VISUAL EXPLORATION – ROUND BLUE-3

Gavin Fraser
Consultant
Blue Ocean Strategy Initiative Centre

Dr Rémi Triolet
Simulation Expert
StratX

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Table of Content

1 Visual Exploration – Round Blue-3 _________________________________________________ 1

1.1 Path 4: Complementary Products and Services for Service __________________________ 1
1.2 Path 5: Looking Across the Functional and Emotional Appeal for Buyers for Delivery ______ 3
2 Potential Services Competing Factors ______________________________________________ 6
2.1 Ability to Swap Games _______________________________________________________ 6
2.2 Ability to Trade-in Console ____________________________________________________ 6
2.3 After Sales Help and Advice ___________________________________________________ 6
2.4 Ease of Repair ______________________________________________________________ 7
2.5 Entertainment Assistant ______________________________________________________ 7
2.6 Extended Warranty Offer (above standard warranty) _______________________________ 7
2.7 Loyalty Card and Rewards ____________________________________________________ 7
2.8 Manufacturer’s Insurance Offer ________________________________________________ 8
2.9 Speed of Providing Patches and Corrections to Games ______________________________ 8
2.10 Standard Warranty __________________________________________________________ 8
3 Potential Delivery Competing Factors ______________________________________________ 9
3.1 Ability to Buy from a Catalogue ________________________________________________ 9
3.2 Deals and Price Promotions ___________________________________________________ 9
3.3 Dedicated Stores ___________________________________________________________ 9
3.4 Direct Sales on the Internet ___________________________________________________ 9
3.5 Distribution Matching my Lifestyle ____________________________________________ 10
3.6 Easy Guide to Online Services ________________________________________________ 10
3.7 Friendly Salespersons _______________________________________________________ 10
3.8 Gaming Cafes _____________________________________________________________ 11
3.9 Informed Salespersons ______________________________________________________ 11
3.10 Local Sales and Service ______________________________________________________ 12
3.11 Number and Complexity of Bundles____________________________________________ 12
3.12 Trial and Return ___________________________________________________________ 12

Copyright © by StratX June 30, 2014 ii

1 Visual Exploration – Round Blue-3
The Executive Team was once again eager to share the results of their
Visual Exploration of the market. When they compared their
observation and personal interview notes they noticed that two of the
Six Paths stood out in terms of insights gained, raising some major
questions about the current Service and Delivery practices of the industry. There appeared ample
opportunities for creating new market space!
 For Services, Path 4: Complementary Products and Services
 For Delivery, Path 5: Look Across the Functional and Emotional Appeal for Buyers.
The Executive Team decided to each share their summary of what they had observed and heard for
each of these two most insightful Paths.

Mike D’Olphin David Richter Sally Burley Rick Stark Barb Regan
CEO CFO Marketing Operations Sales Director
Director Director
The Executive Team

1.1 Path 4: Complementary Products and Services for Service

This is a transcript of the conversation that took place for Path 4.
Mike: Perhaps before we start to talk about Path 4 I just want to raise an issue worth discussing.
David: What’s that, Mike?
Mike: Well you know that as an organization we’ve got into trouble by sometimes trying to take on
too much. Here we are about to see how we can extend our Blue Ocean by looking at our Service
and Delivery platforms. How much can we really take on at once?
Barb: I have the same fears to tell the truth. Already our geographic expansion and those teething
troubles we had in Starland have stretched us to the limit. Also, the number of complaints from
Distributors in Roundland rose dramatically as soon as we took our eye off the ball.
Rick: My people are exhausted … I’ve given everyone the choice of two long weekends over the next
3 months as a thank you for everything that has been achieved, and limited the overtime work so
that they can get some rest.
Sally: Mike, I think that you are right to raise a caution here. Let’s see what we uncover in terms of
creating new value and then let’s think how we can achieve some of those things that we may have
to do to create a Blue Ocean … to achieve them at low strain to the organization.
Barb: And low cost – remember that if we are creating new value, it does not have to have loads of
bells and whistles to unlock demand – we’ve fallen into that trap before!
Mike: That sounds sensible – OK – we’ve agreed we will not be overly ambitious.

