CAZOO: Analysis of Innovation Management Strategies in Business

This report examines CAZOO, a British online car retailer, and its approach to innovation. It delves into the application of the Blue Ocean Strategy, highlighting how CAZOO aims to create a new market space rather than competing in existing ones. The report outlines the steps involved in formulating a Blue Ocean Strategy, emphasizing differentiation and cost reduction. It also discusses the two conditions required for disruptive innovation in this context. The report analyzes CAZOO's innovative practices, such as online car sales, instant finance, and comprehensive warranties, to illustrate how the company has successfully implemented these strategies. Furthermore, the analysis covers the importance of understanding market dynamics and customer needs to achieve business objectives. The report concludes by emphasizing the benefits of this approach for organizations seeking to establish a strong market presence through innovative services.

Managing Innovation

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Blue Ocean Strategy...............................................................................................................3
The steps that are followed to formulate Blue Ocean Strategy..............................................4
The two conditions required for disruptive innovation through Blue Ocean Strategy...........6
Advantages.............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
Books and Journals...............................................................................................................11

INTRODUCTION
As the world is dynamic it is vital for all the business organisation to understand the
importance innovation. To compete in this market full of competition it is vital for business to
regularly innovate the products and service that are offered by the company. Innovation is an
idea that is being converted into the business (Ravichandran, Han and Mithas, 2017). It helps the
organisation to achieve success. It helps in development of product to serve the customer needs
better. This report is based on CAZOO which is British online car retailer that has headquarters
in London, UK. The company was founded in 2018 by Alex Chesterman. The company has
around 1750 employees. There is discussion related to innovation used by CAZOO. The
explanation is supported by I innovation theory that will help to understand the historical
development as well as recommendation related to future development pathways of the products
offered by the company.
MAIN BODY
Blue Ocean Strategy
It is a strategy that is based on creating differentiation. The focus is to open a new market
by cutting cost so that there is new demand in the market. The strategy says that it is not
important to fight with the competitors the task is to eliminate the competition and become the
leader. It is a way of marketing and bringing innovation so that the company is able to form
strong share in the market (Aarikka-Stenroos, Jaakkola and Harrison, 2017). The same is used
CAZOO as the company has come up with an innovative idea to serving the customers and
letting them buy the cars online. The customers do not have to move out they just have to select
the car and the same will be delivered to their doorstep. The key points that are covered under
the blue ocean strategy are mentioned below:
It’s more than theoretical: It is a strategy that is not only based on theory it really
implements the planning. It is originated from a study that covers strategic planning g model.
Thus strategy is formulated and based on proven ideas and not unproven ones.
The competition is irrelevant: The target of a Blue Ocean strategy is not to outperform
the competition or to be the best in the industry. Instead, the goal is to redraw market lines and
operate within the new area, effectively eliminating competition. It is a new concept as all the
previous developed theories always helps to gain lead over the competitors, Blue Ocean Strategy

focus on eliminating the competition and starting something new innovative that is not seen or
used before.
Differentiation and low cost can coexist: Consumers don't have to pick between value
and affordability, according to the Blue Ocean Strategy (Lee and Trimi, 2021). Differentiation
and low cost can both be accomplished if a business can recognise what consumers actually
value and then rethink how to deliver that value. This can be termed “value innovation.” If the
customers will het both value product at affordable price then the customers will buy the product
or avail the service from the company.
A framework to test ideas: The Blue Ocean Idea, which is part of the overall approach,
helps organisations to determine the economic potential of their proposals. It helps to check the
feasibility of the idea and its future (Eastwood, Klerkx, Ayre and Rue, 2019). This approach
helps in the refining of proposals and the discovery of the most attractive prospects while
reducing the risk.
The use of this strategy is beneficial for an organisation as it helps the company to
understand the needs and wants of customers. The target is to serve the customers and to provide
them best and innovative services (Ingram, Gaskell, and Dwyer, 2020). The discussion is related
to CAZOO the company owns and fully re-conditions the cars before selling them to the
customers. The buyers are able to search the cars like any other product online. Buyers will
complete the entire transaction online, including obtaining instant finance and receiving an
instant bid on every part exchange. A free comprehensive 90-day warranty and roadside
assistance are both included with any CAZOO vehicle.
The steps that are followed to formulate Blue Ocean Strategy.
It is important to know the steps that are used to create blue ocean strategy. These steps
help the company to successfully understand the market and use the strategy. The steps are
mentioned below:
Select the right scope: This is the first step that focuses ion first understanding the scope
of the business. It is one of the important steps in which company takes initiatives and identifies
what they are really planning to do (Nguyen and Hoang, 2021). In this strep the team is
established that conducts the research in the market and builds confidence on what will be done.
In this regard CAZOO Company also first identified the need of customers related to cars and
understands the scope of the business.

