Describe the Report for Blue Ocean Strategy and Customer Satisfaction Cycle.
The business industry has adopted a different angle as a result of the stiff competition that exists in the market. To stand out, organizations adopt different business strategies that are aimed at out-competing the market rivals and achieve the customer satisfaction. However, such strategies are not sustainable and are not suitable for a long-term plan that would create a unique business environment. As a result, blue ocean strategy is adopted by businesses so as to render the competition irrelevant by adopting different strategies that will not only meet the demands of the customer satisfaction cycle, but will be a long-terms solution for the business. Two major strategies adopted by businesses are value innovation and evaluation of the business position in the blue ocean strategy.
With the current global business environment, stiff competition is a major challenge facing many companies. Businesses that make it through must thus set a pace through creation of unique product profile that can profit from the lucrative available markets despite the level of competition. According to Srinivasan (2012) the goal of the blue ocean strategy that suggests that business enterprises or companies are better off designing ways and strategies of gaining uncontested marketing other than the engagement on the traditional competitive competition. In their book, Mauborgne and Kim (2015) points out that business organizations can adopt a red ocean working environment where business vigorously compete against one another for a share of the market. Instead, business organizations need to find a way of working in a competition-free market. According to blue ocean strategy, businesses need to adopt different strategic moves within the competitive industries that make them unique instead of having strategies that increase the battling methods. As a result, the business management will be able to have a systematically creative and uncontested market that is ripe for growth as pointed out by Yang and Yang (2011). This paper presents a detailed analysis of how the blue ocean strategy affects the customer satisfaction cycle. It starts with providing an overview of the customer satisfaction cycle as it presents an evaluation and discussion of the blue ocean strategy in the customer cycle.
Overview of the customer satisfaction cycle
Customer satisfaction cycle is the description of the progression of the strategic steps followed by customers when making decisions, purchasing, using or maintaining loyalty to a service or a product. According to Srinivasan (2012), customer satisfaction cycle is categorized into five distinct steps such as acquisition, retention, reaching, conversion, and loyalty. In other words, it involves getting the attention of a potential customer, teaching them what a business offers, converting them into paying customers and keeping them as loyal customers who are satisfied with the services. As a result, Yang and Yang (2011) point out that such customer is in a position of urging other customers to join such a cycle and even refer other customers as well. In his study on the survey process of customer satisfaction, Haafen (2016) effective client satisfaction management requires long lasting and visionary strategies that are dedicated centrally to nurturing and protecting the process of customer satisfaction. A business organization hence requires having a clear responsibility on customer satisfaction to promote a consistent and transparent survey process.
In coordinating efforts and strategies for continuous improvement, a business enterprise needs to design its activities according to the planning, doing, checking, and acting Deming cycle. It both demonstrates and emphasizes that the program of customer satisfaction begins with careful planning, to result in effective action, and should be checked and measured in a consistent and continuous manner.
Plan- it is a central responsibility of the satisfaction manager who establishes the objectives of the survey process that are essential in delivering results as per the expected output of the business. The manager thus plans survey invitations, reminders, and closure.
Do- It is a responsibility of the central satisfaction manager that involves the implementation and execution of the survey process.
Check- The central customer satisfaction manager measures the processes while comparing the results against the expected results in the process of ascertaining the differences. It hence helps in the creative and careful generation of survey response data analysis.
Act- It is executed by the sales, purchase, and logistic manager. The manager is trusted with the responsibilities of compiling customer satisfaction reports, analysis of the reports, and selection of the focal areas in determining their cause as part of the PDCA strategies. The manager is thus able to determine where to changes need to be applied including improvement.
Figure 1: The diagrammatic representation of the customer satisfaction cycle
Pitta (2013) point out that when a pass through the four stages does not generate the expected improvement within the customer satisfaction cycle, the scope of the business is refined so as to correct the necessary changes. It thus means that reporting the customer satisfaction needs to be consistent, timely, continuous, accurate, and reliable. The customer satisfaction cycle is thus necessary for reporting the structure and flow of the marketing responses so as to make relevant and satisfactory decisions to standardize the procedures so as to meet the needs of the customers as pointed out by Yang and Yang (2011). However, the process may face certain challenges as a result of the stiff market competition and the ever increasing market dynamics in the current business environment as asserted by Taylor (2016). It is at this point that blue ocean strategy is necessary so as to create a different in the business activities and strategies of an organization despite the competition in the market.
