The Corner Stone Of Blue Ocean Strategy Marketing Essay To sustain in the market and show high performance formula is not competition in overcrowded industries. The mantra is to create blue oceans of untapped market space. There are two distinct kinds of space, red and blue oceans, in a business environment. Red ocean represents all the industries that exist and perform by the way of competing with the rivalries. Here the industry boundaries are already defined and followed, the competing rules of the game are known. Companies try to surpass their rivals to clutch a larger share of product or service demand. As the market space gets packed, scenario for economic profits and productivity growth are reduced. Products become commodities or niche, and the cutthroat competition turns the ocean red as blood. Blue oceans denote a new concept, not the ones that exist today it is the unknown market space, untainted by competition. Here, demand is created rather than grabbing the existing one. There is ample opportunity for growth, both in terms of profit and the speed at which the profit is obtained; competition is immaterial because the rules of the game are not yet framed. Blue Ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. The logic behind blue ocean strategy contrasts with the traditional model that focuses on competing in an already existing market space. The management is not able to differentiate between red and blue ocean strategy because of the difficulty they face in breaking themselves from the competition. Companies have got huge capacities to develop new industries and re-design the existing ones, a fact that is exhibited in the deep changes that are necessary in the way industries are classified. Blue ocean strategy has been the pioneer in the standardisation, continuity and replacement of the segmentation of the industries. To win in the future, companies mustnt challenge with each other. The only way to overcome the competition is to stop trying to be in the competition. The business atmosphere in which most business strategy and management has been based on is changing, evolving or disappearing. Some of this change is due to technology. Other reasons might be culture, globalization, speed of new information, or the role of demographics in the workplace. There are 3 characteristics that contribute to a Good Strategy. 1) It is focused; it is not diffused across all potential aspects of the market. 2) The shape of the value curve diverges from any potential competitors. 3) It has a compelling tagline. STRATEGIES INVOLVED VALUE INNOVATION The corner-stone of Blue Ocean Strategy is Value Innovation. Instead of focussing on thrashing the competition, the spotlight should be on making it erroneous by creating a bound in the value for buyers and creating uncontested market space. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. Value can be identified in the conventional market segmentation and offering value and lower cost. Value innovation only occurs when organizations have aligned innovation with utility, price and costs. The market must be ready to accept the product, meaning that timing is a major check. The focus is on both differentiation and low cost to provide value to both customers and the organization. Value innovation can be created in a way that the companys actions are favorable for both the company, through reduced cost structure and to its customers through value proposition. Cost savings are made by disseminating and bringing down the factors an industry competes on. In case of buyers value, it is increased by rising and creating elements the existing industries has not offered in the past. Additive costs are reduced further, as scale of economies kick in due to the increase in volumes of sale. THE STRATEGY CANVAS The strategy canvas acts as an indicative and an action framework for structuring a blue ocean strategy. Strategy Canvas seizes the current state in the market by detailing the factors players compete on in product, service and delivery. This enables the company to gain insight into the areas where the competitors are currently investing, the factors on which the industry is presently contending on its deliverables, and the end products the customers receive from the existing offerings from the competitors market. The four actions framework offers a technique that smashes the trade-off between differentiating the products and reduction in cost, thus creating a new value curve. It attends to the four key queries of the issues that an industry takes for granted and issues that need to be eliminated; factors that needs to be reduced below industry standards; factors that needs to be raised above industry standards; and what to offer that the industry has not offered before. The eliminate-reduce-raise-create grid encourages the companies to act on all four areas to form a new value curve. By motivating the companies to fill the grid with eliminating, reducing, raising, and creating actions the grid provides four immediate benefits: it urges them to concurrently adopt differentiation in the products and adopting reduction of costs; identifies companies who are only creating thereby raising costs; makes it easier for the management to understand and comply; and that drives the companies to scrutinize every factor the industry competes on. This is against the Michael Porters Five Force Strategy which implies that an organization should dominate the market in all sectors to attain competitive advantage and gain excellence. Blue Ocean Strategy embeds the concept of slowing down profit attrition with an efficient cut throat strategy for an already existing market, and through the profit made out of it they can increase the financial resources available for new innovative investments and thus their chances of finding an unexploited market with plenty of potential consumers. Figure 1: Four Actions Framework REDUCE Which factors should be reduced well below industry standards? ELIMINATE Which of the factors that the industry takes for granted should be eliminated? CREATE Which factors should be created that the industry has never offered? A NEW VALUE CURVE RAISE Which factors should