The exploitation of the new blue ocean is basically a combination of educational products, such as revision CD-ROMs, with remote-controlled toys. Although we have now moved into the educational toy industry, we have created a new marketplace that has never existed before. Therefore, firms in all three industries mentioned above would be affected by Hornby’s creation of the new Blue Ocean.
Blue Ocean competitors’ analysis is to be focused on the following levels:
- Competing firms are perceived as a business unit;
- Corporate level competition.
The appearance of the absolutely new product on the market stage leads to the ruining of the market boundaries, the market share is not identified anymore, as well as customer-competitor profiles. The competitors will be affected so that their usual customers would lessen, as they would start to try out Hornby’s new product. And as a result, sales and market share would also drop, which would be very unwanted by the company. In such situations, they would use different strategies to respond to the change in order to reduce the effect made by Hornby, and the strategic responses are more likely to be analyzed in the paper. The educational value and quality of Hornby’s Blue Ocean new generation toys are to be analyzed on the basis of its principal suppliers; it is necessary to underline the fact that the basic elements of Blue Ocean new industry are buyers, suppliers, and substitutes. Hornby suppliers, such companies as Hobby Corner, LJ Williams, Britannia Models, Gordon Development Ltd, etc, have direct interdependence with the company’s rate of competitiveness and factors stimulating business success and profitability.
On the corporate level, the first response would be reducing the price of their products in order to attract customers. In these cases, they would be focussing on those who are tight on money, and might not be able to afford Hornby’s new product. They would do research on those potential customers and find out their needs, wants, and preferences. Most importantly, they would need to figure out the exact reasons for Hornby’s price being more expensive, so that they can show some comparisons to the customers, and prove that their low price is not because of any flaws. Then the final step would be to reduce the costs of their products while still maintaining a reasonable profit for the stakeholders. It is necessary to underline the fact that this step will impact Blue Ocean’s supplier’s marketing operations.
The suppliers would react to business operations challenges by implementing similar online applications through its effectiveness testing. Despite the lack of necessary competencies and deep experience of strong brands, Hobby Corner, LJ Williams, Britannia Models, Gordon Development Ltd could stick to App Adoption, contributing to online trade. The suppliers would develop their existing websites stressing the focus on niche market targeting to sell various toys of different generations.
On a business level, a possible response would be to differentiate and update their product characteristics. Again, it would be necessary to assess the current customers, and find out what type of innovation they carry out now would be worth the investment. In this case, they would mainly be aiming to compete against the firms in their industry, and hence, against similar products with a different brand. No apparent competition with Hornby would be seen here.
The companies may get into a Blue ocean business with Hornby and produce a similar product. However, this would really not be the wisest option, as the firm would need to apply the innovation concept as well in order to achieve any success. This is because, naturally, customers would already have gained the confidence of Hornby, and would not want to change to another brand without good reason. This third option might best be applied by some companies which had been a successful rival of Hornby in the past. Should a firm wish to carry out this strategy, we will also see the response of some small electronic engineering companies. Such companies would want to prove to the former firms that they can provide reasonably good resources so that merging or acquisitions can take place with the least hassle.
The suppliers in this case would concentrate on the price reduction aimed at attracting the customers. The production of a similar product may be the other response, which may be used. This product is going to be of the other brand, so no apparent competition with Hornby would be seen here.
Finally, the firms may focus on creating another blue ocean and developing the firm from there. Many firms might have learned something from seeing Hornby being so successful, so it would not be a surprise if they wanted to give this strategy a go. However, as with Hornby, a lot of stuff has to be taken care of and sorted even before the planning can begin, which is why we do not see too many blue oceans being created too often.
The companies may continue to give their customers a good impression, and perhaps even introduce some offers and promotions as an aside response to Hornby’s Blue Ocean. Even more importantly, they need to show that their products are still of the good quality at which they used to have it, and can only improve. Every such firm would hope that after their response, more people would want to invest in their company, and hence raise market share again. Theoretical analysis of competitor’s strategies with response to the suppliers’ business operations, demonstrated the close interdependence of these key elements making the marketing structure.
Kluyver, Cornelis A. De and John A. Pearce. Strategy: a view from the top. Oxford: Pearson/Prentice Hall, 2008.