The Blue Ocean Strategy Simulation

Align the whole system of a company’s activities with its strategic choice of differentiation or low cost. They end up choosing either low cost or product differentiation to maintain their stake in the market

The objective of such a market place is to compete without much differentiation. The firms end up playing price wars which in turn lower their revenues. To counter such a situation the blue ocean strategy was formulated. It entails :

Creating uncontested market space

Making the competition irrelevant

Creating and capturing new demand

Breaking the value-cost trade-off

Aligning the whole system of a company’s activities in pursuit of differentiation and low cost. There isn’t any trade off between the low cost and differentiation, through blue ocean strategy both of them are obtained and sustained.

Simulation

As team Iabet, we played the blue ocean strategy simulation to maintain our product in the competitive scenario using both low cost and differentiation.

Red Round

The major work in the red rounds was market trend analysis, Segment targeting and positioning, Research and up gradation and marketing decisions. Approximately 33% work was done individually by everyone as most of the decisions were taken with team consent rather than handle it individually. By the end of the red rounds the red box characteristics were increased or decreased to reflect the demand characteristics of the targeted segment.

At the end of Red round, the unit cost of the Red box was reduced by 13%. Projects of relocating manufacturing to a low labor cost country was implemented which provided a reduction in production costs of 9%. With just the Red box as the company’s sole product in the market the SPI was at 757. With 18.5 % share of the value in market, the company wasn’t doing very well.

Analysis of Blue Round 1 (2011)

Visual Awakening

The market was studied in terms of our company’s performance with respect to the competitors. In the red round we had tried our hand at cost reduction, price reduction, extensive marketing and even expansion into new areas. Even after all that, our company lagged behind the others in terms of sales and market share. In this first blue round we studied the industry’s overall value curve and came up with our interpretations.

Visual Exploration

Three different types of non customers were explored using these paths.

Path 3 : Chain of buyers and users

Parents of users

Need a way to control consumption

Some saw it as a way to de-stress

Cost issues, battery life, global warming, easily breakable cds

Not at all tech savvy

Path 1 : Alternatives

Outdoor sports provide more physical activity and time with friends

No sophisticated consoles

Need advantages of sports into video games

Path 5 : Functional and emotional appeal for buyers

Smallest in terms of sales potential

Ignorant of the product, mostly the older generation

Negative feelings towards consoles, felt technically challenged

They’re still active(moving around), need games which are a bit more sporty and active

The above mentioned paths were thoroughly discussed and contemplated for a better market share potential before a decision was reached.

Action Framework and ERRC Grid

We consciously decided to target two out of the three groups of non customers mentioned, path 1 and path 3. We searched for commonalities across the noncustomer types and tried to capture a greater share of noncustomers than what we might have acquired by creating an offering for a single large non customer type.

ERRC Grid

Eliminate : We did not eliminate any of the present features

Reduce : The following features were reduced as they were less sought after by the noncustomers we were targeting

Audio sophistication

Multimedia add ons

Raise: We increased the following features as they seemed more appealing to our target group

Console power

Graphics sophistication

Create : As a part of our Blue Ocean strategy we decided to create the following features to tap into the two (path 1 , path 3) noncustomer groups we studied earlier.

Exer gaming/exer-tainment

Ability to control gaming habits

To-Be Strategy Canvas

This involved creating a Blue Ocean product, deciding what level to offer for each of the existing or created Competing Factors. The canvas allowed us the flexibility to modify the levels by which each factor was reduced or raised so as to reach an optimum level and cost of production.

Other Planning

The production plan including forecasting production quantity, geographical expansion, segment growth and demand was handled as a team. We also debated and brainstormed on the various projects that could be implemented as well as the possible outcomes of the same.

End of 2011

The following were the results after the first blue round in the year 2011.

Path 1 noncustomers found our product more appealing

Path 3 noncustomers were not completely satisfied with our offering as it lacked a few value factors

Our product was priced too high, a mistake we corrected in the next blue round

Our value factor console power and graphics sophistication were liked by a large proportion of non customers.

Due to the previously implemented corporate projects, we were able to reduce the unit cost of red box by 13%.

We fell short in our expected sales and were inaccurate in our production planning by around 975 units. This was a mistake because we overlooked the fact that our offering was the only one in the market with such great value features. We did correct our production planning in the subsequent rounds.

Learning

We learnt that a product could be differentiated and also have a low cost.

It is possible to target two large segments at the same time using certain common factors.

It is easier and more profitable when we compete by making our competiros irrelevant through our offerings.

Multi Screen Media

Back ground

Multi Screen Media Pvt. Ltd. was previously known SET India Pvt. Ltd. It is owned by Sony Pictures Television International. There are 40 television networks in the portfolio of SPTI (Sony Pictures Entertainment company).

