Tuesday, April 12, 2011

Blog # 4- Novo Nordisk's Blue Ocean Strategy

Novo Nordisk’s Blue Ocean Strategy in Healthcare

In the business world, marketers aim to categorize / segment given markets, target desirable customer populations, and position their products in an attractive fashion. The practice of target marketing comprises of three interconnected activities—market segmentation, targeting, and product positioning.

Reading the article “Blue Ocean Strategy” by W.Chan Kim and Renee Mauborgne, I find the concepts of red oceans and blue ocean strategies and their applications to business very appealing. To summarize the concepts the strategies involve as follows-

Blue Ocean

Red ocean

Creating uncontested market space

Competing in existing market space

Making competition irrelevant

Beating the competition

Creating and capturing new demand

Exploiting the existing demand

Breaking the value-cost trade-off

Making the value-cost trade-off

Aligning the entire system of a firm's activities to pursue differentiation and low costs

Aligning the entire system of a firm’s activities with its strategic choice of differentiation or low cost

Novo Nordisk, a Danish company serves as the best example of applying the blue ocean strategy in the healthcare business. This company earlier specialized in producing only insulin but is now the leading diabetes care provider. Insulin is a hormone used to regulate the blood sugar level in a human. Diabetics are patients whose systems cannot produce insulin and therefore they need artificial insulin. Pharmaceutical marketers largely focused on the target market- doctors. The strategy was to meet the demands of the doctors, which was to develop and produce purer insulin.

Novo Nordisk adopted the blue ocean strategy and developed an insulin pen- NovoPen. The strategy was not to target the doctors but to focus on the patients directly understanding their requirements. Patients found it cumbersome to deliver the insulin into themselves directly and were not really satisfied with the earlier technologies of using a vial and injection. Novo Nordisk created a new technology meeting and satisfying the needs of these patients. The insulin pen is very user friendly and does not involve the complicated procedures of the earlier technologies.

Over the years, the technology of insulin pens have advanced significantly and Novo Nordisk dominates the market. Their strategy of targeting the patients directly and not only doctors worked in their favor.

Questions

1. With the advent of a breakthrough technology, how does a company sustain the market leadership since the market will eventually become saturated? Does blue ocean always moves into red ocean?

2. Is there a boundary for blue ocean strategy in every market segment?

Sources:

1. “Blue Ocean Strategy” by W.Chan Kim and Renee Mauborgne.

2. http://www.blueoceanstrategy.com/abo/novo.html

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.