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David: We need to gear ourselves for change – if we’re going to do something new, it needs to be
supported by helping capabilities develop within the organization. We can’t expect our people to be
able to alter their capabilities in an instant.
Mike: Thanks, David – absolutely. What are your feelings about doing something in Service and
Delivery simultaneously?
Rick: Sound’s OK to me!
Barb: Hey, Rick, I love your enthusiasm – but, I really feel we can end up doing everything and
nothing, if you know what I mean. Sometimes you have to send a really strong signal to the market,
particularly to noncustomers. I think that we should either focus on Service or Delivery, but not
both.
Mike: I think I agree.
Sally: Me too. Focus on what we can do without too much investment and nearer to our current
capabilities.
David: Sure – agreed. Let’s see what we have and then decide.
Mike: Great … thanks David for keeping us moving along. Why don’t you start then, Barb?
Barb: Well, what stood out most for me was that noncustomers believed that there was a lot of risk
in buying a game console, especially when it came to connecting it up properly with their existing
television setup. They were worried about repairs and what would happen if it broke down. Also,
they wanted to know who would be there to help them if they got stuck. They liked the idea of
gaming, but, similar to the setup issue, they didn’t believe they would be able to cope. Oh, and
people were really indifferent to the whole insurance thing and extended warranties – “all it says to
me is that the manufacturing is terrible if they have to sell these things with the equipment because
it is going to break” was a typical comment.
Rick: Yes … I heard the same as you about insurance and extended warranties and about the help
after purchasing or when something goes wrong. Many noncustomers told me that if we had
confidence in the quality of our products, we would increase the duration of the standard warranty
to two –or even three years– instead of selling extended warranties and insurances. And you’re
right, they were really hot about the repair issue – I heard horror stories about televisions, DVD
players – even fridges and microwaves. The connection issue was big but so was getting after sales
help really easily. People are not that trusting about emailing a company about a problem since they
hardly ever get a reply. They also loathe call centers where a robot ask loads of questions and waste
a lot of time to finally deliver pre-recorded messages that won’t give any helpful advice to solve the
problem quickly.
One of the twelve I interviewed, quite a creative young man, said that it would be great if we offered
a party service – you know when you invite an entertainer to come and run the entertainment at a
kids party or at a large family get-together. I thought that was a really great idea. Others I
interviewed have played games on the internet once or twice and were intrigued about being able to
do this away from the computer environment.
David: The issue of help if things went wrong was the major concern I heard – would they be able to
speak to someone who spoke in plain language and resolved the issue quickly. The connection issue
came up quite a bit.
Mike: When I went to one of the specialist gaming shops, I saw a mixture of buyers – those that
seemed to know what they wanted, went to the shelf, picked the product and went to pay without
asking any questions and those that stood around seeming to be a bit lost waiting for a sales person
to help them. The ones who knew what they wanted had cards stamped after they bought – they
were the distributor’s loyalty card. Some of the potential buyers who seemed lost left the shop.

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When those remaining asked questions of the retail staff I was curious what they were asking. When
I asked one of the salespersons she said most of the questions were about whom the potential
buyers/users could consult in the future to get questions answered and what would happen if the
console broke. The salesperson said that she had told these people that this was not something the
distributor really knew much about and it was best to talk to the manufacturer or go to their website.
Barb: I am raising my ‘people and change’ hat here, just to say how much of this service handholding
of potential new customers can we do? We don’t have a good record at doing new things, Mike.
Even one or two new things or a slight change of direction is a real challenge in this organization.
Mike: Wise words, Barb – but we’ve got to do something. On the loyalty card issue, my experience
in my previous job, which as you know was with a large national retailer, was that loyalty cards are
enormously expensive to run – not just the rewards but interacting with customers when they have
reward queries and the like – we ended up with a huge call centre just to handle the loyalty card. We
phased it out after 5 years and not having a card didn’t affect sales at all. It can be a two edged
sword is all I can say. Yes, David…
David: We put a lot into our new Blue Ocean product – the organization is committed, but tired.
Mike: I hear you loud and clear, but I sense a new confidence in the organization that wasn’t here
three years ago – I am not saying that it is down to me. We must do something in Service and
Delivery, but let’s keep focused.

