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Blue Ocean Strategy

Section 1 Group 9

with focus on US Wine Industry

AMISH DHAWAN
AYAN PAUL
DHEERAJ
SANTOSH V
NEHA MITTAL
RAAMPRASAD C
SHOBHIT

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What is Blue Ocean Strategy?


Untapped market space, vast and deep like blue oceans
Competition and rules do not exist
Demand creation leading to opportunities for high profits
Focus shifts from competitors to alternatives, from existing
customer base to non-existing potential customer base
Reconstructionist view :
Market boundaries and industry
structure can be reconstructed by
the actions and objectives of 1st
movers
Untapped demand is out there, it
just needs to be created

Red Ocean
Ocean

Blue

US Wine Industry: A Red Ocean

Intensely competitive $20 billion industry


US consumer base remained stagnant; low per capita wine
consumption
Cut-throat competition; top 8 players had 75% market
share
Increased distributors and retailers
Consolidation among competitors,
bargaining
power of
distributors

Squeezed
profit
margins

Flat
demand
Red
ocean of
bloody
competiti
on

Blue Ocean strategy by Casella wines

Casella wines ,an Australian winery made a easy to enjoy wine for
everyday by looking at demand side of the industry alternatives of beer,
spirits, and ready-to-drink cocktails.
Noncustomers outnumbered the customers three to one, industry focussed
on competition rather than on noncustomers but Casella focussed on non
customers
Casella created a social drink accessible to everyone: beer drinkers,
cocktail drinkers, and other drinkers of non-wine beverages. In the space
of two years, the fun, social drink [yellow tail] emerged as the fastest
growing brand .
Yellow tail not only steal the market from is competitors but grew its
market by pulling more than 6 million new customers.
Strategy Canvas

Yellow Tail Wine


The Eliminate-Reduce-Raise-Create Grid -

Eliminate

Terminology and Distinctions


Aging Quality ,Above-the-line Marketing

Reduce

Wine complexity and range


Wine yard prestige

Raise

Price versus Budget Wines


Retail store involvement

Create

Easy drinking , ease of selection


Fun and adventure

Characteristics Focus : Company does not diffuse it factors across all key factors
of competition
Divergence : Shape of value curve diverges from other players ,
not benchmarking competitors but instead looking across
alternatives
Compelling Tagline : Tagline is clear A fun and simple wine to
be enjoyed everyday

Reading Value Curves

Blue Ocean Strategy


o If the value curve lacks focus, the cost structure will rise
o If it lacks divergence, the company would be following a me too strategy
o Without a compelling tagline, the company might not have great potential

Red Ocean Strategy


o If the companys value curve converges with the competitors, the company is
within the red ocean of competition.
o The strategy would be to outdo the competition on the basis of cost or quality

Over Delivery without Payback


o A company may be oversupplying customers, offering a lot of those elements
that add incremental value to buyers
o The company has to decide which factors to eliminate, reduce, raise, and
create to construct a divergent value curve

Strategic Contradictions
o Inconsistencies are present if the company focuses more on one factor and
ignores the others
o Such inconsistencies
can be found in the level of offering and price; offering
Internally
Driven Company
for less
o more
Strategic
canvas helps to know whether the companys strategy is driven by

demand or by operations
Analyzing this, it can be known how far a company is from creating industry
demand

Cheers
!