In our continuing business conversation, I’d like to return to Christensen’s Blue Ocean strategy. Since this is the predominant business logic today, it only seems fitting to give it a bit more focus. Tonight, I’d like to focus more on the second tier of non-customers. Christensen refers to this tier of the Blue Ocean as “refusing non-customers.” These people are those who know of a product, are aware of its uses, and have weighed the option as a way to fill their needs. However, for some reason or another, they refuse to patronize the market.
W. Chan Kim & Renée Mauborgne go into a more detailed explanation of this in “Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant”, and explain this tier as “people who either do not use or cannot afford to use the current market offerings because they find their offerings acceptable or beyond their means.” In plain English, this means that this consists of people who find anime too expensive, or those who were overshot by the greater industry.
Tonight, I’ll tackle both of these topics, beginning with the idea that people find anime as a product “unacceptable.” This is the market that is aware of anime, but does not find the quality worth the price of admission. These are the folk who want to try anime, but are scared away by the $60 cost of a season, and were similarly repelled by single disc sales. They are the ones who claim that anime is too expensive, and gives too little for the price, or they complain that features like a dub, or bonuses are missing when looking at a show that appeals to them. They’re the type that would gladly buy a show like Dirty Pair, if only it had a few more tweaks to bring the pricing in line with their perception of value, or vice versa.
Typically, in terms of Tier 2 non-consumers, these are the easiest to identify, and among the more difficult to please. To satisfy this market, one needs to be able to line up the customer’s idea of value with what can feasibly be done. This would mean making the product as inexpensive as possible, so that the non-customer will overlook the lack of features (thus bringing the expectation of value in line with pricing), or include some (or all) of the features that the customer demands, to bring the product up to the customer’s current expectation of value, given the price.
In many cases in the anime industry, only one of these two of these options is available, given the nature of licensing and distribution contracts. However, given the option, companies are best advised to that which would ensure the largest margins – in the case of some programs, it may be cheaper to to add value, while it may be more cost effective to sell a cheap bare-bones set instead.
In the case of an “overshot” consumer, the industry tried to appeal to a more advanced, more experienced consumer. In this case, we see many of the customers (a percentage of whom may have been customers in the past) simply stop buying anime. This is the group that sees a market of simulcasts, of streams and on-demand, and scratches its head. This breed of customer sees DVD and Blu-ray side by side, and doesn’t see a difference. This is also the customer that sees a market dominated by titles like K-On and Lucky Star, and wonders where the titles like Dirty Pair or Captain Harlock went.
Now, don’t be mistaken. This isn’t a stupid consumer in the least – the overshot consumer is one that the market simply left behind. They don’t see the content they want being produced anymore, nor do they see the content out now at a price that they value. They see a market that tries to convince them that the new way is the “right” way, and that this new anime is the same, if not better than the anime shows they grew up with in the past. They see Blu-Ray as a meaningless addition that adds nothing to the show itself, and they see digital streams as something that just adds another barrier to the shows that they desire.
We’ve seen companies try to fight the idea of the overshot consumer in numerous ways. FUNimation’s Blu-ray combo packs have condensed what would have been two releases into one SKU, which simplifies the process for someone who just wants to buy a show. Nozomi Entertainment has made it a point to chase older titles that the overshot market has chased, and made it a point to give titles like Dirty Pair and Utena, titles that the “lost market” has been asking for, a lease on life in America. At the same time, these shows are being pushed with a lower retail price and classy, collector-grade packaging that features supplementary books of artwork and creator interviews. The move attempts to fight both the spectre of overshooting and the value-perception problem, by raising the quality (and thus perceived value) of the product, while also staying firmly within the expectations of the Tier 2 non-customer.
As always, these aren’t “magic bullets” that work 100% of the time. Instead, they are mere approaches to the market that have worked previously. The Tier 2 customer is incredibly difficult to reach, as it’s a constantly moving target. A Blue Ocean customer must be sure to keep within its means, and within the non-customer’s expectations of “reasonable” in order to be successful. I don’t pull titles out of favoritism, but instead like to cite empirical evidence. In particular, Dirty Pair and Utena were successes. Right Stuf expressed satisfaction with both titles’ performances so far, and Utena even climbed into the top-100 on Amazon.
Tonight, I’ve only scratched the surface of the Tier 2 non-customer. In particular, this customer’s influence is incredible, and a vital key to tapping the third Tier of the blue ocean. However, I will expand upon this in an upcoming piece.