible than all enemy aircraft.The Air Force also needs stealth aircraft to avoid enemy missiles and fighter jets by using materials and structures that absorb radar waves and avoid exposure to radar.Since neither aircraft is available in the other two arms, the Air Force never considered co-purchase.
This knowledge of non-customers makes the Joint Fighter program feasible.The goal of the plan is to integrate key factors, reduce and remove those factors that are taken for granted by various arms but have no practical use, and those factors that are over-designed for comparison, so as to manufacture the same aircraft for the three arms, As shown in Figure 5-2, about 20 factors from the three arms were eliminated or simplified.
In this way, the Joint Fighter Program was able to create a vehicle that could be used by all three arms.The result has been a drastic reduction in costs and, of course, the price of the aircraft has dropped dramatically.For the three arms, the performance of the aircraft has also been greatly improved.Specifically, the Joint Fighter program would reduce the cost per aircraft from $190 million at the time to $33 million, and at the same time, the Joint Fighter (now known as the F-35) would outperform all three of the best aircraft in the service: The Air Force's F-22, the Marine Corps' AV-8B and the Navy's F-18.Figure 5-3 fully demonstrates this point. (Legend: 1. Price; 2. Special requirements for design; 3. Special requirements for weapons; 4. Special requirements for missions; 5. Flexibility; 6. Stealth; 7. Ease of maintenance; 8. Durability; 9. Resistance ;10, STTO/VTOL)
As shown, the F-35 roughly retains the obvious advantages of the F-22 - flexibility and stealth - while also having better ease of maintenance, durability, countermeasures and short takeoff/vertical The main advantages required by the Navy and Marine Corps such as takeoff and landing.These are advantages the Air Force never imagined being able to possess.By focusing on these factors and excluding other special requirements (i.e. design special requirements, mission specific requirements, weapon special requirements), the joint fighter program can produce a fighter with superior performance at a lower cost.
By breaking beyond existing customers and expanding the market to the three military branches, the Joint Fighter Program brings together previously fragmented requirements. In the fall of 2001, Lockheed Martin received its largest order ever, surpassing Boeing.Delivery of the first of the $200 billion F-35s is scheduled for 2010.At present, the Pentagon believes that this project is a success, not only because of the value it creates, but also because the project has the joint support of the three defense departments.
When should we focus on which level of non-customers? There is no easy, quick way to do this.Because the blue ocean scale of non-customers at all levels will change in different industries and in different periods, it is necessary to focus on finding the customer level that can bring the most benefits at that time.At the same time, it is also necessary to investigate whether there are overlapping common points among the three levels of non-customers, so that the potential needs can be released and processed as much as possible.That being the case, we should not only focus on non-customers at one level, but should consider everything and strive to maximize the benefits.
For many companies, it is a natural strategic choice to maintain existing customers while seeking opportunities in more market segments, especially in the face of the pressure of market competition.This may be useful for gaining a competitive advantage and increasing market share, but it is difficult to create a blue ocean of new markets and new demands.The point of this chapter is not to argue that it is wrong to focus on existing customers and market segments, but to question current strategic orientations that are taken for granted.We suggest: In order to expand the blue ocean field as much as possible, when formulating future development strategies, we should transcend existing needs, look at non-customer groups, and integrate market opportunities.
If you don't find market opportunities in non-customer groups, you can also consider finding differentiated needs among existing customers.But it must be pointed out that the consequences of such a choice may be that the company is forced to land in a small market space.However, if competitors successfully carry out value innovation, customers will give up their differentiated needs and enjoy the benefits of value enhancement, and a large number of existing customers may be lost.
It is necessary to expand the blue ocean area as much as possible, but it is not enough. It is also necessary to create a win-win situation, which will bring continuous profits.The next chapter will explain how to build a viable business model to create and maintain profit growth in the blue ocean field.