New Mindsets: Blue Ocean Strategies
The competition is everywhere: other travel agents, the big online agencies, suppliers selling direct. All about you, sharks swim and the water is red with blood. Everyone is after the same clients, and you want your share. So you circle with the pack, waiting for another traveler to drop into the water. You hone your competitive advantages, distinguish yourself from the competition and wait.
But just over the horizon is a vast blue ocean. Not but a few miles off-shore, hard as it may be to believe, there is no competition. There is an entire blue ocean of uncontested market space. Is that even possible? Yep. |
Blue Ocean Theory indicates it is possible to create products and services in which a company can view the competition as irrelevant. Why? Because there isn’t any. In an industry as ancient and worn as travel, is it really possible to create products and services that have no alternatives from the buyer’s point of view? Is it possible, instead of continually dividing up the existing market space, to create new markets in travel? Could it be at least possible that there is a strategy that involves creating demand rather than focusing on the competition?
We are going to do a walk-through of the book Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne and apply the lessons there to our own profession. We are going to examine a number of case studies of real importance.
In their book, Kim and Mauborgne open with the story of Cirque Du Soleil. In an age of television and wifi, where Barnum & Bailey was an existing but struggling giant, how did an upstart spectacle like Cirque Du Soleil not only appear, but flourish? Here’s some of the possibilities we will explore: |
Here’s a blue ocean case study that I will leave you to ponder as we get underway: Everyone in America has a coffee pot. So why will they stand in line to purchase a $4.00 coffee at Starbucks? There were hundreds of thousands of breakfast places selling coffee when Starbucks launched. How can Starbuck’s success be understood in terms of Blue Ocean theory, and what can the travel professional learn from a caramel macchiato?
Join me in an attempt to render competition irrelevant.
Value Innovation
- The life cycle of a travel product – how travel products become commodities
- How to revitalize your travel product by adding value
- How to make money by better understanding your market
- How to create your own markets
Here’s a blue ocean case study that I will leave you to ponder as we get underway: Everyone in America has a coffee pot. So why will they stand in line to purchase a $4.00 coffee at Starbucks? There were hundreds of thousands of breakfast places selling coffee when Starbucks launched. How can Starbuck’s success be understood in terms of Blue Ocean theory, and what can the travel professional learn from a caramel macchiato?
Join me in an attempt to render competition irrelevant.
Value Innovation
The authors of Blue Ocean Strategy point out participants in red ocean markets all follow a conventional approach. Everyone more or less does things the same way. As the markets become more crowded, competition increases, prices are cut and margins fall. Costs go up. Soon, the only differentiator is price. Well educated consumers no longer need the expertise that distinguished the early markets.
Sound familiar? Authors Kim and Mauborgne place the concept of “Value Innovation” as the cornerstone of Blue Ocean Strategy. Instead of an attempt to “beat” the competition at the game, a Blue Ocean Strategist will make the competition irrelevant by creating a value for the market that is a leap out of the red oceans. There will simply be no competition. This is not mere “added value” – we are not discussing a small, incremental value. I’m not talking about the bottle of wine in the cabin or hand delivering documents. We are looking for a leap radical enough to make the company stand out in the marketplace. |
Likewise, we are looking to actually eliminate many of the cost burdens of the conventional market while increasing profits. Can it be done? Sure.
Let’s take a 7-night Caribbean cruise as an example.
How’s the market look right now for that cruise? The oceans look pretty red, don’t they? Try to “beat out” any number of online discounters. Try to convince your clients that you are the expert in the field. Match the rebates and the discounts and the onboard credits everyone else is offering. Market to the conventional market for this cruise and may the best travel agent win. How does that sound for a good time? Is it any wonder so many travel professionals are frustrated with “selling” cruises?
Blue Ocean Strategy would say to look for a market other than the conventional one. So I’m going to do some homework. I personally like to bike. I’m a mountain biker and a lot of my friends like road racing. There are three or four clubs right here in Tallahassee.
I look at Celebrity Cruise lines:
Celebrity Summit 7-Night Southern Caribbean Cruise Cruise Ports: San Juan, Puerto Rico, Charlotte Amalie, St. Thomas, Philipsburg, St. Maarten, St. Johns, Antigua, Castries, St. Lucia, Bridgetown, Barbados, San Juan, Puerto Rico
I Google “Biking in Antigua”, “Biking in Puerto Rico”, "Biking in St. Lucia", etc. Hey, I might be onto something.