be raised well above the industrys standard? SEQUENCE OF BLUE OCEAN STRATEGY The essential concept of blue ocean strategy is to get the strategic sequence right. This sequence washes out and authenticates blue ocean ideas. This reduces the business model risk. In this model, prospective blue ocean ideas must pass through a chain of buyers utility, price, cost, and adoption. At each step there are only two options: a yes, in which case the idea may move on to the next step, or no where the company can either park the idea or rethink it until a yes. Figure 2 : Sequence of Blue Ocean Strategy BUYER UTILITY Is there exceptional buyer utility in your business idea? A Commercially Viable Blue Ocean Idea ADOPTION What are the adoption hurdles in actualizing your business idea? Are you addressing them up front? COST Can you attain your target to profit at your strategic price? PRICE Is your price easily accessible to the mass of buyers? LG ELECTRONICS A CASE STUDY LG ELECTRONICS, wanted to implement Blue Ocean Management to make competition irrelevant. Their strategy was to redefine industry boundaries by focusing more on high end products and entering new segments of emerging markets like China, India and Middle East and Africa and thus create uncontested market space. They shifted their focus from increase in volume to increase in value through high-end product innovation in all of its four product divisions: Mobile Communications, Digital Appliance, Digital Display and Digital Media. Each domain of the company planned to establish high end value added products. In the mobile phone division, LG Chocolate and the Black Label series are LGs Blue Ocean operational strategy in action, which are expected to generate around 30 per cent of sales and 50 per cent of profits by 2010. LGs Chocolate became best selling product through intensifying research capabilities and high-end design which was in the midterm strategies for the company. The Digital Display Company was the leading producer of digital TVs in LCD and Plasma modules. In the increasingly competitive digital TV market, LG Electronics had cutting-edge products through innovative products. Digital Display division was formed in joint venture with Philips to produce LCD TV and plasma TV in 2001. The digital display division had earned $ 2.77 billion which constituted 28% of their global sales in the year 2005. Their business goal being becoming the dominant leader in digital TV and plasma TV, the division had undergone breakthrough innovations and products under the blue ocean strategy. The Digital Appliance, another SBU of LG Electronics, was a leader and pioneer in home appliance products, like air conditioner, refrigerator, vacuum cleaner, washing machine, microwave oven, and other home appliances. They had developed the worlds inbuilt TV, refrigerator, ARTCOOL air conditioners, steam washing machines and many more core technologies for home appliance parts and products. Building on successful home appliance operations, the company was also expanding their business scope to have a greater emphasis on new product sectors such as commercial air conditioners, built-in kitchen appliances and home networks. The digital media segment, with their global sales of $5.7 billion generated synergy with its audio and video (home theatre, DVD recorder), digital storage (super multi DVD rewriter) and personal computer (desktop and notebook PC) divisions65. Through continued technology innovation, the company had developed the worlds first Satellite DMB notebook66 in 2005. In particular, the company was actively penetrating multimedia product markets with mobile technologies, such as PDAs and MP3 players, and with composite products, such as super-multi drives and super-multi DVD recorders. They were also focusing on its Car Infotainment business.
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12/25/2019 0 Comments Microsoft Marketing PlanMicrosoft Corporation 1. 1 Executive Summary The purpose of this article is to highlight the current marketing strategies of Microsoft Corporation and also to identify the lacking areas where Microsoft should develop new strategies to with stand with the throat cutting market challenges. 1. 2 Mission Statement Empower people through great software anytime, anyplace, and on any device. 1. 3 Our Values As a company, and as individuals, we value integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect.We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our customers, shareholders, partners, and employees by honoring our commitments, providing results, and striving for the highest quality. (Microsoft Corporation, 2010) 1. 4 Company Profile At Microsoft, everyone one is motivated and inspired every day, by how their customers use their software to find creative, solutions to business problems, develop breakthrough ideas, and stay connected to what's most important to them.Microsoft run business, in much the same way, and believe in their five different business divisions, which offers the greatest potential to serve customers. They are: a. Windows ; Windows Live Division: Includes the Windows product family, and is responsible for our relationships with personal computer manufacturers, as well as online software and services through Windows Live. b. Server and Tools:Software server products, services and solutions, include: Windows Server operating system, Microsoft SQL Server, Visual Studio, Silverlight, System Centre products, Forefront security products, Biz Talk Server, and Microsoft Consulting Services. c. Online Services Division: Consists of an online advertising platform with offerings for publishers and advertisers, and online information; offerings such as Bing and the MSN portals and channels. d. Microsoft Business Division: Includes the Microsoft Office suites, desktop programs, servers, and services and solutions; Microsoft Dynamics; and Unified Communications business solutions. . Entertainment and Devices Division: Consists of the Xbox video game system, including consoles and accessories, Xbox Live operations, Zune digital music and entertainment device; Mediaroom, mobile and embedded device platforms, Surface computing platform, and Windows Automotive. We are committed long term to the mission of helping our customers realize their full potential. Just as we constantly update and improve our products, we want to continually evolve our company to be in the best position to accelerate new technologies as they emerge and to better serve our customers. (Microsoft Corporation, 2009) 1. 