Value curve is a graph created by the authors W. Chan Kim e Renee Mauborgne in the book The Blue Ocean Strategy. According to the authors, nowadays most of the companies red oceans - very competitive and bloody markets with thousands of companies killing each other for minimal differentiations, suffocating themselves by trying to offer commodities with increasingly lower prices.
See also: All about pricing
However, some companies know how to create a new market, where they navigate alone and manage to live in peace with success. These are the blue oceans. Companies such as Cirque du Soleil, are part of the examples cited in the book. Instead of trying to compete in the same way as conventional circuses in red oceans, they created their own way of acting and consequently their own blue ocean.
The Blue Ocean Strategy
Red Ocean: "Boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to squeeze more of the existing demand. As market space gets more and more crowded, prospects for profit and growth are getting smaller. Products turn into commodities and the "scythe fight" bloody waters, giving rise to the red oceans. "
Blue Ocean: "Blue-sea companies have not resorted to competitors as paradigms. Instead, they adopted a different strategic logic, which we call value innovation. We call it value innovation because instead of striving to outperform competitors, they have focused on making competition irrelevant by offering value jumps to buyers and to the companies themselves, who have pioneered new untapped marketplaces. "
In a comparative table it is easy to understand the difference between the two types of oceans and all the advantages of a blue ocean for your company. See below:
So they say that "the only way to beat competitors is to no longer try to beat competitors." And to do that, they say it's necessary to create value curves that behave differently from competitors.
The Importance of Positioning in the Marketing Plan
Everything that is said in the book is related to the company's strategy and its market positioning. In other words, all innovation and differentiation aims to offer something of value over what already exists to a specific audience that has not yet been well served. Creating a value curve that positions you within a blue ocean will help your marketing plan following points:
- Audience Clarified: This is the first point for any strategy, and any marketing plan. What is the segment of customers that you will act? Who exactly do you want to achieve with your product / service? In these cases, the value curve associated with business model can help.
- Knowledge of your Value Attributes: Communicating the value of your product and service is always difficult because it is expensive and the time of attention of your customers is limited. Knowing the points on which you stand out will make it easier to create assertive advertising pieces.
- Out of Competition: Novelty draws attention and attracts curiosity. By creating a unique value offer, you outbound are more interesting than what already exists in the market and this generates cost benefits for your campaigns.
- New Media: Typically, by creating value innovation, you also allow yourself and yourself to use media not yet used by your competition. This not only generates cost savings but also puts the spotlight on your offer.
- Cost Reduction: Really innovative products delivering a new and desired customer experience are commented on in word-of-mouth. With this, your dependence on paid media will certainly decrease, as will your marketing cost.
Building Your Value Curve - Step by Step
The value curve is a simple chart in which the X-axis has the value attributes that your customers value when it comes to buying a product or service in its category and on the Y-axis you have the scoring scale. In a spreadsheet, you would do the following:
In the example above, we have prepared a comparison between the offering of spreadsheets, softwares and notebooks for business management. The attributes chosen were: cost, ease of sharing, data security, flexibility, integration, customization and capillarity. By filling in the attributes, you will have the formation of your value curve.
As we can see in the chart above, spreadsheets and notebooks generally have the same attributes, but spreadsheets do better than notebooks. The software has a totally different offer. That is, the products have very different value offers and each one is in its blue ocean, without competing with each other. If you want to make your own value curve, download this spreadsheet for free.
However, in other cases, you will draw your value curve and realize that your product / service is not different from your main competitors. In these cases, the authors of the Blue Ocean Strategy also offer a solution.
See also an article on Facebook value curve.
Wine That Loves Example
Let's now take the case of a non-differential market and you will need to change your value curve. In this example, we are analyzing the wine market. We start by charting the value curve between the popular and premium competitors.
When looking at the attributes: price, use of terminology, marketing, aging, prestige and variety, we realize that both the popular and the premium are in the same ocean competing. From this, we start to evaluate the attributes according to the methodology of the blue ocean and we ask ourselves:
- Delete: What attributes can we eliminate?
- Reduce: What attributes can we reduce?
- Raise: What attributes can we raise?
- Create: What attributes can we create?
These questions make even more sense if you have identified some type of customer or behavior within your market that provides you with an even more specific segment that can be explored. In case of Wine That Loves, they realized that many young people would like to try wines, but they got lost and were embarrassed choosing from thousands of options, so they deepened in that customer and innovated creating the following value curve.
We can see that they eliminated the use of thermology, marketing and aging, greatly reduced the prestigious attribute of the vineyard and the varieties of wine, but they made the choice of the product very easy and they brought some fun and adventure into the process!
The result was wine that already proposes the harmonization with certain type of food directly on the label and does not say anything about types of grapes, place that was produced, year of harvest and none of that we are accustomed to see! Great, is not it?
The above example is a world famous case of success and inspiration. But we have people innovating, using the value curve method, consciously or not here in Brazil too! A great case is that of the male beauty salons that are becoming popular. Until recently, we only saw classic neighborhood barbershops where the only difference was if you liked the barber's chat. Today, you have different salons where they serve cold beer, video game, among other attractions that the conventional salons did not deliver for lack of concern with the differentiation.
Did you like the method and think that it can help you improve your value offer? So do not download our free value curve worksheet! If you need any help or have questions, leave your comment!