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How to Increase Prices and Still Get More Customers

How to Increase Prices and Still Get More Customers

 
Cirque Du Soleil, a unique blend of traditional circus acts and theater storylines, has presented shows in over 40 countries and generates close to a billion dollars in revenue each year.  

Over 90 million people have seen a Cirque show, with their permanent Las Vegas shows entertaining over 9,000 people a night (which is 5% of the city’s visitors).

But despite runaway success, their future wasn’t always so clear.

The circus industry has been in massive decline for years.  It has little potential for new growth.

And Cirque’s founders have limited business experience. They were former street performers -- accordion players, stilt-walkers and fire-eaters.

All of which begs the question...

How did Cirque Du Soleil achieve such staggering, rapid growth in a declining industry?


In Search of Uncontested Blue Oceans


Most companies in mature markets try to steal customers from each other. They compete head-on, in bloody red markets to increase revenue by taking market share from their competitors.

But that’s not how Cirque grew so quickly.

Instead of competing directly in the circus industry, they broadened their horizons and found uncontested blue oceans.

They created a new market space to dominate, without having to compete directly with others.

If you’ve seen a Cirque show, then you know it’s unlike anything else.

They have some classic circus elements, like acrobatics and death-defying stunts. But they also have vague plots and storylines, with a mix of drama and humor that you would traditionally only find in the theater.

How did they decide on this interesting mix of acts, and create a billion dollar company in only 20 years?


Eliminate, Reduce, Raise and Create


One of the key concepts in Blue Ocean Strategy is the Eliminate, Reduce, Raise and Create grid.

The goal is to force business owners to “systematically pursue differentiation AND low cost" by answering the following customers:

  • Eliminate: Which of the factors that the industry takes for granted should be eliminated?
  • Reduce: Which factors should be reduced well below the industry’s standard?
  • Raise: Which factors should be raised well above the industry’s standard?
  • Create: Which factors should be created that the industry has never offered?

You can use this grid to analyze all the factors in your current industry, and discover better ways to restructure your company to create uncontested market space.

Cirque eliminated classic circus elements like 3 rings with different acts and the use of animals. They reduced the number of acrobatic acts, while at the same time raising the level of quality.

All of these things created a new competitive advantage that has survived, and thrived for over two decades.

And by positioning themselves against more sophisticated forms of entertainment, they were able to raise prices and charge a premium that’s 3 or 4 times what you would pay for the traditional circus.   
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