Celebrity Summit 7-Night Southern Caribbean Cruise Cruise Ports: San Juan, Puerto Rico, Charlotte Amalie, St. Thomas, Philipsburg, St. Maarten, St. Johns, Antigua, Castries, St. Lucia, Bridgetown, Barbados, San Juan, Puerto Rico
I Google “Biking in Antigua”, “Biking in Puerto Rico”, "Biking in St. Lucia", etc. Hey, I might be onto something.
What do I know about bikers? They love to bike in new locations! They will travel across country to bike new terrain. Here is an opportunity for them to bike in a string of new countries on a single trip, with all of the amenities of cruises thrown in to boot!
Naturally, there is some work to be done. I would need to contact various biking companies in each locale, get references, learn about the terrain, the equipment provided, etc. I would have to put together a program. My business plan calls for me to achieve wholesale rates with the local bike outfitters.
I have re-constructed the market.
My package is not a cruise, it’s a biking vacation using cruise transportation. The elements I put together will not be easy to duplicate on a casual basis. My package will be appropriately priced and highly profitable.
Hey, look around. Where’s my competition? There isn’t any, and I have a great big blue ocean of bike clubs across the country to fish.
Here are some Blue Ocean principles this example bears out:
This same exercise can be accomplished time and again, not just with cruising but in many areas of travel. In fact, I dare say that no other industry so lends itself to blue ocean strategy!
Moving from Transaction to Strategy: Cirque du Soleil
Naturally, there is some work to be done. I would need to contact various biking companies in each locale, get references, learn about the terrain, the equipment provided, etc. I would have to put together a program. My business plan calls for me to achieve wholesale rates with the local bike outfitters.
I have re-constructed the market.
My package is not a cruise, it’s a biking vacation using cruise transportation. The elements I put together will not be easy to duplicate on a casual basis. My package will be appropriately priced and highly profitable.
Hey, look around. Where’s my competition? There isn’t any, and I have a great big blue ocean of bike clubs across the country to fish.
Here are some Blue Ocean principles this example bears out:
- I created a new market – I didn’t market to conventional cruisers where everyone else was. In fact, I went to bikers – people who would probably otherwise despise cruising as “Not active enough."
- I have created new value – I’m appealing to the clients’ desire to bike in new locations, new destinations in an economical manner. Yet, I’m putting an entirely new “spin” on cruise economics. It’s now great, economical, transportation between exotic biking destinations with nightlife and food thrown in to boot.
- I’ve eliminated some costs – discounting and rebating.
- I’ve increased my profits – By increasing value substantially over a mere cruise.
- I’ve eliminated competition – Try to find another company that even offers biking cruises, has set up contacts in ports of call, who has vetted the outfitters and put together the great plans I offer.
- Note, too, that this is not merely “niche marketing” – I have created true differentiation, not in the cruise product, but in the market to which I am appealing and in the value I am offering. This is no small incremental value – it is a leap, a new offering in a new market – cruise biking.
This same exercise can be accomplished time and again, not just with cruising but in many areas of travel. In fact, I dare say that no other industry so lends itself to blue ocean strategy!
Moving from Transaction to Strategy: Cirque du Soleil
Our biking program offered the participants the opportunity to pursue their biking passion in a series of exotic countries over a period of days, something many of the participants would not have ever thought about or even thought possible. We accomplished this neat trick by transporting our bikers from country to country aboard a cruise ship sailing the Caribbean.
However, I ask you, is it enough? Is a single instance of a biking event, or any similar blue ocean event, where you want your practice to be? Perhaps. Some good entrepreneur could build an entire business around such a program. Many of us, however, would want more. We want a varied travel practice not confined to a single destination or activity but to a relationship with clients. Is it possible to build an entire travel practice based on blue ocean strategies and principles? I believe it is. But we need to analyze and understand what we have achieved and how. |
First, let’s analyze a blue ocean strategy in a two case studies using the “Eliminate-Reduce-Raise-Create” grid developed by the Blue Ocean theorists W. Chan Kim and Renee Mauborgne in their seminal work Blue Ocean Strategy. I should note that my abbreviated discussion of their work does not do them justice and that every travel consultant interested in Blue Ocean Strategies should obtain a copy of their work.
