Blue Ocean Strategy – Nestle Nespresso Digital Transformation to survive

Nespresso is an operating unit of  Swiss food and drink company, Nestlé that sells coffee machines, flavored coffee capsules and other coffee-related accessories around the world through its site, nespresso.com. Nestle created a blue ocean market uncontested market space within the gourmet single-cup coffee market. Nespresso created and dominated this  entirely new coffee category and product consists of high quality, individually-portioned coffee in aluminum capsules for use in specially-designed machines, sold at household appliance retailers and the Nespresso shop. 

Nespresso had become Nestle’s fastest-growing product line, growing at 40% annually, and the company continued to expand its coffee expertise by creating unique new blends. Nespresso was regarded as an example of Nestle’s spirit of discovery and ability to innovate and Nestle built a new consumer experience with the unique “razor-razor blade model” for coffee, technology, machine, and capsules. Nespresso was a highly profitable unit with margins of up to 50% and annual growth of 40%.

Nespresso blue ocean strategy in terms of Eliminate Raise Reduce and Create (ERRC) framework, eliminated the need for visiting high end coffee cafes with highly skilled coffee making professionals, same experience can be had at home with this machine & capsules. Raised the number of options in terms of coffee flavours in capsules, convenience at home and the high quality coffee from various regions of world can be has in the comfort of own house. Reduced the requirement to have coffee at high priced and often crowded cafes and sacrifice the satisfaction & taste that comes with instant coffees. Created a new machine that requires no expertise to operate, half prepared capsules that just need to be inserted for the best coffee experience. Created membership clubs and digital formats where consumers interact and purchase and also added direct selling channels both online and offline

By 2012, Nestle dominated the single-cup coffee market with a 34% revenue share and chief amongst the competition was Keurig Green Mountain, who had become the dominant player in the North American market. In addition, Nespresso’s patents began to expire in 2012, gradually allowing competitors to release similar machines and capsules. As competitors continued to chip away at its market share, Nespresso has been spending heavily on marketing and R&D to stay ahead, two areas in which the company is known to excel.

In the Red ocean market, Nespresso has created a transformative experience for its customers. Overall, they have enabled simple digital transactions, drove personalization and customization across channels, leveraged digital media to craft and deliver is brand, and blended digital and physical channels for a meaningful experience.  Nespresso has made strides in its digital transformation is the creation of the Prodigio machine, which makes the Nespresso machine a part of the IoT revolution.

The Prodigio connects the machine to smartphone via Bluetooth technology and additional benefits through the use of its app. The Nespresso app alerts your phone when the coffee machine needs service maintenance or water tank refill and also lets you set a time for the machine to make coffee. Furthermore, the app lets you reorder capsules before you know you need them, allowing you to order with one touch. Because the individual capsules are at the core of Nespresso’s business model, the Prodigio allows Nespresso to go after this revenue.

Deployed a cloud-based customer engagement solution that integrates all consumer data (web and app orders, in-store orders, behavioral analytics, interactions with Nespresso kiosks) all in one integrated customer view that  lets company to make recommendations and target media. Nespresso Cube, a digital and fully automated boutique, which offers consumers state-of-the art personalized shopping experiences and limited-edition flavors. After placing their order on a digital screen, consumers can watch robots process their orders at incredible speeds and Use of big data to derive insights and personalize products for consumers.

Blue Ocean Strategy – Stitchfix data driven styling approach

Stitch Fix relies on  data-driven, personal styling service that revolutionized the consumer retail experience in terms of buying apparel. Differentiation achieved by the company using its data driven approach and human stylists had led to company’s success in red ocean and highly competitive e-commerce sector Stitch Fix personalized retail at scale with large consumer base and high repeated purchase and retention.  

Stitch Fix will be focused on growing its customer base, innovating on its proprietary data science capabilities, and expanding into new markets. Stitch Fix shifted the apparel retail ecommerce from a “browse-all” model to a curated, convenience-driven model associated with human stylists. In terms of Blue Ocean Strategy the company eliminated consumer problems in the shopping experience by gathering personal preferences on style, fit, and size to offer a personalized combination of hand-selected items that clients can try on in the convenience of their home and ultimately raised consumer satisfaction.

Stitch Fix reduced the costs of operations through  unit economics and economies scale leading to profitably compared to typical e-commerce businesses. Stitch Fix has created a new market space that is uncontested using the combination of data and stylists, and refining algorithmic recommendations, leading to increased conversions and higher retention. The average Stitch Fix client directly provides over 85 meaningful data points through style profile.

This data combined with other sources enables Stitch Fix to provide highly personalized customer experiences. Stitch Fix also needs to maintain high retention through continual improvement of its algorithms and superior customer service. The company needs to recruit and retain high quality stylists for new product categories and its existing core women’s business in the face of increasing competition for high quality “part-time” workers with the growing popularity of sharing-economy services.

With new online and mobile commerce services being innovated consumer-centric shopping experiences are being developed that go beyond increased speed and convenience. These emerging services were possible due to  understanding from a highly competitive space that has seen many companies closing. Stitch Fix is not the first to try a personalized and curated model in fashion commerce, but it is one of the most successful because of its data driven approach and blue ocean strategy adopter.

