A PRACTICAL APPROACH TO BLUE OCEAN STRATEGY - PART 4 REACHING BEYOND EXISTING BOUNDARIES – Noncustomer Analysis

Every business has a specific customer segment they are focused on which meet criteria e.g. specific demographics or specific needs. This can be described as the existing boundary.

Reaching beyond existing boundaries therefore refers to reaching out to those who do not usually patronize these businesses products or services. They are referred to as noncustomers and are the key to unlocking the blue ocean.

This group called noncustomers is divided into three categories:

 First Tier Noncustomers

 Second Tier Noncustomers

 Third Tier Noncustomers

FIRST TIER NONCUSTOMERS

These are customers who currently patronize your business occasionally for the following reasons:

Lack of a convenient alternative

Geographical reasons i.e. the products cannot be found in their immediate vicinity and so have to travel to another region to purchase such products

 Financial Reasons – they have to save for a while to be able to afford the product

SECOND TIER NONCUSTOMERS

These are customers that know about the product or business and can benefit from it but intentionally refuse to use it either for reasons such as

 Religion

 Cultural background

 Financial reasons i.e. cannot afford it

 Age

 Personal taste

 Prior bad experiences or lack of user friendliness

 Perception of the business and what it stands for

 Geographical reasons – products cannot be found locally

THIRD TIER NONCUSTOMERS

These are those that do not know about the product and/ or know about the product but have no use for them. Examples are :

 Children and alcohol

 Illiterates and books

 The blind and movies

 OBJECTIVE OF NONCUSTOMER ANALYSIS

At each point in time the noncustomer segment far outweigh the current customers. The objective of noncustomer analysis are:

1. Identify these noncustomers

2. Identify their needs

3. Focus on the key commonalities across these noncustomers (desegmentation)

4. Unlock the Blue Ocean 

Below is a table depicting the output or outcome of the noncustomer analysis for Polo Ralph Lauren T shirts 

Having successfully identified the noncustomers by desegmenting the market the next step in the process of unlocking a blue ocean is to access the uncontested market is to analyze and identify the pain points in the buyer experience cycle. Look out for this in the next article in the series.