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Finding Uncharted Waters

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CPG MBA
November 07, 2023

ISSUE NO.25

Finding Uncharted Waters

Competition. It’s a part of the industry.

Regardless of what product you make or what category it falls into, the majority of your time as a business owner will be spent finding ways to stand out above the competition.

This challenge has led many entrepreneurs to explore innovative strategies to differentiate their products and capture market share. The Blue Ocean Strategy, a concept introduced by W. Chan Kim and Renée Mauborgne, provides a unique and strategic approach to break free from the cutthroat competition of the CPG industry.

Understanding the Blue Ocean Strategy

The Blue Ocean Strategy encourages organizations to escape the intense rivalry in "red oceans" (highly competitive markets) and seek untapped, uncontested market spaces, or "blue oceans."

In a red ocean, companies engage in cutthroat competition, often driving prices down and profits with them. In contrast, blue oceans are markets where competition is minimal or non-existent, offering companies the opportunity to more easily create and capture new demand.

So, how do you go about finding your blue ocean? It all comes down to something called the Four Actions Framework.

Understanding the Four Actions Framework in the Blue Ocean Strategy

The Four Actions Framework is a critical component of the Blue Ocean Strategy, encouraging businesses to explore untapped market spaces, creating uncontested market opportunities and driving innovation. This framework helps you rethink your product's value proposition and find unique ways to differentiate it from existing market offerings (in other words, turning your red ocean into a blue one).

Raise: Enhance Key Product Attributes

"Raise" involves identifying and enhancing key attributes that set your product apart and raising them to well above the industry standard.

Consider aspects like quality, convenience, or customer experience. What can you do to elevate these to meet unmet consumer needs and provide more value? By raising the value of these attributes, you can create a product that not only meets but exceeds customer expectations.

Reduce: Simplify and Optimize

In the "Reduce" phase, the goal is to simplify your product and make it more efficient. Identify elements or features that may not be essential or could be scaled back without compromising your product’s core value, and reduce them to well below the industry standard.

Reducing complexity can lead to cost savings and a more user-friendly product. It can often also improve efficiency in production, reducing expenses.

Eliminate: Remove Unnecessary Elements

"Eliminate" focuses on identifying aspects of the product that are unnecessary or overemphasized. These are factors that the industry has long competed on but just aren’t worth it anymore.

Find attributes that require a lot of investment but don’t yield significant returns on revenue or customer acquisition and eliminate them.

Create: Innovate and Differentiate

The final step, "Create," is the heart of the Blue Ocean Strategy. It involves introducing entirely new features, benefits, or elements that existing products in the category lack. This innovation should be rooted in a deep understanding of consumer needs and market dynamics.

What can you create that fulfills previously unmet customer needs or desires? Your developments will create a unique value proposition that resonates with your target audience, making your product stand out and thrive in the market.

Tl;dr

Incorporating the Four Actions Framework into your product launch strategy can provide a clear and systematic approach to differentiating your product in a crowded market.

By raising the value of specific attributes, simplifying your product, eliminating non-essential elements, and introducing innovative features, you can create a unique value proposition that attracts customers and allows you to escape the fierce competition found in red oceans.

It’s time to sail into uncharted waters.

Until next time,
— The CPG MBA Team

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