1.2 Path 5: Looking Across the Functional and Emotional Appeal for Buyers for
Delivery
This is a transcript of the conversation that took place.
Mike (to Sally): Great … Sally, why don’t you start? What did you find out about how customers and
especially noncustomers feel about how our industry delivers its products?
Sally: I just want to say that I think that the barriers for noncustomers were higher on the services
side – or, put another way, dealing with the service issues may unlock more demand. Anyway …
Delivery and Path 5 … well, this was a bit of a surprise! Just about all the noncustomers I spoke to,
and a good number of people who had bought game consoles before, found that our distributors did
not address their fears about whether they were buying the right thing. They still felt that they were
at risk of buying something that did not suit them. Even where we have spent a load on researching
the kinds of bundles people might want, they found the fact that we had so many very confusing.
Bit of a shame, really.
Barb: I heard that exact thing as well from many people … about the bundles, I mean. Also, people
never knew when the right time to buy was. There are significant deals being offered by the
industry. Those wanting to buy would see an amazing price discount and would then have to spend
time shopping around to see whether other distributors were offering the same kinds of deals.
Some said that when they went back to the distributor who had made the offer, the offer had
expired. They wished that there was just one low price everywhere. Also, sometimes the price deals
were linked to buying a flat screen television as well – something that they only discovered once they
went to the shop. They found the price discount offer thus a false one. When they asked the
salespeople why this was so, they just received a blank response.
Rick: Oh yes – I heard so much about the kind of help, or rather lack thereof, which potential
buyers/users experienced in the shops. Even in the specialist game shops it seemed that the staff
could only answer general questions in a very superficial way. Some were friendly, others offhand,
but all quite useless. In the bigger electronics distributors and major supermarkets the staff seemed
to know even less than the noncustomers – they just read the box labels … something that anyone
who could read could do. Many potential customers wanted to know about online gaming and how

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this worked with the various consoles – it seemed that the salespersons had even less to say about
this.
Sally: You’re right. The salespersons I observed did not seem to be very friendly. This did not seem to
bother too much the customers I talked to. But they were very concerned about their poor
knowledge in term of new technologies, online games and so on. It looks like our industry and our
distributors are not doing a good job at training the staff.
David: I support everything that you all have just said – especially about helping people even get
started with online gaming or the new features of Blue Box. I also heard over and over again about
how much risk people still felt about buying a console, and how complex it seems that purchasing
options are. Their perception of the online gaming potential was even more so since it seemed so
invisible. People didn’t know what they needed to do after connecting their console to the TV to
then be able to access online services and games.
Mike: Yes – you have to wonder about how we are distributing our products right now. The
environments in which we ask people to buy seem so risky, complex and sterile – they don’t feel like
places where you buy fun and games! When I asked people what a completely different distribution
approach would be, they were not specific – they just said it would be great if what the industry
offered was simpler. Quite a few talked about having a place where you could go and try out the
consoles and see what connecting online was all about – a place that was more like a coffee shop
than a hi tech shop – where you could take your time learning how to play and getting advice from
someone.
They also said that having games at different prices for different consoles in different packages was
complex enough – but the consoles and accessory differences made them feel that they were taking
a big risk by committing themselves to one console. The salespeople were not helpful in finding out
what they were really looking for and didn’t offer great guidance at all. Even when they had decided
what they wanted, there were the different bundles to consider – doing the math for deciding to buy
separates versus a bundle was complex because of the special deals offered many consoles on their
own and the accessories. And the frequent price discounts and promotions made decision making
and buying even more complex. People I spoke to said that anything a manufacturer could do to
make things simpler at the point of delivery would be much appreciated.
Sally: You know, Mike, what you said about a completely different kind of place to buy game
consoles and games in was something that six of the ten people I spoke to in stores mentioned.
There was nowhere to sit in the stores and people felt exhausted enough by all the jargon and the
over-stimulating store environment. That coffee idea is a good one – do you think our distributors
would support us putting special coffee areas in their shops like Barnes and Noble does?
Rick: I was thinking about that too – but I afraid that most of them will not want to give up any retail
space at all. It might be easier to enter into a business partnership agreement with an existing coffee
shop chain or to create our own franchise model. Our customers would be reassured by trying out
the consoles and talking to experienced staff, and this would most certainly bring additional clients to
the shop.
Barb: Overall, you have to believe that there were some strong pointers about moving away from
complexity and risk towards simplicity and taking the risk out of the purchase decision … in a less
threatening environment!
Mike: That’s a great summary of what I heard.
Sally: There is much talk in the industry magazines that Shiny Apples is going to open up ten flagship
stores. Apparently other manufacturers in the consumer electronics industry had had great success
from their flagship stores.
Mike: Are you recommending this is what we should do?

