4.3: Cost

Produce the offering at a target cost easily accessible to the mass of target buyers while still earning a healthy profit margin.

Other Information:

To maximize the profit potential of a blue ocean idea, a company should start with the strategic price and then deduct its desired profit margin from the price to arrive at a target cost... price-minus costing, and not cost-plus pricing, is essential if you are to arrive at a cost structure that is both profitable and hard for potential followers to match... To hit the cost target, companies have three principal levers. The first involves streamlining operations and introducing cost innovations from manufacturing to distribution... a second lever ... is partnering... the third lever companies can use [is] changing the pricing model of the industry... what is pricing innovation for one industry ... is often a standard pricing model in another industry.

Stakeholder(s):

• • Attraction (Performer): Attraction to the offering due to its value for the price

Indicator(s):

Indicator:1

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