Value proposition is the company focusing on the plus styled new design men’s category that is growing rapidly equivalent to women’s category. The company also needs to focus on cutting costs further and increase buyers utility further. The market is rapidly getting crowded as large players also started to launch personalized services.

Blue Ocean Strategy – Patagonia Environmental Sustainability at the core of business

Patagonia is a popular outdoor clothes brand with many styles and products made in Fair Trade Certified™ factories around the world that promote and sustainable fair labour practices, safe working conditions and environmental responsibility. Company aims to  build highly durable and efficient products that last long and can be easily repaired if required and used for long period rather than throwing away with short term use. Patagonia is a socially conscious brand with a demonstrated their commitment to change the world that is their core belief that caring for our planet is not in conflict with running a successful business. The company is passionate about reducing their manufacturing footprint and is a member of 1% for the planet whereby they commit 1 percent of their annual net sales to grassroots environmental groups. 

Patagonia’s Worn Wear initiative – which was launched in 2013 is composed of 4 ‘R’s.”  Reduce, Repair, Reuse and at the end of a product’s life when all usable value has been exhausted – Recycle. Patagonia invites its conservationist shoppers to buy second hand outdoor wear and trade in their old gear. The experience aligns with Patagonia’s focus on resource conservation and makes customers feel like their personal actions have a positive impact on the world.

Blue Ocean strategy of Patagonia in terms or ERRC grid is eliminating CO2 emissions, waste output, and water usage by extending the life of garments, through proper care and repair, which has in important sustainable impact on the  planet and reduces the need to buy more over time. Raised the consumer awareness towards environmental sustainability and preservation which is one of the most important issue today as climate change is drastically effecting the world. Reduced carbon, waste and water footprints by 20-30 percent   by extending the life of  clothing by nine extra months. Created a new business that not only provides good products t consumers but also reduces the environmental effects that typical manufacturing companies cause to the environment. Patagonia was recognized for its “long track record of sustainable innovation in the industry,” including its ongoing campaign to encourage consumers to repair their worn items instead of tossing them and buying new.

Patagonia value proposition is increasing the buyer utility through the fact that their buying clothes have significantly low impact on environment, reduce the cost and impact on environment and created a new market for environmentally sustainable clothing which consumers are buying and the company is earning good profits. Various initiatives by the company towards environmental sustainability has created an uncontested market space for the company. Company adopted digitization technologies to communicate with consumers there by reducing the usage of printing and paper materials. Patagonia is considered the best socially conscious innovative company and blue ocean strategy adopter.

Blue Ocean Strategy - CVS Health Innovative Healthcare propositions to Consumers

CVS Health is an American pharmacy and healthcare company with nearly 10,000 stores in its network. CVS Health constantly innovates  towards the health of the consumers and provide them with all the required products and services to stay healthy that became the corner stone of success for the company. CVS Health redefined its brick and motor pharmacies to transform into health care system where customers can walk in and seek help. CVS uses digitalization and mobile technology to help deliver care and where in  28 million customers receive text message for pharmacy pickup and refill reminders. As part of value innovation the company intends to utilize patient data to create a “health-engagement engine” for better health care to its customers. A major selling point of walk-in clinics such as those operated by CVS and other companies has been that they will help reduce hospital emergency room visits by giving patients a lower-cost and more convenient place to go for minor problems.

Personalization is essential part of  of CVS’ front-store growth strategy through its “MyCVS” store clustering initiatives. CVS/pharmacy has also been busy leveraging its insights from its ExtraCare loyalty program to feed a more personalized, one-to-one relationship with its customers, and drive more efficient — and more lucrative — promotional investment, deemphasizing promotions on low-margin categories and prioritizing slower moving, but higher margin categories. CVS/pharmacy is investing significantly in an enhanced digital shopping experience.v

CVS moved beyond convenience offerings like drive-through and 24-hour service towards better  healthcare system delivery with various allied services that increase its revenues. Apart from finding solutions to address customer concerns like the rising cost of prescriptions, which led to the creation of the Rx Savings Finder, and the desire for simplified medication schedules, which spurred the development of the ScriptPath Prescription System.  Kevon Hourican described how CVS Pharmacy is working to improve the overall retail experience, with new health-focused store designs complete with “Discovery Zones” that highlight emerging products and specific wellness needs, as well as designs tailored to the communities where they are located.

Blue ocean Strategy ERRC grid in terms of CVS Health is that CVS health eliminated the need for patients to closely track the prescription medications usage worry about the availability by digitalization and providing mobile  applications that track the usage and order refills, raised consumer health benefits by offering all the required products and services at single location 24 hours, reduced the costs and increased savings monetarily for the consumers and created a new healthcare system that goes beyond pharmacy and provide various health care services and become a healthcare delivery system.

Blue Ocean Strategy value proposition for CVS Health is the increase in buyer’s utility as consumers have tremendous healthcare and monetary benefits through the stores, reduced prices for the consumers and also manage costs efficiently. Key to success is the adoption of mobile and digitalization technologies to further innovate and develop new services for consumers. CVS Health is one of the most innovative Blue Ocean Strategy adopter.