Kim and Mauborgne consider the case of Cirque du Soleil. The grid below is their analysis of how Cirque managed to create new value in their production, achieving differentiation while at the same time reducing costs and creating new value. In so doing, Cirque did not just build a “better” circus – they literally reconstructed the circus.
Cirque eliminated several components of the traditional circus such as animal acts, “celebrity” performers, and “three rings”. Each of these was considered vital components of a traditional circus. Yet, the cost structure of a circus was thereby increased beyond the actual value achieved. For example, obtaining an obscure Romanian trapeze artist for Barnum and Bailey was an expensive proposition and one that added only slight, incremental difference to those who attended the circus. Animal acts were incredibly expensive from the perspective of animal care, transportation and insurance.
It may seem odd at first to consider “reducing” fun, humor and thrills, but consider the target audience for the traditional circus: children. Look across the grid at what was increased: a theme to the show, with a story line, music, intellectually stimulating acrobatics and wonder. The slapstick humor of the circus gave way to more sophisticated themes of Cirque. The appeal now is to a new, more affluent audience. Finally, Cirque raised the ante by staging their productions in new, exciting venues capable of servicing many more viewers.
Cirque du Soleil combined elements of circus and theater, reconstructed the appeal and eliminated the high cost structure. Now, let’s look at our biking cruise grid:
Want to do it again? Checkmate.
Too often, we think of travel as transportation garnished with a beach and a nice hotel. In Blue Ocean Strategy, it is important for us to more fully appreciate the experience of travel and its importance to the client. In so doing, we will open up new ways of thinking about our discipline.
We will, in fact, re-invent travel while all of the other travel consultants in town are selling airline tickets and cruises. One of the truly great aspects of the travel experience is practically any activity can provide a matrix in which travel can play an important role. Pull up any activity you want, let’s choose one pretty far removed from typical travel activities. |
Let’s imagine you love chess and we will pretend you have enough of a background to justify your entry into this particular activity. Typically chess is played by people who love study the game with a passion, who have memorized great players and even games of the past. Their travel seldom extends beyond the local coffee shop or park table. I’ll bet they don’t travel to play chess because they don’t know you. Yet. You haven’t yet had the opportunity to suggest they attend the Chicago Open Chess Tournament.
Of course, you don’t want to just provide transportation and hotel accommodations to a chess tournament. You want to provide a giant leap in value over transportation. So you do the following:
- You study the local chess clubs for information on instructors, local tournaments and interest. You do your research on the Chicago Open, tournaments and the psychology of chess competition.
- You prepare a packet of information on the Chicago Open. Your pricing is not discounted. In fact, in light of the enormous value innovations of the package you have prepared, there is a sizable premium built into the program.
- You provide four weekly meetings with a local chess master who will train your travelers and prepare them for the competition. If you are really lucky, your chess master will have experience with this particular event. If you are even luckier, your chess master will act as a group leader and recruit your travelers in return for a comp to the tournament.
- You arrange an online mini-event in the days prior to the Chicago open with members of the University of Chicago Chess Club and your travelers.
- You plan your hotel and transportation accommodating the travelers in your group and you set up some of their dining opportunities.
- Since your little home town does not have a major retail location for chess paraphernalia, you set up a visit to It’s Good To Be King in Elmhurst, IL and arrange a 15% discount with the shop owner for your travelers.
- You plan a return party for your travelers to debrief in front of the local chess club and begin planning the next trip.
Most importantly, however, you will not be competing with a single agency in your home town for this business. You are still carrying on with your more conventional booking activities, but now your are raising the WOW factor associated with your brand. Feel a press release coming on? Great, because the story of how your CheckMate Chess Adventure came to be and the activities of the team on their trip makes for a great local human interest story for your home-town newspaper.
A marketing mindset pulls everything together into a campaign! Always on, always marketing.
One More Time: TravelU
Here we are, playing with Blue Ocean Strategies. I say “playing” because there is a very creative, imaginative side to the exercise. At the heart of every Blue Ocean Strategy is a leap of value so large as to leave competition behind. While other agencies are hand delivering documents and ordering bottles of wine and as “value adds,” your clients will be traveling down the Autobahn of your own turbo-charged vision.