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Sally: Maybe … we could have ten or a dozen in major cities as places where people could see just
our products rather than everyone else’s. People could also chat to really experienced and
informative people about problems and questions that they may have.
Mike: Would you go for that rather than the coffee idea?
Sally: Well, it could be less risk, couldn’t it?
Rick: I think the risk would be the same.
David: I wonder if we can afford the investment in flagship stores. The situation of Shiny Apples is
different because they will share the stores with the other divisions of the group. They have a much
wider product assortment than we have. Do you think we will be able to make our flagship stores
profitable with only two consoles, controllers and a few other accessories?
Rick: I am not sure … Anyway, we could pilot this in a low key way somewhere and test it out – isn’t
that what being sensible about creating Blue Oceans is all about?
Sally: If it works, we will have to find a way to roll it out rapidly before competitors get going.
Rick: Sure, thing, Sal. Oh … another thought I had was about catalogues – apparently the catalogue
business is rising fast. It is almost 6% of the market now and it seems to be rising by at least 1% per
annum.
Barb: I don’t know … On one hand, selling in catalogues or on the internet sounds like a great idea.
But on the other hand, we’ve been talking a lot about simplicity, closeness to customers and taking
the risk out of the purchase decision. I am not sure that catalogues or internet will really unlock new
demand.
Mike: Well, one thing I can say about everything that I’ve heard is that the problems that
noncustomers have voiced represent a great opportunity for us! Once again, I am worried about our
ability to do too much, to tell the truth – especially if we were to try and make the coffee shop idea
work within the next year. One final question for you Sally: did you talk to the Market Research team
to find out more on potential market sizes?
Sally: I sure did. Actually, Bob was really keen to work again with me on this project. Let me find my
notes … here they are. According to Bob, dealing with services could bring 6 million additional
consumers on the market worldwide and delivery could bring 4 million. These numbers are based on
a full expansion in Roundland and Starland.

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2 Potential Services Competing Factors
2.1 Ability to Swap Games
This competing factor is an offering from the manufacturer to provide a second hand swap game
service. Buyers/users send their old games to the manufacturer in exchange for other games or
credits to buy other games.
 At level 1, a fee of $5 is payable for every game swapped and buyers/users have limited choice on
what they will receive
 Level 2 is the same as level 1, although the fee is only $3
 At level 3, buyers/users can select the game they would like from an extended list
 At level 4 up to three games can be swapped for two others at a fee of $6 and an extended choice
is available
 Level 5 is the same as level 4 except that a fee of only $3 is payable.

2.2 Ability to Trade-in Console

This competing factor involves the manufacturer accepting used consoles back as a trade-in for
purchasing a new console - possibly even a competitor’s product. Blue Buddies then reconditions the
console and sells it back into the market through distributors, at a lower price. Buyers/users are
made aware of this offer at the point of purchase.
 At level 1, only consoles bought within the last 6 months, with proof of purchase, are accepted for
a 10 % discount on a new console
 At level 2, the discount on a new console is 20%
 At level 3, the console could be owned for up to a year and the discount offered is 20%
 Level 4 is similar to level 3, except that the discount is 25%
 The level 5 offer is that any console, no matter how old the console is, a discount on a new
console of 33% is offered.