SET(Sony Entertainment Television) Asia made its debut in India in 1995 and has been one of the popular GECs since then. It was recently renames as Multi Screen Media Pvt. Ltd. (MSM, formerly SET India Private Limited), a joint venture promoted by Sony Pictures Entertainment since 1995. MSM’s family of channels in India includes SAB TV, SET Max, SET PIX, AXN and Animax, distributed by MSM Discovery Private Limited.

The company has a rich library of over 40,000 hours of original programming, which has received national and international acclaim, garnered successful ratings and viewership. There is also a huge library of Drama, Soaps, Costume drama, Sitcoms, Thrillers, Game shows, Bollywood related programs and much more..

Set India is using the brand name of ‘Sony Entertainment Network’, to reinforce its identity of a television network with a number of offerings (Set, Max, Sab and Pix).

Product portfolio

Sony Entertainment Television : SET is MSM’s flagship channel which has been undergoing changes in its positioning and also its target audience definition in the recent past. Usually SET’s programming is targeted towards family audiences. The genres of drama, reality, comedy, horror, Bollywood and live events are all include in the channels offerings. SET faces competition from the other GECs like Star Plus, Colors and Zee Tv.

Sab TV : This channel is dedicated to the comedy genre. Its viewership ratings are acquired from its famous property “Tarak Mehta ka oolta Chasma”. The channel and its properties are a favourite with the lower SECs.

SET MAX: This channel is dedicated to the screening of Movies. In the recent times, MSM has managed to acquire some huge blockbuster movies like 3 idiots for a screening on MAX. Although MAX has steadfastly maintained its place in the genre, it does face a competition from Zee Cinema and the likes. Max purely caters to the movie lovers, showcasing the country’s best premium Hindi movies. The company boasts of a huge library of more than 800 of the finest film titles from the stables of Yash Chopra, Karan Johar, Rakesh Roshan, Mukesh Bhatt, Vidhu Vinod Chopra and many more. Along with their present collection of classic films, MAX has recently added to their bouquet, some of the greatest Bollywood hits of 2007 and 2008. To name a few Om Shanti Om, Chak De India, Welcome, Heyy Babyy, 36 China Town, Salaam-E-Ishq, Namastey London, Jaan-E-Mann, Cheeni Kum, Kabhi Alvida Na Kehna, Fanaa, Lage Raho Munnabhai, Apna Sapna Money Money, Partner, Omkara, Dhoom 2, Kabul Express, Provoked, Eklavya, Gandhi My Father, No Smoking, amongst others

PIX : Sony PIX screen all English classics for the connoisseurs of old movies. Since MSM bought the Tristar library, the channel has been screening all the classics and blockbusters of yesteryear. PIX too is trying to broaden its Audience base by reaching out to the younger crowd. It has recently started a loyalty program in collaboration with PVR, which allows college students to watch certain movies at a heavily discounted rate.

Channel 8 : MSM acquired Channel 8 to venture out in the regional space. It is the only Bengali film channel. The entry into the regional market is definitely late considering Star and ZEE have a good number of regional channels in their portfolio and all seem to be doing quite well. MSM also has a Tamil movie library and Bhojpuri space is what it plans to enter in the future.

AXN : An English GEC, it has under its banner action TV series, movies, animations and adventure-reality and lifestyle sports programmes. AXN has always been associated with rugged sportsmen or adventurers who live for a thrill in their life. In a recent survey conducted, most of the regular viewers (past and present) have profiled AXN as an adventurous and exciting channel. Its competitors are Star World and Zee cafe which cater to a broader audience base.

Animax : This channel has animated programming and caters to the kids.

Applying Blue Ocean Strategy

Since I did my internship with Sony entertainment television’s marketing division, I will now try and apply my learning from the blue ocean strategy to the same. When SET was first launched, the properties it had were innovative and targeted mostly SEC A and B audience. Over the years it oscillated between SEC A, B and SEC C, D audience by providing for one of the sections at a single time. At first Sony’s programming was more alluring to the higher SECs with content like Jassi and other YRF productions. Now the channel is working towards building its viewer base in the lower SEC, by providing them with similar content that they are already watching on other channels. It has been constantly competing with the other GECs like Zee, Star and Colors. All of the GECs have pretty much the same kind of programming content aimed at the average housewife from the middle classes (SEC C, D).

After going through the entire concept of Blue Ocean Strategy, I believe that Sony can differentiate in its programming and allure both sections, the higher classes and also the middle and lower classes.

Creating uncontested market space : SET could introduce new programming content which hasn’t been launched in India yet.

Making the competition irrelevant : All its competing channels are providing the same content of family soaps or reality shows. If SET can come up with a different genre of properties, it might be able to make the competition irrelevant. The audience could definitely do with a change from the usual sob stories on the smaller screen.

Creating and capturing new demand : Apart from producing content for both the upper and middle class sections of the society, SET could also try to tap into a whole new segment. Although the MSM bouquet does contain various channels catering to a variety of needs across every segment of the society, Sony could still try and capture more niche markets.

Breaking the value cost trade off : SET should venture more towards IPTv, and Mobile aggregators to build a more economical and value-for-money revenue models.