Reconstructing Market Boundaries
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Kim and Mauborgne argue that blue oceans look accidental from the outside but are rarely accidental on the inside. They result from a specific kind of strategic exploration: looking in places that industry competitors are not looking. The authors identify six paths for reconstructing market boundaries. Look across alternative industries: customers often choose between your industry and a different one that solves the same underlying need. Understanding why they sometimes choose the alternative reveals what your industry lacks. Look across strategic groups within your industry: most industries have high-end and low-end players competing separately. Looking at what makes people choose one tier over the other reveals where to create something new. Look across the chain of buyers: who actually uses the product, who buys it, and who influences the purchase are often three different people. Shifting focus to a different buyer in the chain can reveal a new market. Look across complementary products and services: what else do customers do before, during, or after using your product? Solving problems outside your current scope can create a blue ocean. Look across functional and emotional appeal: some industries compete mainly on function (efficiency, price) while others compete mainly on emotion (status, experience). Switching between these can open new space. Look across time: by projecting current trends into the future and imagining what customers will need, you can create an offering that is ahead of where the market is going.