2.3 After Sales Help and Advice

This competing factor is about helping the buyers/users to make full use of the console from
installation onwards. Unpacking the console, reading the instructions and setting up the console can
be intimidating. Where people have an established home entertainment environment, this can
provide more of a challenge to connect the game console in a way that is not unsightly. It is a way to
build a long time relationship with noncustomer/customer.
 From the manufacturer’s point of view, at level 1, this competing factor is about providing
software updates and tips on cracking games as well as general information and FAQs
 At level 2, buyers/users are able to email the manufacturer and receive a response within 24
hours regarding any question or issue
 At level 3, the buyer/user can telephone a Call Centre to try and resolve the issue – this is more
convenient since the Call Centre is open 24/7/365 whilst the shop is not. However, the Call
Centre is partially automated and is located in low employee wages countries is not that effective
at solving real problems quickly
 At level 4, it is about getting great advice from a Call Centre where the people in the Call Centre
are from the same country as the buyer/user – this involves more investment from the
manufacturer, but since issues are dealt with once (solved first time) the incremental investment
on the low employee wage Call Centre may be negligible or it may even require less investment.
In addition, at Level 4, this Competing Factor also offers demonstrations of new games as well as
advice and guidance for the buyers/users buying the games
 At level 5 more information is available on how to organize birthday party entertainment with the
games console at the center of the entertainment. There are downloads for this and it is quick

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 and easy to enter the names of guests and other critical details for the party, as well as the fun
scoring system for all the players. Although only 4 players may be able to play at one time, the
software keeps a tally of all players and places them in rank order. Similarly there are
Thanksgiving and Christmas party downloads.

2.4 Ease of Repair

This competing factor relates to the fear that people have that when something goes wrong they will
find it nearly impossible for either the distributor or the manufacturer to take responsibility for
repairing the console, let alone providing another to use immediately.
 At level 1, there are some instructions in the instruction manual as to what to do about the
problem and a telephone number
 At level 2, the buyer/user takes the console to the distributor’s store (or sends it in). No firm date
is given for the completed repair
 At level 3, the distributor does some initial testing and may send off the console for repair – no
replacement is provided. A firm time estimate is given for the return date.
 At level 4, whatever the repair, the buyer/user does not have to worry about not having a
console. The manufacturer sees to it that the buyer/user is never without the ability to game and
will provide a replacement until the buyer/users computer is fixed, through the distributor.
 At level 5, a technician comes to the house of the buyer/user to do the repairs. If the console has
to be taken away, a replacement is supplied free of charge.

2.5 Entertainment Assistant

People spend time and effort thinking about how to celebrate someone’s birthday, or a meaningful
moment in their lives, whatever their age. The search often involves seeking novel ways to entertain
people – children or adults. This strategic offering involves the manufacturer providing trained
people to run a party event.
 At level 1 they arrive and show the users how to use the controllers and the game but they are
not responsible for the entertainment – they stay for one hour
 At level 2, they spend time with the players beforehand creating the right atmosphere and are
responsible for all the entertainment – they spend 2 hours
 At level 3, they arrive in a costume selected by the buyer making the booking
 At level 4 they arrive with a game console and multiple controllers, regardless of whether the
buyer/users have one or not
 At level 5, they also arrive with a 50inch plasma television monitor and high quality speakers.

2.6 Extended Warranty Offer (above standard warranty)

An extended warranty is often offered in industries such as the auto or computer industries as an
additional service which can be purchased when the product is first acquired. It allows the
buyer/user to be able to claim the benefits of the manufacturer’s warranty for a period beyond the
standard warranty. Two or three options in terms of length of extended warranty are usually
offered.
 At level 1, the extension is 6 months; at level 2 it is one year; at level 3 it is 18 months; at level 4 it
is 2 years; at level 5 it is 3 years.

2.7 Loyalty Card and Rewards

This competing factor is the manufacturer’s Loyalty Card which is available when registration occurs
online after purchase of the console. There are two ways of contributing points to the card – one is
through buying games and accessories, either online or through the distributor and the other is
where friends/parents etc contribute money to an online account which the buyer/user can use to
buy more games and accessories, or participate in the online gaming world. The manufacturer

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awards free points (essentially a discount) for purchasing new accessories and new games. The
different levels of this competing factor relate to the level of rewards offered by the loyalty card.
 At level 1, it equates to a 2 % reduction; at level 2 it is a 5 % reduction; at level 3 it is a 7%
reduction
 At level 4 it is a 10% reduction and regular promotional deals are offered to the buyer/user
through Email
 At level 5, a generous 15% is offered. Also at level 5, in addition to promotional deals, loyalty card
members are invited to trial new games as well as take part in competitions.

