WEEK 7

Value Proposition Map

Creating New Market Spaces

Kindly mute your microphone and keep the video on

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 Agenda

• Value proposition map

• Creating New Market Spaces
• Assessment 2
Assessment 2

Week 10:Friday 10 May at 11:59.PM

Overview
The global hotel and accommodation services sector has evolved to
include non-traditional providers such as Airbnb and Booking.com.
This has created a new competition for traditional service providers
such as hotels. New opportunities have also emerged for creative
start-ups that can further develop alternative products with unique
value propositions. Design thinkers recognise the critical role of a
unique, appealing value proposition as a mechanism for
establishing successful start-ups or increasing existing market
share.

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Assessment 2

Task
Assume you are the owner of a new start-up entering into this sector and need to
develop a competing product.
Questions
1. Develop a value proposition map for your product-service and identify the
customer profile and value proposition components (see week 4 and 5 tutorial and
reading materials)
2. Using your understanding of creating new market spaces covered in Kim &
Mauborgne’s article, outline and critically justify three (3) strategies your start-up
can use to create new market spaces. (The article is available as a reading on vUWS
in Module 7)
3. What macro-environmental forces could influence your start-up’s corporate social
responsibility strategy selection?
4. Outline a recommended corporate social responsibility strategy to improve your
start-up’s responsibility to society and the environment?

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The first step – jobs to be done

 What “jobs” are your target

customers “hiring” you for
 Do you know or are you just
guessing?
 Getting out and finding out
 Where to look?
 What to ask?
EMPATHY
Empathy

• Understanding how your

brand/product/organization is experienced
on an emotional level offers a business rich
insights
• A willingness to listen to what they’re saying,
to find meaning in what they say and why
they say it and then to respond in a valuable
way
• Ask open ended questions
• Go beyond the functional
Drilling down – creating a VP

A good VP tell us the nature of the VALUE you are

delivering and for whom
Customer insight – a key to sustainability
What’s the big deal about a VP?

Business model formulation

RHS/LHS balance

Source of truth and inspiration for TACTICAL marketing

– who when and how:
Pricing
Promotions; marketing communications form and
frequency
Place; distribution and communication channels
Product; form, function and the most important
features (MVP)
Processes
People
Physical evidence
Understanding
customers
Complete an empathy map with the
target customer of a brand you are
familiar with in mind. Write down:
- What job are they trying to get done
- Note their pains and gains
- Formulate the value proposition for
this segment
Weekly Concept Checklist
CREATING NEW MARKET VALUE

REDUCE

What factor s should be reduced well below the industry standard?

ELIMINATE CREATE

What factors should be NEW VALUE What factors should be

eliminated that the created that the industry
CURVE
industry has taken for has never offered?
granted?

What factor s should be RAISED well beyond the industry standard?

RAISE

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 Assessment
2
Re-thinking Competitive Dimensions

The challenge for creating new market spaces in modern day economies
requires managers to adapt a new strategic thinking mindset which is
responsive to the dynamism of the environment. Central to this new mindset
is the need to move beyond conceptualising competitive dimensions beyond
the traditional dimensions through creation of innovative value that redefines
the competitive boundaries. The cornerstone of these boundaries is the
capacity to view competitive dimensions across different boundaries.

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Figure 1 Competitive Dimensions Across Boundaries

Across substitute
industries

Across Across
complementary functional-
products and emotional
services orientation

Competitive
Boundaries

Across buyer
Across Time
groups

Across strategic
groups

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 Assignment 2

STRATEGIES FOR CREATING NEW MARKET SPACE-

VALUE(Chan Kim & Mauborgne 1999)
Conventional Head to Head Competition Create New Market Space
Competition
boundaries

INDUSTRY Focuses on rivalry within its industry Looks across substitute

industries
STRATEGIC GROUP Focuses on competitive position Looks across strategic groups
within strategic group within its industry
BUYER GROUP Focuses on better serving the buyer Redefines the buyer group of
group the industry
 Assignment 2

STRATEGIES FOR CREATING NEW MARKET VALUE-

SPACE(Chan Kim & Mauborgne 1999)

Conventional Head to Head Competition Create New Market Space

Competition
boundaries

PRODUCT SCOPE & Focuses on maximising the value of Looks across to complimentary
SERVICE OFFERING product & service offerings within products & services offerings
the bounds of its industry that go beyond the boundaries
of its industry
FUNCTIONAL Focuses on improving price- Rethinks the functional-
EMOTIONAL performance emotional orientation of its
ORIENTATION OF AN in line with the functional – industry
INDUSTRY emotional orientation of its industry
TIME Focuses on adapting to external Participates in shaping external
trends trends over time
as they occur
 Class Discussion
Can you think of examples of other examples
for each of the new market spaces that we have
discussed ?
Design Thinking Challenge 1
Group Exercise
 Design Thinking Challenge

Reflect on the following industries and identify how players in these

sectors define and use competitive dimensions as a basis for creating
new markets or re-creating existing ones:
• AFL- Groups- Group/room 1,6
• NRL-Groups -Group/room 2,7
• Hotels-Groups-Group/room -3,8
• Airlines-Groups- Group/room -4,9
• Supermarkets-Groups -Group/room-5,10

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DT in Action Illustration –Nokia’s Smartphone
Blunder
The Home Depot Story

• Revolutionised the DIY industry

• Created a new market of DIY enthusiasts out of ordinary
home owners
• Warehouse format and low cost store locations
• Knowledgeable service
• Large stores and low prices ,therefore economies of scale
and high volumes
• But were these the fundamental ingredients for their
success?
Home Depot fundamental source of success

Understanding why buyers would choose a substitute over

another
• Why do people hire contractors to do their work?
• So why not change the industry and supply this skills set in-
store?
• Hire tradies as sales assistants
• Have prototypes in-store for demonstrations
Home Depot fundamental source of success

Understanding why buyers would choose a substitute over

another
• Eliminate costly features of hardware stores & introduce a
self service warehouse format that cuts costs
• Delivering decisive advantages of both substitute industries
and eliminating or reducing everything else they changed
latent demand into real demand.
Weekly Concept Checklist
Blue Ocean vs Red Ocean

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Tata Nano Launch

https://www.youtube.com/watch?v=3brUB8IZhAo

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Let us Unpack Red versus Blue Oceans

RED OCEAN BLUE OCEAN

Compete in existing market Create uncontested market
Beat the competition space.
Exploit existing demand Make the competition
irrelevant
Make the value –cost trade off Create and capture new
Align the whole system of a demand
firm’s activities with its Break the value cost-trade off
strategic choice of
differentiation or low cost Align the whole system of a
firm’s activities in pursuit of
differentiation and low cost

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Blue Ocean Strategy-People-Profit-Value

Value Proposition

Utility-Price

BLUE OCEAN STRATEGY

Differentiation AND Low Cost

Profit Proposition People Proposition

Revenue-Cost Employees-Partners &

Other Stakeholders

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 Reading List

Kim,W.C. ad Mauborgne,R (1999) Creating New Market Space, Harvard

Business Review,Jan-February,pp.83-95

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