5 SWOT Analysis . 5. 1 STRENGTHS: i. Microsoft is one of the huge reputable global brands currently in the market. It is recognizable for couple of reasons, it was known to be one of the largest software developers and it’s developed a customer base of near about thirty million people all around the world. ii. It has built its brand image on the successful development of its computer software namely the Windows series of products. iii. Brand is everything, Microsoft is one of the best established, highly visible and healthy IT brands in the World, and holds a very loyal set of passionate customers that advocates and uses the brand.By loyal customers, it means that Microsoft retains old customers as well as recruits new ones too. iv. The corporation is alienated in several central offices inside the United States and all around the globe making the distribution channel and development of its products easily approachable to every consumer. It helps the company to launch new products and services across the globe at the same time. 1. 5. 2 WEAKNESSES: i. Microsoft lacks a solid client age and service support centre on the internet.This issue has to be rectified in order to overcome since problems and bugs with regards to their products must be fixed rapidly to attain efficiency. The lack of a customer service centre would erode the integrity and quality perceived by costumers on Microsoft products. ii. Generally Microsoft products have compatibility issues with different hardwares and softwares platforms manufactured by other companies, hence this sort of compatibility issue would then limit the ability of the customer to buy all products made by Microsoft since it would affect the stability and performance of a computer. ii. Microsoft does not share the programming codes of its softwares making modification difficult if bugs and other malfunctions are detected by programmers not affiliated to the company. 1. 5. 3 OPPORTUNITIES: i. Microsoft has expanded its market share by entering into the Chinese market by producing computer programs based on the Chinese language and giving discretionary authority to the Chinese government to censure and to eaves drop on emails, documents and webpage. ii. Microsoft has also diversified its products.During the past years the company has ventured into fields such as game design, game developing and publishing and the production of game consoles such as the Xbox. iii. The company has also branched out to provide free email and news services to its customers. It has also developed softwares and computer programs that are vital in organizing business spreadsheets and data. 1. 5. 4 THREATS: i. Microsoft has created a set of example for all existing and forthcoming software developing houses to follow the same footsteps for such a drastic success. ii.Early competitor of Microsoft in the operating systems industry is the Linux program which was developed by independent programmers. this program gave very though time to Microsoft due to of its user friendly and can be obtain free of charge. iii. Because the company is diversifying in various fields it started to compete with the products being produced by such companies who have been experts in their parent industry. The company might eventually lost its battles in making its products competitive when put side by side with products made by corporations which has established heir name and reputation to the customers. iv. Microsoft is losing its market share steadily, due to increase in competition and diversified products offered by their competitors. A recent publication (Thinking Made Easy: SWOT Analysis of Microsoft) 1. 6 PESTEL ANALYSIS APESTEL analysisis a set of tools or an investigation of the important factors that are chronologically changing which influences on a businessexternally. PESTEL is abbreviated as Political, Economical, Social, Technological, Environmental ; Legal impacts.Politically influences on organisation like abrupt changes in government, inconsistency in their policies. Economic changes relate to changes in the macro economical conditions such as unstable economical conditions, rise in people standards or fluctuations in interest rates, etc. Social changes relate to changes in society (either globally or locally) such as changes in lifestyles e. g. more women going out to work, changes in customers buying behaviours. Technological changes relate to the entrance of new high tech inventions and ideas such as the development of the robotics and internet as business tools.Environmental changes means the impact on production oriented organisation with the environmental policies like all textile manufacturing units were transferred to Asian markets from Manchester UK due to its adverse effect on the environment. PESTEL Analysis a. Political Microsoft is highly affected by the political scenario there in USA. Microsoft is becoming one of the giant companies globally. It has created huge monopoly across the globe. US government is now trying to break up Microsoft into several different companies so that to maintain equal competition throughout the market.One of the other reasons in splitting up Microsoft Corporation that it is becoming so much stronger that it could be a threat for even US government in near future. b. Economical Being such a versatile company and the market share they have, Microsoft plays major role in bringing up the country economies they have set-upped their businesses. According to an independent studies that the economies of the country shoots up three times when Microsoft starts businesses in that country. c. SocialMicrosoft has an edge on all of its competitors that socially more people are inclined towards Pentium platforms so naturally it helped a lot to have more market share rather than others. Market segment of Pentium