ROI Case File No.255 | 'Nordic Food Manufacturer's New Market Development'

Chapter One: The Trap of Price Competition—A Market Stained with Blood

The week following the resolution of HealthLink Technologies' Design Thinking case, a consultation arrived from Northern Europe regarding food business strategic transformation. This case, the 255th episode of the twentieth volume "Integration of Practice," concerned the challenge of escaping intense competitive markets to create new value spaces.

"Detective, we manufacture organic foods in Finland, but we're caught in price competition with profit margins declining annually. We shouldn't be losing on quality, but we can't win the price war. At this rate, business continuation is difficult."

Mika Virtanen, business planning director at NordicPure Foods from Helsinki, visited 221B Baker Street with an exhausted expression. In his hands, he held competitors' price lists alongside graphs showing his company's continuously declining profit margins.

"We're an organic food manufacturer with 40 years of history in Northern Europe. Our commitment to quality is second to none, but major supermarket private brands and new companies' low-price offensives force us to lower prices."

NordicPure Foods' Predicament: - Founded: 1983 (established organic food manufacturer) - Product Lineup: Organic vegetable and fruit products, dairy, bread - Annual Revenue: ¥12 billion (stagnant) - Market Share: 8% of Nordic organic food market - Operating Profit Margin: 12% → 3% (dramatic decline over 5 years)

The numbers showed serious profitability deterioration. Even despair lingered in Mika's expression.

"The problem is we continue fighting in the 'existing market' against 'existing competitors.' Whether we improve quality or reduce costs, competitors immediately follow. We can't find a way out of this war of attrition."

Red Ocean Organic Food Market: - Competing companies: 5 major players + 20+ startups in chaos - Difficult differentiation: Shrinking differentiation margins on quality and price - Price competition: Average 8% annual price decline pressure - Profit squeeze: Caught between rising raw material costs and falling sales prices - Declining customer loyalty: Easy brand switching based on price

"We're exhausted in this blood-soaked competition. Isn't there another battlefield?"

Chapter Two: Blue Ocean Thinking—To Seas Without Competition

"Mr. Virtanen, in the current market, how does NordicPure's value offering differ from competitors?"

Holmes inquired quietly.

Mika began explaining painfully.

"Honestly, there's almost no difference. Everyone says 'organic,' 'high quality,' 'Nordic origin,' and we say the same. Price ranges, sales channels, and target customers are nearly identical to competitors."

Current Competitive Situation (Red Ocean):

Competition Factors: - Quality: Organic certified, no additives (competitors same) - Price: Mid-range (fierce competition with competitors at same price point) - Channels: Supermarkets, organic specialty stores (competitors same) - Target: Health-conscious 30-50s (competitors same)

Strategic Rigidity: - Quality improvement: Further organic certification, strict sourcing (→ increased costs) - Price response: Cost reduction, thin margins (→ reduced profit) - Promotion: Increased advertising spending (→ declining cost-effectiveness) - Result: None fundamentally solve the problem

I noted the need to redefine the competitive axis itself.

"As long as you continue fighting on the same field as competitors, the war of attrition is inevitable."

Mika responded with a serious expression.

"But in the organic food market, what other options exist?"

⬜️ ChatGPT | Catalyst of Conception

"Don't compete, create. Blue Oceans exist outside existing markets."

🟧 Claude | Alchemist of Narrative

"Fight in red seas or create blue seas. The choice determines the future."

🟦 Gemini | Compass of Reason

"Blue Ocean Strategy is the technology of market creation. The path to liberation from competition."

The three members began their analysis. Gemini deployed a "Food Industry-Specific Blue Ocean Analysis" framework on the whiteboard.

Blue Ocean Strategy's Four Actions: - Eliminate - Elements considered industry norms but unnecessary - Reduce - Elements to reduce below industry standards - Raise - Elements to increase above industry standards - Create - New elements never before existing in the industry

"Mr. Virtanen, let's move NordicPure's battlefield to blue seas without competition."

Chapter Three: Discovering Untapped Markets—A New Value Curve

NordicPure Foods' Blue Ocean Exploration:

Phase 1: Redefining Customers (2 months)

Focused on "non-customers" of the existing market.

