In a recent post, I was sharing with you some thoughts about Nintendo's Blue Ocean Strategy of targeting girls, which opened up a huge untapped market of nonusers for that company. Similarly, Disney created its new MagicBand wristbands in hopes of growing their base of frequent users and attracting nonusers by making it easier to enjoy its theme parks.
"Who is a nonuser, anyway, and why should I care?"
At Simon Associates, we frequently get asked this question by many of our clients, often followed by "Why should I focus on them?" and "Shouldn't I be worrying about my target markets and current demand?"
You can, of course. You can also stay in a Red Ocean teaming with competition, fighting fot market share among the same customers with similar needs seeking rather identical solutions. Or, you can begin to search for new, unmet markets that you can own — those Blue Oceans that are often right before you, if only you could see them.
Don't ignore nonusers. Instead, pay close attention to them
Think about markets in two ways: those you know really well and those that are all around you but you cannot see. Your brain works very efficiently to block out:
- Those odd-ball customers or clients, those "onesies" that occasionally ask for something
- Those calls that come into your customer service desk to whom your people say: "No, we don't do that"
- And those emails that come from parts of the country where you don't have distribution
We have had clients who have discovered really big opportunities when they started to "see" these nonusers (or occasional users) as possibilities, not anomalies. They shifted from irritants to potentials in a moment.
In Blue Ocean thinking, there are three tiers of nonusers:
- Tier I nonusers: those who wish they had an alternate product or service. This group can provide you with interesting information while you are searching for Blue Oceans. Most Tier I nonusers face some type of barrier that is keeping them locked into a current solution. Whether there is a state-imposed monopoly, a long-term contract the buyer now regrets, or a steep switching cost, Tier I noncustomers are stuck. When these pain-points become rather ubiquitous, the market at large finds a way to rectify the problem. Just think about Uber and the taxi monopolies or Zipcars and the rental car business. Both are perfect Blue Oceans opening up new markets for the unmet needs of Tier 1 nonusers.
- Tier II nonusers: those who reject your product or service. This population is typically where businesses find new Blue Oceans. They are not a competitor's customers — they are potential buyers who do not show interest in a certain product or service no matter who offers it. Blue Ocean Strategy focuses on building a market niche that appeals to these nonusers but does not necessarily compete with alternative offerings. For example, girls who buy Nintendos DS still purchase dolls, and people rarely purchase a Nintendo Wii instead of an Xbox 360 or Playstation III, but often purchase both.
- Tier III nonuser: those who are unlikely to become a sizable mass of customers but who can provide insight into the factors that create a successful strategy. Nintendo studied how geriatric people pass their time in nursing homes. By observing them, they realized that older adults tend to play approachable games that look simple, are easy to start playing and offer ever-increasing complexity. Wii pioneered an entire group of games modeled after what Nintendo learned in nursing homes and opened a deep Blue Ocean of Tier III nonusers: people who thought they did not like video games.
Where are your nonusers? Maybe right before you!
I'd like to share with you two client stories that illustrate how in fact, your nonusers — and big, profitable opportunities — might be right before you, waiting for you to capitalize on them big time. Maybe you just aren't listening.
Elkay Industries and its water bottle filler stations
Elkay Industries is one of our favorite Blue Ocean success stories. Elkay, a major plumbing supply company who dominates the water fountain industry, developed a water-bottle-filling station to sit on top of their water fountains which would make it easier to fill a water bottle. Sounds cool, right?
The idea was to add more value to the water fountain, as sales had become sluggish among Elkay's traditional purchasers: facilities managers, building owners and architects who saw limited value in adding cost to the code-driven water fountain.
Then one day, Elkay's filler stations were bought by Muhlenberg College in Ohio to help kickstart a movement among its students to eliminate disposable water bottles.
For Elkay, this was seen as a one-off purchase by sustainability directors. When they hired us, they were trying to figure out how to get their traditional distribution channel to sell this filler station to traditional buyers or users. As we worked with them on this project, one of their folks said in the middle of a strategy session: "This isn't about water fountains. Its about 'killing the bottle.'"
That was the "aha" moment that shifted everyone from focusing on current users to an entirely new market of nonusers: sustainability directors. These nonusers were right before them. Indeed, Muhlenberg College created a market for them. Read more...
Benjamin Obdyke discovered unmet needs for its "Home Slicker" products
Benjamin Obdyke is another Simon Associates favorite story. Benjamin Obdyke had wonderful home slicker house wrap products that were widely used in new home construction. This house wrap (Home Slicker) was a terrific rain screen that eliminated moisture and offered a premium residential and commercial-grade house wrap.
But when the housing market crashed in 2008, Benjamin Obdyke's sales declined as well. What to do? Who could use their products who weren't already, and what were the unmet needs of those who used to use their Home Slicker? We went out to their distributors and did some culture probes. We were looking for unmet needs and nonusers at a time when new home construction was really in a slump.
One of the distributors we were speaking with said something very interesting: He didn't have a strategy to grow. Indeed he wasn't even putting the house wrap into inventory until the housing market turnaround. But, he did have a lot of business around stucco remediation.
As we walked out of his office, I asked the CEO and the head of sales about stucco remediation. Was this something that could open a new market space for them? Ironically they had never really targeted the stucco market. But as they thought about it, they had one of those "big idea" moments: "Of course they can use our house wrap for stucco remediation; we just never marketed to that segment before."
Today when you look at Benjamin Obdyke's product mix, you'll see products redesigned just for the stucco remediation market and "New and Improved Slicker MAX" for the "sacrificial layer" in stone or stucco applications. Indeed, Benjamin Obdyke discovered that there were lots of ways to repackage, repurpose and reinvent their products for a market that really needed their solutions.
Lots of stories to share (just read our Stories2Share section)
All too often, nonusers are right before you. Unfortunately, you probably have been so well-trained to stay focused on your current customers that you are ignoring how you could create an entirely new market space. Give it a try. Go exploring and listen to what is happening among nonusers who could use you. Listen and look with fresh eyes and perhaps you too can find a Blue Ocean that is even now knocking on your front door.
Let us know and share your story with us at email@example.com.