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Unformatted text preview: eks to make the competition irrelevant by creating a leap in value for
both the company and its buyers.
Blue Ocean Strategy aligns the following three propositions:
1. Value proposition: The utility buyers receive from the product or service minus the price they pay for it.
Is there a compelling reason for the mass of target buyers (customers and noncustomers) to purchase
the new offering? Is the offering priced to attract the mass of target buyers so that they have a
compelling ability to pay for it?
2. Profit proposition: The price of the offering minus the cost of producing and distributing it.
Achieving lower cost is achieved by eliminating and reducing factors that the industry has either taken
for granted (e.g., legacy factors the industry still competes on but add little value); or over delivered
on. (cont´d) 5
© 2008 Kim & Mauborgne. All Rights Reserved. Blue Ocean Strategy Dictionary 3. People proposition: The readiness of employees to execute the new strategy with all of their energy,
to the best of their abilities, and voluntarily.
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- Spring '12