2.8 Manufacturer’s Insurance Offer

This competing factor involves offering insurance to the buyer/user: the more that is paid, the less
the buyer/user has to pay as an excess in the case of an accident.
 At level 1 the excess is $100; at level 2, it is $80. At level 3, it is $50 and at level 4 the excess is
only a nominal $10
 At level 5, the most expensive insurance, the console is replaced without any excess payable.

2.9 Speed of Providing Patches and Corrections to Games

In the rush to produce the next ‘big game’ prior to say the winter holiday season, many games hit the
shelves of retailers whilst there are still errors in them. One reason is the rush for the production
team to finish the game, and the second is that there are an almost infinite number of situational
permutations which can occur as buyers and users play the game – designers cannot always account
for every possibility. Thus, the game and console provided have to provide ‘patches’ or corrections
to enable the game to work properly.
 Level 1 offers only a list of available patches on the console manufacturer’s website where they
can be downloaded
 Level 2 offers Email notification of the existence of a patch and an explanation of the impact of
having the patch or not
 Level 3 offers a flash drive as standard with the console when it is purchased so that it is more
convenient to download and transfer the patch from an internet-linked device to the console
 Level 4 offers a flash drive with its own software which intelligently records and tracks the
‘downloads’ it has installed. When it is inserted in an internet-linked device, it automatically
checks for updates and copies them – a message is given onscreen to prompt the buyer/user to
insert the flash drive into the console where updating takes place automatically
 Level 5 involves CDs being mailed to the dwellings of buyers/users whenever a patch is devised.
The CD comes in addition to the solution put in place at Level 4.

2.10 Standard Warranty

A standard warranty is offered when you purchase a game console. It covers all manufacturing
problems that may occur.
 At level 1, the warranty is 3 months; at level 2 it is 6 months; at level 3 it is one year; at level 4 it is
2 years; at level 5 it is 3 years.

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3 Potential Delivery Competing Factors
3.1 Ability to Buy from a Catalogue
This is distribution through major catalogues as well as specialist electronic goods and gift
catalogues.
 At Level 1, distribution is through one catalogue only. The console and accessories are not widely
available and have to be ordered for collection at the catalogue’s distribution outlets at least a
week later
 At Level 2, the console and accessories appear in one more major catalogue and consoles are
available within three days
 At Level 3, the console and accessories appear in all the major catalogues and is either available at
the major catalogue outlets or can be posted to the buyer/user
 At Level 4, the console and accessories are also available through specialist electronic goods
catalogues. Fulfillment is the same as Level 3 and various supply options are available for quicker
delivery
 At Level 5, the console and accessories are also available through further specialist catalogues
such as gift catalogues.

3.2 Deals and Price Promotions

 At level 1 an annual price promotion is held in the first week of January for 10% on accessories
only
 At level 2, the annual price promotion includes consoles
 At level 3, price discounts are offered twice per annum at a level of 15% on consoles and
accessories
 At level 4, seasonal promotions are organized and at least one item is offered at a price discount
throughout the year
 At level 5, seasonal promotions are organized and several products are offered on price
promotion every quarter.

3.3 Dedicated Stores

Dedicated stores (eg Sony, Apple, Nokia) are becoming more ubiquitous than just flagship stores in
major shopping locations aimed to promote the entire range of a particular manufacturer. Levels 1
to 5 represent a combination of the penetration and size of these dedicated stores.
 For level 1, the offering is a small shop with product discovery zones for Blue Buddies major
products. If a potential buyer/user wants to make a purchase they have to go to the nearest retail
outlet
 Level 2 is a larger version of level 1 with more products on display
 Level 3 is a better decorated and presented version of level 2 where free refreshments are
available – products are sold at these stores
 At level 4, the offering also includes diagnostic facilities for damaged or faulty consoles as well as
a theater to organize demonstration sessions.
 Level 5 is like level 4 but with a repair facility so that damaged consoles can be repaired on the
spot.

