It is an ongoing struggle for businesses to develop distinctive products and services. This is reflected in the abundance of ‘me-too’ products that differ only in trivial or superficial ways. The millions of dollars spent on their development and marketing could be better spent on developing more effective up-front strategies that pursue new white space. White space is that unexplored and undiscovered domain of opportunity for new products and new markets.The Strategy Canvas is a tool which helps map out white space in strategies. This tool visually displays the strategies of firms in a market space, making it possible for the user to identify radically different strategies that may create new value for customers.
Strategy Canvas is highlighted in the book Blue Ocean Strategy, written by W. Chan Kim and Renee Maubogne, and illustrated with examples of “game- changing” strategies by companies liked Curves and Yellow Tail Wine.
The Strategy Canvas
The Strategy Canvas plots the strategy of each player in a market. Key factors of competition are identified along the horizontal axis (see the plot below). In the wine industry in the late 1990’s, companies competed on elements like price, wine complexity and vineyard prestige. For each company, the level on each factor is plotted. If a company charges the customer a higher price, relative to the competition, then the factor is plotted as “high.” If the company does not present itself as a prestigious vineyard, the level would be low. Strategy is thus represented as the level offered to buyers on each of the factors of competition. Companies will tend to cluster into a handful of strategies, as illustrated below. Some companies compete in the premium wine segment and some compete in the budget wine segment.
Source: “Blue Ocean Strategy: From Theory to Practice” by W. Chan Kim and Renée Mauborgne, published in the California Management Review, Spring 2005
By understanding which factors are important to customers, you may be able to develop a strategy that is very different from the competition, but better suited to your target customers, thus giving you a competitive advantage. By downplaying unimportant factors, companies can shift resources into dimensions that really matter to customers.
As an example, Casella Wines noted that other types of alcohol (beer, spirits and ready-to-drink cocktails) had sales three times higher than wine in the U.S. Many alcohol consumers found wine intimidating and pretentious, and the complex flavors challenging. Current wine producers, following their strategies that competed on wine complexity, special wine terminology, and wide ranges of types of wines, made the situation even more difficult and confusing for most consumers. These producers were shutting out a large percentage of the alcohol-consuming market. Casella Wines introduced [yellow tail] which eliminated these hurdles for consumers and made wine easy to select and appreciate. They introduced a new model of competition and enjoyed phenomenal success.
The Strategy Canvas focuses on factors firms currently compete on. It ignores new factors that may be important to customers or potential customers, including those that the firms themselves have not recognized. For this reason, it is important to conduct customer research, as Casella Wines did, to identify other important factors in the purchase decision, identify important unmet needs related to the product, and uncover some of the reasons why non-customers do not buy the product. Customer research will also help suggest other valuable potential strategies.