Blue Ocean Strategic Moves - Philips

Consider the British teakettle industry, which, despite its importance to British culture, had flat sales and shrinking profit margins until Philips Electronics, the Dutch consumer electronics company, came along with a teakettle that turned the red ocean blue. By thinking in terms of complementary products and services, Philips saw that the biggest issue the British had in brewing tea was not in the kettle itself but in the complementary product of water, which had to be boiled in the kettle. The issue was the lime scale found in tap water. The lime scale accumulated in kettles as the water was boiled, and later found its way into the freshly brewed tea. The phlegmatic British typically took a teaspoon and went fishing to capture the off-putting lime scale before drinking home-brewed tea. To the kettle industry, the water issue was not its problem. It was the problem of another industry—the public water supply.

By thinking in terms of solving the major pain points in customers’ total solution, Philips saw the water problem as its opportunity. The result: Philips created a kettle having a mouth filter that effectively captured the lime scale as the water was poured. Lime scale would never again be found swimming in British homebrewed tea. The industry was again kick-started on a strong growth trajectory as people began replacing their old kettles with the new filtered kettles.