3.4 Direct Sales on the Internet

This competing factor involves the manufacturer selling directly on the internet. In this way the
manufacturer avoids distribution investments and is able to enjoy some of the margin which
distributors currently make.

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 Level 1 involves a simple website with limited payment methods (2 credit card options) and a two
week lead time to supply the console and whatever accessories are ordered
 Level 2 provides more information on products and the delivery lead time is within 1 week
 Level 3 allows payment using all major credit and debit cards as well as displaying detailed
pictures of the console; delivery is still within a week
 At level 4 overnight delivery is an option (at a cost) and much more information is available on the
consoles with rotating 3D pictures
 At level 5, the website recognizes what has been purchased before and recommends new
accessories as well as games which the buyer/user may enjoy.

3.5 Distribution Matching my Lifestyle

This Competing Factor involves distribution of the console through outlets more aligned to the
lifestyle and shopping habits of noncustomers. Only a few outlets are chosen: sports clubs, gyms,
major supermarkets, sports stores, decoration and furniture stores. It also involves a business
agreement with a car manufacturer that sells special dedicated models in its dealerships.
 At Level 1, information on the console is on a leaflet on a table top stand with a discount voucher
to purchase a console
 At Level 2, there is a stand with a small LCD screen showing a looped video illustrating the game
being played
 At Level 3, some of the employees at the particular distribution outlet have been trained to talk
about and present the value that the console could bring to the friends/family of the potential
buyer/user.
 At Level 4, there is a significant display stand with product available for purchase and a part-time
(peak time) sales person
 At Level 5 there is a full time sales person as well as the entire range of console, games and
accessories.

3.6 Easy Guide to Online Services

This competing factor addresses the lack of guidance in the market about how to access online
services after the console has been purchased. Currently, these are either free or more services can
be accessed through additional payment (eg online gaming). Buyers/users are usually left to their
own devices after the initial purchase of the equipment.
 At Level 1 the box and the instruction manual refer to the website from which online services can
be accessed
 At Level 2, a CD-ROM is included with the console with more animated instructions
 At Level 3, the instructions are included on the console itself and can be accessed via the console
menu. The connection mechanism and options are clearly laid out and the software on the
console makes the process as much as possible ‘plug and play’.
 At Level 4, the manufacturer has created a demonstration in the shop; buyers/users can
experiment safely and ask the trained salesperson exactly what they should do to access online
services.
 At Level 5, the salesperson in the shop completes the purchasing of online services with the
buyer/user, giving them all their individual passwords etc. The salesperson gives full guidance and
all connections required given the home environment of the buyer/user.

3.7 Friendly Salespersons

This competing factor involves the manufacturer allocating more distribution expenditure to the
distributors specifically to help them to train their staff to be friendlier. Or the manufacturer
specifies what they believe the distributor should spend for the money resulting from extra margins
negotiated by the distributor. In the industry, the employees at electronic goods stores are known to

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be less than friendly. Levels 1 to 5 represent different levels of friendliness in terms of how a
buyer/user is greeted and dealt with.
 For level 1, the sales persons wear badges saying “Can I help?”
 At level 2, sales persons are instructed to smile and greet all shoppers
 At level 3, potential buyers/users are greeted at the entrance to the store
 At level 4, sales persons are instructed as to how to generate ‘small talk’ with potential
buyers/users to make them feel at ease
 At level 5, a salesperson offers light refreshments to potential buyers/users.

