Chapter 5 Summary: Reach Beyond Existing Demand
The chapter covers the methods of maximizing the size of a blue ocean strategy, tiers of non-customers, and the significance of going for the biggest catchment. Companies seeking to maximize their blue ocean strategies need to aggregate demand in their new markets and challenge conventional strategy practices. One of the ways of growing market share includes striving for existing customers. However, according to the blue ocean strategy, companies should look for non-customers, build powerful commonalities, and unlock existing demand held in non-customers. Many companies, including Big Bertha, have used the non-customer strategy to build market demand and succeeded. In looking at non-customers, companies should focus on the commonalities and use these commonalities to leap value and turn non-customers into customers. For a company to succeed in maximizing the size of a blue ocean strategy, it needs to understand its attention locus, reach beyond existing demand, and prioritize non-customers over customers.
Non-customers exist in three forms, including first-tier, second-tier, and third-tier. Deepening knowledge of non-customer tiers improves the ability to unlock big blue ocean opportunities. The three tiers of non-customers differ in their relative distance to the market, leap in value, and frequency of purchases. First-tier non-customers remain closes to the market, are defined as sitting on its edge, and exhibit the willingness to jump into a market should opportunities arise. First-tier non-customers also seem like an ocean of untapped demand closest to a market and exhibit a demand for better solutions to their problems and needs. First-tier non-customers also exhibit significant differences and commonalities. However, the commonalities unite this batch of non-customers. A company that understands first-tier non-customer commonalities can tap into a blue ocean demand strategy and utilize it to create new demand and increase market share.
The second-tier non-customers act differently from first-tier non-customers with this batch refusing market offering because they position themselves above their means. Second-tier non-customers often find their needs ignored. For companies to tap into the second-tier of non-customers, they need to dig into their reasons for refusing available products and services. Knowledge of this behavior can help companies build a blue ocean strategy that responds to this group’s commonalities and changes their perception to refuel their demand for market goods and services. Third-tier customers remain far away from a market and their distant position from a demand market depends on the failure by companies to tap into their demand or organizational inability to recognize them. For companies to tap into third-tier non-customers, they need to focus on the actual delivery of performance and engage creative concepts into the delivery process. Good execution and creativity in the execution processes help tap into third-tier non-customers easily.
Whereas many blue ocean strategies may exist, companies tapping into the non-customer business perspective must prioritize the tier with the biggest possible demand. All three non-customer tiers exhibit different demand levels. For companies to determine the tier with the biggest catchment, they should first establish overlapping commonalities and their role in increasing or decreasing the untapped demand. A successful blue ocean strategy to improve share prioritizes non-customers over existing customers. By prioritizing non-customers, companies reach out beyond existing demand. Focusing on non-existing demand creates room for companies to plan for the future, formulate strategies to fit future needs and preferences, and maximizing the impact of prioritizing non-customers. However, companies should focus on two issues, including creating a sustainable blue ocean strategy and maximizing benefits from this created strategy. Failing to fulfill the needs of these considerations may block a company from utilizing its existing resources to tap into the untapped demand and increase market share in the process.