TATA chose not to compete with entry level strategic group of cars in India such as Maruti Omni, Maruti 800, Alto & Hyundai Santro. Thus by looking across strategic groups, an organization has to find why do buyers trade up for the higher group, and why do they trade down for the lower one? Strategic groups include a hierarchical order built on two dimensions, price and performance. Strategic groups within Industries are group of organizations within an industry that pursue a similar strategy. Thus Yakult has created a blue ocean for itself across industries. However, both health drinks producers & pharma brands don’t consider Yakult as their competition. It competes with health drinks, juice brands, at the same time it competes with pharma industry. Let us take the case of pro-biotic drink Yakult. Thus by focusing on the key factors that lead buyers to trade across alternative industries and by eliminating or reducing everything else, you can create a blue ocean of new market space. But the alternatives to this industry include visiting a mall, library, hobby centre, etc., all of which serves the same purpose. The substitutes to this industry are CDs, TV, stage shows, etc.
The function of this industry is to provide entertainment and the purpose of this industry is relax, rewind, de-stress, experience and fun. Let us consider an example from entertainment industry. Alternatives are products or services that have different functions and forms but the same purpose.Substitutes are products or services that have different forms but offer the same functionality or core utility.In order to understand this path let us first understand difference between substitute and alternative: The first path in formulating the blue ocean strategy is to find the alternative industries to your industry’ One of the biggest limitations we put on our organization is to assume that our products/services compete in a defined and unchanging industry with a very narrow view of the environment. Organizations compete not only within the industries but also with organizations in other industries which produce alternative product and services to their industry. Path 1: Look across alternative industries 6 paths framework blue ocean strategy Following are the six paths framework involved in formulating the blue ocean strategy.
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