Blue Ocean Strategic Sequence for Blockbuster
The BOS sequencing for Blockbuster is as follows:
- Buyer utility. They created buyer utility by offering convenience and affordability with their new online renting business model. They took away the hassle of having to drive to the store and created a low monthly membership in which customers can rent unlimited movies.
- Pricing. Next, they created strategic pricing by offering a free first month trial. This lures customers in and creates a buzz which in turn creates volume which in turn creates higher returns. The actual membership prices are low for the same reason. Also the risk of free riding is another reason for low pricing.
- Cost. Thirdly Blockbuster achieved successful target costing by getting rid of most of their physical stores. This along with the fact that they are also not paying employees that would be working at those stores contributes to a cost structure that is profitable.
- Adotion hurdles. Lastly Blockbuster successfully overcame the hurdles that come with the adoption phase. Since Blockbuster was bankrupt at the time of its new business venture, it did not have any employees to announce the new venture to but it did stay true to its business partners which are the movie studios by agreeing to pay them profits from the new business venture. They also acquired acceptance from the general public by offering free trial memberships.
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