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Developing for Customer Needs and Desires

Question:How can companies be sure they are developing something customers will need or desire?
Answer:

Qualifying innovative ideas for commercial success is a critical component of blue ocean strategy. We have created three analytical tools to help managers identify winning business ideas regardless of the market space they occupy or create. The first is the Buyer Utility Map, a matrix of the six stages of buyer experience, from finding a product to eventually disposing it off, against six buyer utility levers, from environmental friendliness to improved customer productivity. This framework indicates the likelihood that customers will be attracted to a new idea and establishes whether there is a compelling reason for customers to purchase your product or service.

The second tool, the Price Corridor of the Mass, identifies which price will unlock the greatest number of customers by analysing prices not just against similar products, but also against different products that fulfil the same function. For example, short haul airlines compete not only against other airlines, but also against buses, trains, and cars. This analysis allows companies to desegment markets that are assumed to be highly segmented into far larger pools of customers.

The third tool, the BOS Profit Model, is a framework for assessing whether and how a company can deliver an innovative product or service at the targeted price. It includes options such as cost targeting and opportunities for outsourcing and partnering.

Like all strategic initiatives, a blue ocean strategic move involves both opportunities and risks. Yet, blue ocean strategy’s methodologies and tools are designed to help systematically increase the likelihood of a successful outcome, shifting the odds in favour of the opportunities over the risks.