Discussion and analysis of Blue Ocean Strategy its effect on customer satisfaction
The reality in the current business market is companies engaging in head-to-head competition while searching for profitable growth. Both small-scale and large-scale business companies battle over the market share, struggle for differentiation and fight for the competitive advantages in the market. In his study, Sushil (2012) points out that the head-on competition has nothing like a good impact but instead a bloody read-ocean of a rival who are struggling over a shrinking profit pool while failing to build sustainable and meaningful strategies that can profit growth in the future. Doug (2014) asserts that the universe of business consists of two major kinds of space, viz Blue Ocean and Red Ocean. The red ocean represents industries that are in existence in the current market, also known as the current marketplace. Here, the business boundaries are strategically defined and accepted by the participants as everyone understands the rule of the game. The business enterprises involved try outperforming their rivals so as to grab a greater share of the existing market demands. As space gets crowded with time, it reduces the prospects for business growth and profit making. As a result, the products become the commodities as the increasing competition turns the water bloody.
On the other hand, Doug (2014) also denotes that the blue ocean represents all the industries that do not exist in the market. It is also referred to as the unknown market space that is not yet tainted by competition. Such a space gives the business an opportunity to create the demand rather than fighting for it so as to enjoy the ample time for rapid and profitable growth. Doug hence denotes two primary ways of creating Blue Ocean where in limited instances; businesses can give rise to the completely new industry. The Blue Ocean is hence created from within the red ocean where a business alters the boundaries of existing industries. The process involves creating a meaningful competitive advantage by developing organizational capabilities that enable the enterprise to design and deliver distinctive and unique customer experiences. Such a step, the business creates a value that is distinctive in the market so as to satisfy a real client/customer need that does not only deal with relevant, unique, or appropriate product or service but addresses the emotional and experimental elements needed by the customers as well (Sushil, 2012).
With the nature of the current business environment, Taylor (2016) points out that it is necessary for a competitive business strategy to focus on the strategies activities that can be adopted to beat the competition. However, the blue ocean strategy applies a different view of creating a new marketplace for the business that will allow one to write business rules that will promote unique strategies to the competitive market. Adopting the blue ocean strategy in a business hence require the business to adopt different strategies that would affect the response and satisfaction of the customers as per the products and services of the business. Arnould and Wallendorf (2015) hence points out two major factors that a business is adopting the blue ocean strategy needs to understand too as to meet the satisfaction needs of the customers in the market. These include knowing the business position in the blue ocean as well as value innovation procedures to meet the needs of both new and existing customers in relevance to the customer satisfaction cycle.
Value innovation to challenge growth of competition the current business environment
As businesses are getting larger and organic challenges growing bigger, Mishra, Mohanty, and Mohanty, (2015) point out that the current business market is challenged by profitable organic growth since. As more nimble and agile competitors gets to disrupt the market, value differentiator that caused the initial growth becomes a bigger challenge. In the process of meeting the satisfactory demand of the customers in the market, many business organizations tend to share an implicit set of beliefs and conventional wisdom about where and what services and products do customer value. With the strategies dominated by ideas that can make the businesses stay ahead in the competitive market, Pitta (2013) points out that organizations view the business opportunities through a lens of their existing capabilities and assets. Focusing on what they can offer as well as what they can do best, they develop a competitive convergence that creates a competition solely on the basis of incremental improvements in quality and cost. However, differentiated and winning business enterprises under enlightened management principles pay little or no attention to beating or matching their rivals. Motley (2011) points out that winning and satisfying customer requires business organizations to seek to make the competitors irrelevant through a strategic logic of value innovation that will create a blue ocean strategy for the business.
Value addition is identified as the major strategy for satisfactorily meeting the needs of the client. With the blue ocean strategy as the major strategy for adoption in satisfying customers, value innovators have learned not to accept the conditions of the industry or even let competitors set their perimeters for their strategic thinking. Value innovators do not focus on comparing the weaknesses and strengths with those of the business rivals so as to strategize a business advantage. They are also not interested in the margin competition for incremental share. Blue ocean strategy hence require a value innovation logics that targets towards dominating the market by offering a tremendous leap in product and value and services as pointed out by Kim and Mauborgne (2014). It is hence the best strategy that will cover all the facets of the check, plan, do, and act in the customer satisfaction cycle through innovation and sustained performance.
In their study and analysis of the current business environment and customer satisfaction, Mishra, Mohanty, and Mohanty (2015) reports that many customers desire innovation towards the organic production of food and non-food products. Blue ocean strategy is hence the best market strategy to adopt to ensure success in the organic value innovations so as to win new customers and retain the existing ones. Blue ocean strategy thus helps in the efficient allocation and management of resources so as to meet the needs of customers based on their worth. The strategy helps in promoting or completing proposition of a customer value to ensure a business develops its current customers through sustainable, relevant, and appropriate cross-sell and up-sell business initiatives. It hence motivates leap development in the value of the products and services for both the customers and the buyers so as to create all new satisfactory customer demands. Harper (2015) hence concludes that creating a blue ocean is reliant on product and services innovation as well as delivery experiences that can satisfactorily meet the demand so of the customers.
