Blue Ocean strategy for creating value innovation: A study over Kedai Digital in Yogyakarta, Indonesia

Abstract

In Yogyakarta, merchandise business has been developing rapidly in recent years. The phenomenon has made entrepreneurs in the industry compete to retain customers, by which most of them fall into a price war. To create a new market and make the competition irrelevant, Kedai Digital, a merchandise manufacturer in the region, has attempted to implement Blue Ocean strategy, wherein value innovation has a critical position. This study aims at analyzing current value innovation in the company, in which it is supposed to determine value innovation and identify value drivers. A mix-method approach is taken, by which qualitative approach is adopted in conducting an in-depth interview with 12 decision makers from 6 companies currently participating in the merchandise business in Yogyakarta, while quantitative approach is conducted by spreading questionnaire to 100 persons based on a purposive sample over the Kedai Digital’s customers. Canvas Strategy and Four Framework Analysis are taken as the tools for analysis. Findings show that 8 value standards serve within the competition, i.e. volume, price, prestige, quality, promotion, service, variation and on-time delivery. Most companies attempt to win the competition in these area. In particular, the Kedai Digital has been creating 3 distinguished value innovation instead of playing in the red ocean. These value innovation are a free design, a unique location and a one-stop shopping concept. These values have made Kedai Digital to be a leading company in the industry and may have made the competition irrelevant.