3.8 Gaming Cafes

This competing factor is about creating franchised dedicated gaming cafes containing the consoles
and games for one manufacturer only. The Gaming Café resembles something between an internet
café and a karaoke bar. It is developed along a franchised model where the franchisees are both
dedicated gamers as well as entrepreneurs in the café/coffee/snack market. Groups of people play
together or alone. It is possible to buy consoles, bundles, accessories and games – everything that
Blue Buddies offers. The accessories and games can be tried out in the café without potential
buyers/users having to buy them since gamers pay for each half hour and can use whichever games,
controllers and accessories they wish. Coffee, fruit juices and healthy snacks are available.
 Level 1 is an inviting environment with comfortable and simple environment – like a living room at
home; the snack and drink range are relatively small
 Level 2 is more like a café at a sports club – functional and comfortable with a slightly larger range
of food and refreshment than level 2
 Level 3 is like level 2 though with far more exciting and enticing décor and lighting
 Level 4 is similar to level 3 but with fairly sophisticated with greater comfort and range in the
décor – also, much more help and advice on how to use the console, playing new games and
gaming tips would be available
 Level 5 would be a leap up from level 4 with fairly luxurious décor and exotic snacks and
refreshments at fairly high prices.

3.9 Informed Salespersons

The manufacturers’ role is to provide the information about the product to the distributor – the
reason why they should distribute it. This usually takes place when the distributor’s buyer decides to
stock the product. The manufacturer may get involved in product training directly, or may contribute
to the training costs to that the salespersons can sell convincingly.
 At Level 1, the sales person is not equipped to communicate anything other than what is
represented on the display material
 At Level 2, the sales person is able to communicate features and benefits of the product category
as whole in his/her own words but not necessarily for each competitor
 At Level 3 (average market expectations) the salespersons are trained to be able to discern,
through a limited number of questions, what constitutes value for the potential buyer/user: they
use thus information to communicate a clear story/ies as to why the console will provide value for
them
 At Level 4, the sales persons are able to contact Blue Buddies via a one-touch telephone in the
store. They are answered instantly and can have clear information on the products, bundles,
delivery lead times, available games and accessories
 At Level 5, the offering is all of Level 4, but the salary of the highly trained salesperson is partly or
completely funded by Blue Buddies. They are incentivized by Blue Buddies and their views taken
seriously when asked for input to new products and services.

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3.10 Local Sales and Service
This competing factor involves a great number of franchised individuals – ‘agents’ - throughout the
market who act as agents and handle everything from sales to repairs directly with buyers/users
resident in their area. The service offering is convenient and good and it is relatively low cost to the
buyers/users. It is, however, quite expensive for the manufacturer as each agent represents a fairly
high cost for a low sales volume. If the buyers and users have a problem they know exactly whom to
call. Levels 1 to 5 all represent the same elements of the offering – ease and speed of getting help,
availability of supplies, professionalism of franchisees - but successively closer to where they live.
 At level 1, the nearest agent is within 30 miles. At level 2 it is 20 miles. At level 3 it is 10 miles. At
level 4 it is six miles and level 5 is three miles.

3.11 Number and Complexity of Bundles

This competing factor relates to the presentation of the product within the store as a pre-assembled
bundle of console, games and accessories, making it easier and quicker for buyers/users to find what
they really want.
 Level 1 for this Value Factor involves 2 bundles only – the small group bundle and the large group
bundle. They are in different sized boxes in different colors and the price advantage versus
buying components is clearly identified and compelling in size
 Level 2 involves 3 bundles and a variation on each of these bundles – single player, small group
and large group. The variation for each of these bundles involves two accessories and an extra
free game. The bundles are displayed differently, in different color and size boxes and the price
benefit over buying each component separately is clearly displayed
 Level 3 (the average market expectation) is for about 6-8 different bundles
 Level 4 involves a great deal of choice in the combination of console, games and accessories
 At Level 5 for this competing factor there is something for everyone no matter what their specific
needs are, they will find and offering seemingly designed just for them.

3.12 Trial and Return

This competing factor involves the manufacturer supporting the trial and return of consoles at the
distributor. This is to address the issue of buyers/users not being sure if they would like to have a
gaming console at home or not.
 At Level 1, the potential buyers/users are allowed to have the console at home for one evening,
together with 2 controllers and one game
 At Level 2, they are allowed to have the same system as for Level 1 but for the whole weekend
 At Level 3, they are given 3 different games and 4 controllers to try
 At Level 4 they receive a console for a week to try – with similar games and accessories as at Level
3
 At Level 5, they receive a brand new console as well as all the benefits of Level 4.

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