Finding a space in the blue ocean and building an organizational blue ocean strategy
In meeting the demands and customers satisfaction requirements, many companies in the red ocean focus on ideas that position them directly against the competitors. For both small and large business enterprises, once can have an idea that had been presented in the market before but presents it in a different way that will make it unique and render the stiff market competition irrelevant (Srinivasan, 2012). Blue ocean strategy hence opens up new innovative opportunities in the market that will timely provide the desires of the customers hence satisfying their needs. It thus helps in evaluating what makes effective customer satisfaction depending on both qualitative and quantitative market indicators. Finding a space in the blue ocean hence helps the business to clearly understand the relationship between customer loyalty and customer satisfaction as importance factors that can help in the achievement of the business success. Yang and Dylan (2011) point out that customers are increasingly demanding for suppliers who increasingly improve their supply and quality product provision. As a result, finding a space in the blue ocean through strategic business ideas enables an organization to build a satisfactory business environment for the customers.
Where or when do the customers need for the product improvement needs to begin is a vital question that every business needs to answer. As a result, Taylor (2016) identifies the blue ocean strategy as a step that will help in identifying the events that occur before the customers realize they have a need to be satisfied. Knowing the needs of the customers thus enables the organization to evaluate the business strategies so as to understand the customer experience so as to identify the relevant hurdles that need improvement. The evaluation of the business strategies enables a clear understanding of the customer response to the satisfaction cycle thus helping in the identification of the strategic ideas that can be effective in the business as pointed out by Mishra, Mohanty, ad Mohanty (2015).
Competing in overcrowded business industries is not a sustainable way of high performance. As a result, it is vital that businesses develop operational customer-centric strategies that will draw them out of the red ocean and enable it to stand out. With the competitive nature of the business industry in the 21st century, it is essential that business enterprises adopt blue ocean strategies that will enable the competition irrelevant while satisfactorily meeting the needs of the client. Businesses hence need to adopt different innovative ideas that do not focus on out-competing the rivals but gives the business unique market performance despite the stiff competition in the market. Blue ocean strategy is hence the best way to go for businesses that target at a long-term customer satisfaction of both new and existing clients in the market margins.
It can only be achieved when a business industry critically understands the factors that need to be raised in the market above the existing industry standards, factors that need to be eliminated, those that need to be reduced below the industry standards, and factors that can be created that have never existed in the market. These four factors will not only enable the business to meet the needs of the existing customers but will open more opportunities for value innovation, which is a major demand in the current business industry. It is hence a wholesome strategy that will assist in meeting all the strategic steps in the customer satisfaction cycle while adopting strategic that will pull out the business organization from the red ocean of stiff competition.
Arnould, E. J., & Wallendorf, M. (2015). Market-Oriented Ethnography: Interpretation Building and Marketing Strategy Formulation. Journal Of Marketing Research (JMR), 31(4), 484-504.
Doug, L. (2016). Customer-Centricity - Blue Ocean Strategy, Retrieved from https://customerthink.com/customer-centricity-blue-ocean-strategy/
Harper, S. C. (2015). Recognize the rules of engagement. Industrial Engineer: IE, 47(5), 32-37.
Kim, W. C., & Mauborgne, R. (2014). Blue Ocean Leadership. (cover story). Harvard Business Review, 92(5), 60-72.
Mishra, S. P., Mohanty, A. K., & Mohanty, B. (2015). Are There Dominant Approaches to Strategy Making?. Vilakshan: The XIMB Journal Of Management, 12(1), 1-42.
Motley, L. B. (2011). Finding Your Bank's 'Blue Ocean' Strategy. ABA Bank Marketing, 40(4), 44.
Pitta, D. (2013). Issues in a down economy: blue oceans and new product development. Journal Of Product & Brand Management, 18(4), 292-296. doi:10.1108/10610420910972819
Srinivasan, M. S. (2014). The Challenge of Execution in a Changing World. Vilakshan: The XIMB Journal Of Management, 11(1), 135-142.
Srinivasan, M. S. (2012). Rethinking Corporate Strategy - A Consciousness Perspective. Vilakshan: The XIMB Journal Of Management, 6(1), 119-130.
Sushil. (2012). Making Flowing Stream Strategy Work. Global Journal Of Flexible Systems Management, 13(1), 25-40. doi:10.1007/s40171-012-0003-8
Taylor,S, C. (2016). Blue Ocean Strategy for small businesses, Retrieved from https://fundbox.com/blog/blue-ocean-strategy-small-business/
Yang, C, & Dylan S, (2011). An Integrated Model of Value Creation Based on the Refined Kano’s Model and the Blue Ocean Strategy.” Total Quality Management & Business Excellence, Special Issue: From Value Creation to Customer Satisfaction. Vol. 22, issue 9): 925-940.
Yang, C., & Yang, K. (2011). An integrated model of value creation based on the refined Kano's model and the blue ocean strategy. Total Quality Management & Business Excellence, 22(9), 925-940. doi:10.1080/14783363.2011.611358