Get super clear about the current state: In this step the company identifies the current
state of the market. It anyone else on the same platform (Puhan, 2019). The competition is being
considered in this stage as it is important to identify if any one is also is planning to start the
same business. In this step the customers are also reviewed. In this step CAZOO also identifies
and conducts study related to the competitors and the customers to start the business
successfully.
Identify the hidden constraints that can turn into opportunities: In this step the pain
points are identified and then converting them into them into opportunity. As these point will
help to attract the customers and gain a huge market share. These are the points that tell the
company that why these customers are in the industry the reason of their stay in the industry. In
this step CAZOO identifies these points and never treat them as constraints. These are the points
that help to create demand in the industry for the products offered by the company.
Practical implementation: In this step the team is able to come up with realistic blue
ocean solutions that are both exclusive and low-cost (Gaynor, 2017). This means using a
systematic approach to finalise the business lines and to establish new market space. In this step
the team of CAZOO focuses to eliminate, reduce, raise and create. This is the practical step in
which the team work for the benefit of the company.
Launch the blue ocean move: It is the final step in the process where the product is
tested in the market. It helps to maximise the profits of the company. It will help to identify the
success of the product in the front of customers. It is most effective that is used by CAZOO
before launching the products in the market. As testing is vital part and will help the company to
determine the areas of success.
All these are the steps that companies follow to make a blue ocean shift. This will help
the company to successfully launch product and service in the market and become successful. It
is important to follow all these steps and identify the needs of customers that are not fulfilled by
others (Zhang, Tang and Wu, 2021). This helps to retain customers and achieve goals and
objectives of the organisation. The same is followed by CAZOO so that they identified the needs
of people and then served them with an option of buying the car online that satisfied the needs
and wants of customers. The company has successfully launched and captured good share in
market.

The two conditions required for disruptive innovation through Blue Ocean Strategy
The world is turning digital and it is important for each and every business to understand
the importance of internet. All the customers are switching towards online modes to make the
purchases and buy the products that they want to. It is supported by blue ocean strategy. There
are two conditions that are required for Blue Ocean strategies are explained below:
Defend current position’ perspective: It is the important part that needs to be studied.
Under this perspective the history of the product and the industry are identified (Wei, Thurasamy
and Popa, 2018) It is important for a company before launching the product to identify the past
of the industry so the success in that area. In this case CAZOO identified the market position of
current industry and will help to know the success and future in the industry. It is that the
automobile industry is at boom. There is need of cars in the market so they understood the
concept. The points that are important to be considered as mentioned below:
Compete in existing market space: This was followed in the past as the task at that time was to
compete with the existing market. Wherein the company use to launch a product and service that
is already in the market and try to capture the share in the market. The CAZOO started the
business of selling the cars to satisfy the needs and wants of the customers.
Beat the competition: This is the point that discusses about the competition. Every
company wants to gain advantage over the competitors. They make efforts and regularly update
the products in such a way that helps them to gain advantage over the competitors (Konstantinov,
Sakulyeva and Makeeva, 2019). It is important point that is responsible for the success of the
business.
Exploit existing demand: Previously the focus used to be on exploiting the already
existing demand. As the customers are already in demand of the products that are offered by the
company this is to satisfy their needs and wants. The companies use to strongly promote their
goods and services so that they are able to serve the demand and gain huge profits.
Make the value-cost trade-off: Here the organisations focus on the war between
providing value to the customers or to provide affordable goods to the customers. The companies
face a trade off in which they have to choose between the cost and value that they have to
provide to the customers. It is difficult for the company to know the needs and wants of the
customers and serves them accordingly.