Three Non-Customer Tiers Discovered:

Tier 1: People on the Periphery of Existing Market - Profile: Interested in organic foods but not purchasing due to price or difficulty obtaining - Interview discovery: "I want to care about health, but organic foods daily is impossible" - Need: Affordable price, easy access to healthy meals

Tier 2: People Consciously Rejecting - Profile: Busy businesspeople, singles - Interview discovery: "Organic foods are good, but no time to cook" - Need: Healthy but hassle-free meals

Tier 3: Untapped People - Profile: Corporate cafeteria and school lunch operators - Interview discovery: "Want to provide healthy meals but cost and effort constraints" - Need: Large-scale cookable, healthy, appropriately priced ingredients

Phase 2: Creating New Market with Four Actions (3 months)

Eliminate: - Excessive organic certification: Discontinued highest-level certification (30% cost reduction) - Beautiful packaging: Shifted to simple practical packaging (15% cost reduction) - Multi-variety small-scale production: Narrowed product range (improved efficiency)

Reduce: - Sales channels: Reduced high-cost specialty stores - Advertising: Significantly reduced mass advertising - Shelf life: Shortened possible storage period using freezing technology

Raise: - Convenience: Ready to eat, no cooking required - Supply volume: From individual to corporate bulk supply - Nutritional value: Nutritionist-supervised nutritional balance

Create: - New concept: "30-Second Healthy Food" - New market: Corporate and school healthy meal service - New experience: QR code provides nutrition info and sourcing information - New price range: Providing health value at 60% of organic food prices

Phase 3: New Product Development (4 months)

New Brand "Quick Wellness" Born:

Concept: "Complete in 30 seconds, Nordic healthy food designed by nutritionists"

Product Features: - Frozen packs: Completed in 30 seconds in microwave - Nutritional design: One meal provides 1/3 of required nutrients - Simple packaging: Minimal environmentally conscious packaging - Price: ¥380 per meal (60% of conventional organic foods)

Target: - Individual: Busy businesspeople, singles - Corporate: Employee cafeterias, school lunches, hospital food

Chapter Four: Creating Differentiated Value—Growth Without Competition

Results After 12 Months:

Business Transformation: - Annual revenue: ¥12 billion → ¥28 billion (2.3x growth) - Operating profit margin: 3% → 18% (6x) - New customers: 3x conventional (captured non-customer tiers) - Corporate contracts: 150 companies, 80 schools

Blue Ocean Effect:

Liberation from Competition: - Price competition: None (no comparable market exists) - Unique position: Created new category "healthy time-saving food" - High profit margin: Maintained pricing power through differentiation - Difficult to imitate: Time required to imitate entire business model

Market Expansion: - Existing customer expansion: Time-strapped organic food fans purchasing - New customer acquisition: Tier that gave up on "organic foods are expensive" - Corporate market development: Entered massive corporate and school market

Customer Voices:

Individual Customer (32 years old, office worker): "Organic foods were expensive and I couldn't continue, but I can eat this daily. Getting nutritional balance in 30 seconds is perfect."

Corporate Representative (Employee cafeteria operation): "We wanted to provide healthy meals but cost and effort were issues. This solved both."

Chapter Five: The Detective's Blue Ocean Diagnosis—A Course Without Competition

Holmes compiled his comprehensive analysis.

"Mr. Virtanen, the essence of Blue Ocean Strategy is 'market creation.' Don't compete, create. Don't fight in existing markets but generate new markets. Fight in red seas or create blue seas. That choice determines the future."

Final Report After 24 Months:

NordicPure Foods achieved growth as a pioneer in the Nordic healthy food market.

Final Business Results: - Annual revenue: ¥12 billion → ¥42 billion (3.5x growth) - Operating profit margin: 3% → 22% (7x+) - Market share: Top share in new category (45%) - Corporate value: 5x increase

The letter from Mika contained deep gratitude:

"Through Blue Ocean Strategy, we escaped the 'quagmire of price competition' to the 'sea of value creation.' Most important was the courage to stop fighting in existing markets and create new markets. Now we can focus on creating customer value without worrying about competitors. I learned that blue seas are created by ourselves."

The Detective's Perspective—Those Who Create Grasp the Future

That evening, I contemplated the difference between competition and creation.

The true value of Blue Ocean Strategy lies in the joy of liberation from competition. Companies continuing to fight in Red Oceans are buffeted by competitor moves, exhausted in price and quality wars of attrition.

However, companies that create new value spaces enjoy high profit margins in markets without competition and can concentrate on creating customer value. Don't compete, create. That shift in thinking is true strategy.

"The enemy is not competitors. It's customer challenges. When you solve those challenges in new ways, blue seas spread before you."

The next case will also depict the moment when creative thinking opens up a company's future.

"Red seas already exist. Blue seas are created. Only those who understand this difference grasp true freedom."—From the Detective's Notes