But here is an important point – just as the trip itself is customized for the traveler, so too are your value innovations. Ultimately, it is your client who determines what is valuable and you must know and understand their sensibilities to launch into the creative exercise of bringing those sensibilities to reality. |
In that vein, what if your agency was themed on teaching travelers how to be a better travel consumers? What if travel planning was not about booking suppliers but about…travel planning! What if every travel planning exercise became essentially a class on how to research, how to understand the industry, how to work with a travel consultant, how to find a great value, how to get a passport, register with an embassy? What if your mission was to educate your clients on the various types of tours, suppliers and options available? Graduation from your course could be celebrated in destinations across the globe. What if being a travel professional was more like being a travel professor? Let’s call your plan “TravelU.”
The “TravelU” program could be built on a simple premise. Everyone loves to travel, but every traveler has a bag full of worries. They worry they are paying too much, they are missing things they “should see” or they are going to waste time and money seeing the “wrong things.” Many travel with no long-range plans, no short term plans….basically with no plan at all. Vacations and travel become hurried, last minute decisions.
You step in and introduce them to TravelU – teaching people to be better travel consumers, one trip at a time. Each planning exercise intensely involves the clients and they do much of the research while you monitor the results, goad them in the right direction and help them clarify their travel goals and ambitions. Each time they travel they come to you with their ideas and you help to give them shape using the best “Blue Ocean” value innovations and creative thought possible.
No doubt many of you will have concerns about so empowering clients. If you completely demystify travel, if you teach clients all of the tricks of the trade, if they know how to research and how to plan on their own, if TravelU is going to teach them all there is to know about travel planning, why do they need you?
Oh ye of little faith. Please read this article. If you fail to fully empower your clients, if you live in fear they will research alongside of you, then you will live transaction to transaction instead of in relationship to your travelers. Teaching them to be a better consumer does not make them a travel consultant. One of the tenants of being a good traveler is to use a travel consultant! Someone who will look over the client’s shoulder and help them plan the perfect trip. What if you make them so engaged they want to become group leaders for you? Outside agents for you? Tell all of their friends about what you do?
Always marketing.
Remember the “Eliminate-Reduce-Raise-Create” grid? Let’s see how well TravelU does in each category.
What TravelU has accomplished is a program demanding intense client participation in the planning process. In so doing, the client is involved every step of the way, directed and moderated by the travel professional. The value is jointly established by the client and the travel consultant, and the client feels empowered and excited by their involvement. Do you discount or rebate for the trips you plan through TravelU? Of course not! You charge a premium.
Will every client want to attend TravelU? Of course not! But many will. Look around your local community. I’ll bet there’s not a TravelU to be found out in the open, but many group leader programs initiated by good travel marketers look a lot like TravelU.
Remember, these exercises are to get you thinking about your own Blue Ocean Strategies. Treat them as suggestive and inspirational, not as well-developed ideas out of a box. The idea is to re-invent the way travel is practiced in your community so you can operate without competition. I think TravelU is one such possibility, but there are hundreds of others.
Note: This series of articles earned TRO some cool accolades from the Blue Ocean Community and authors W. Chan Kim and Renee Mauborgne:
https://www.blueoceanstrategy.com/bos-elibrary/travel-agents-and-blue-ocean-strategy/
https://www.blueoceanstrategy.com/bos-elibrary/travel-agents-and-blue-ocean-strategy/
Exercise:
THINK. Come up with a Blue Ocean Strategy of your own. Work through your idea's grid. How imaginative, how creative can you be? No limits! The seminal idea here is to create a giant leap of value. You can do this best when you truly know your clients. It is your clients, not you, who decide what is valuable.
Here's an easy example:
You have two clients going to London for a holiday. During your client interview, you ask your client about his hobbies and he mentions he collects antiquarian books. When time for the trip comes, you provide the client with a list of the best antiquarian book shops in London. This is of tremendous value to this particular client, far outside the bounds of what most travel agents would consider when "adding value." Look for opportunities to create value for the particular client. Then do it for 100 clients.
THINK. Come up with a Blue Ocean Strategy of your own. Work through your idea's grid. How imaginative, how creative can you be? No limits! The seminal idea here is to create a giant leap of value. You can do this best when you truly know your clients. It is your clients, not you, who decide what is valuable.
Here's an easy example:
You have two clients going to London for a holiday. During your client interview, you ask your client about his hobbies and he mentions he collects antiquarian books. When time for the trip comes, you provide the client with a list of the best antiquarian book shops in London. This is of tremendous value to this particular client, far outside the bounds of what most travel agents would consider when "adding value." Look for opportunities to create value for the particular client. Then do it for 100 clients.