users is considerably very huge but it would be threat for Microsoft that they are losing its share with an average pace, due to their unsatisfied customers. d. Technological It was a decade earlier that Microsoft was the leader in producing high tech softwares and gadgets, but now they are getting tough competition from global phenomenon brand ‘Apple’.No doubt Microsoft adopts and market new technology as soon as it could be but still i e. Environmental Microsoft follows very strict policies to make sure that the company remains in full compliance with international environmental regulations and the specifically environmental requirements of each country/region where they are doing their business. Microsoft reduces waste disposal, where possible through source reduction and recycling at company facilities. All waste safely and responsibly handled and disposed of properly. f. LegalMicrosoft is playing vital role in legal aspect of their pirated products like Windows and other softwares. They are trying their level best to reduce the usage of their pirated softwares. They are introducing different security features which may reduce the usage of pirated products. 1. 7 Porter’s Generic Strategies Michael Porter has proposed three generic strategies that provide a good starting point for strategic thinking; overall cost leadership, differentiation, focus and combination of all these three strategies is known as stuck in the middle.Microsoft is a versatile company it produces series of products and services which caters different market segments, and according to every particular segments they developed their specific strategy for different product segments. a. Overall cost leadership Microsoft’s has out scoured its major software houses towards Asian markets, that help them to develop efficient and yet low cost softwares with low overhead or manufacturing cost.The added benefit of companies going globally is that they get access to their local market, and one of the reasons Microsoft has established software house in India is to expand their Indian market share. b. Differentiation The other strategy which Microsoft is keep following since very early stages, is of their differentiated products and softwares. With the launch of Windows the most user friendly and c. Focus Microsoft has narrow down its market segments, they identified the need of their customers and created segments within the segments.For example at first there was only one segment of computer games lovers but now Microsoft has narrow down this segment and created a separate gaming console for gamers called Microsoft Xbox 360. 1. 8 Implementation Plans As a marketing adviser, I would redefine the marketing structure by improving their segmentation, targeting and positioning strategies. Last year Microsoft launched Xbox 360 gaming console, it was segmented for kids to teens gaming needs and it was positioned as a complete home entertainment solutions which merges video gaming, internet and DVD playback.The Xbox 360 is the most robust and high tech gaming console in current market. Sony Playstation 2 is currently the market leader with almost more than 50% of the gaming console market share. The Xbox was launched the previous year and positioned as the complete home entertainment solution combine video gaming, the Internet and DVD playback. The Xbox is the most robust gaming console on the market, but faces stiff competition in its product category. Microsoft is trying its level best to become the market leader in this category by dethroning Sony.To accomplish this goal, Microsoft has to restructure its targeting strategy; specifically they should stick to a specific age group people so that they could focus their efforts on them. They should more focus on people aged between 16 to 24, due to the high tech device and this age group are very high gamers. This age group people are substantial knowledge how to use high tech equipment and themselves fascinated by the entire features Microsoft is offering. Secondly, these age group people are good source of marketers by influencing their friends and family circles by introducing them and flavouring them its joy.Considering various opportunities and challenges ahead, Microsoft must continue to narrow down their campaign specifically on the heavy male gamers, since this demographic category are usually trendsetters in the society and they are even very early innovators too. Microsoft should work out on the differentiation strategy, in the current market scenario Microsoft is the only one who is offering online and network gaming on their gaming consoles where as Sony and Nintendo are not offering such features, so Microsoft should invest more capital for marketing in such area which make them set ahead among their competitors.In the software development side, Microsoft is facing huge customers losses by one of its competitors namely OpenOffice, they are offering complete range of office softwares free of cost, thus giving very tough time to Microsoft Office software, in such critical situation my opinion would be going towards differentiated strategy.Technically Microsoft should develop such uniqueness in their Office software so that customers (majority of them are students) can’t think to adopt free softwares rather than paid one, customers should have high perception in their mind that paid must have great value rather than free one. This can be achieved if Microsoft creates a monopoly by creating incompatible extensions of Office which can only be viewed and edited on exclusively Microsoft Office. Bibliography Hollensen, S. (2004). Marketing Management.Illinois: Pearson Education Limited. Kotler, P. (2002). Marketing Management (Eleventh ed. ). California: Prentice. Microsoft Corporation. (2010). About Microsoft: Your Potential. Our Passion. Retrieved March 12, 2010, from Microsoft Website: http://www. microsoft. com/About/default. mspx Microsoft Corporation. (2009, December 4). Our Commitment to Our Customers. Retrieved March 12, 2010, from Microsoft Corporation Website: http://www. microsoft. com/about/companyinformation/ourbusinesses/business. mspx
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