It is seen that the company is used to follow all these strategies to bring innovation in the
business. There are various points that were considered in the past and already discussed above.
Innovate & pursue new opportunities’ perspective
It is the approach that is followed no by the companies in which the task is to bring
innovation and capture the new strategies that are launched by the company (Müller, Påske and
Rodil, 2019). It is important to bring innovation as it helps to serve the customers. New product
and development in the product are important in today’s time. To provide value to the customers
it is effective for a company to satisfy the current needs and wants of the company and also
forecasting the future needs. As there various opportunities that are present in the market, that
needs to be identified and then fulfilled to serve the customers. These are the strategies that are
follows by CAZOO to launch their business of online cars. The strategies are mentioned below:
Create uncontested market space: As per the strategy the company do not work in the
existing market. The focus in this strategy is to create a new market for the customers. The
research is also required and is important in this approach also. But the focus is not on the
existing market the task is to formulate a new market and then serve the needs of customers by
creating demand for the product offered by the company. In relation to CAZOO the company
understood the need of cars and then combined it with digital ways to serve them. They are able
to serve the needs of customers by providing them the service of buying online cars through one
click.
Make the competition irrelevant: This approach is based on not trying to gain
advantage over the competitors. The company try to make the competition irrelevant by starting
and developing the products that are new for the customers. It is important in this stage to
identify a new market to cater the needs and wants of customers. In this case CAZOO has
ignored the competition in the market and started a new business in which they sell the cars
online. This is the way in which the CAZOO eliminated the competition and started their own
market and served the customers without fear of competition.
Create and capture new demand: It is seen that under this approach the demand is
created. As the needs of the customers are identified and then they are made available to the
customers then it helps to create the demand in the market. It creates demand for the product in
front of customers (Sharmelly and Ray, 2021). Once the demand is created then the success of
business is possible. In relation to CAZOO, the company did the same they created demand in

the market for online cars and that helped them to create new market share and enhanced the
demand of the products offered by the company.
Break the value-cost trade-off: The Company identifies what the customers want and
then provide the same to the customers. This enhances the value along with that the target is to
serve the customers with affordable goods. Here in this strategy the company breaks the war
between the value and cost. The company provides both valuable goods at affordable price to the
customers. In relation to CAZOO the company uses the strategy and provides both values to the
customers at the cost that they can afford.
These are the options that are used under Blue Ocean Strategy. They help the company to
develop own market and serve the needs and wants of customers in an effective way. It is vital
for bringing innovation that the organisation follows the strategies. All this helps to serve the
customers and gain profits. These strategies are being used by the CAZOO Company and that
has helped them to become leader of the market. They have served the customers successfully
and earning huge profits.
Advantages
The advantages of following Blue Ocean Strategy to a business are mentioned below:
 Blue Ocean Strategy works with businesses to identify uncontested opportunities while
avoiding mature and saturated ones (Tien and Cheng, 2017). As it will help the company
to identify the new market that is developed by them and there is no other competitor
present in that market. This is advantageous for CAZOO as they have created own
market where they are no competitors and the company has captured huge market share.
 It helps in getting away from the impediments of operating within the current market and
cost structure and toward incremental performance growth. In brief, it shows how to use
research to break away from traditional strategic models and improve the profitability and
demand for the industry. The same is used by CAZOO and the company has earned huge
profits short span of time due to following the blue ocean strategy. It is seen that the
company is able to satisfy the needs and wants of customers by providing them cars
through online mode that shows the innovative idea of the company.
 A Blue Ocean Strategy helps to provide value innovation. The combination of creativity
with utility, price, and expense positions is known as value innovation (Bennink, 2020).
It finally generates new value and demand for customers, thus increasing the capacity for

expansion. As the opportunity for growth increases due to use of the strategy. In relation
to CAZOO the company is able to provide value to the customers and that is one of the
reasons behind success of the company.
 The Blue Ocean Strategy allows for a significant change in thinking. It opens one's
intellectual horizons and assists in the identification of possibilities. This is the reason
that companies are able to find new and innovative ways in which they are now serving
the needs and wants of the customers. As it helps in changing the perception of the
customers and then letting them research in a way that is different others.
 Another important point that should be taken into consideration and it related to
development of Blue Ocean Strategy is rather than unproven theories; the Blue Ocean
Strategy is based on "time and time again" confirmed theory. It is focused on experienced
methods that have shown positive outcomes in market executions. This shows that the
companies that use these theories are able to serve the needs and wants of customers
effectively as they are based on practical experiments and not based on just unproven
theory.
 Blue Ocean Strategy products should not force consumers to choose between reliability
and affordability. It is the study of differentiation and the low-cost theory at the same
time (Pandit, Joshi, Arun Sahay, and Rajen Gupta). It breaks the war between the proving
value to the customers are providing them affordable goods.
These are the advantages that the companies get due to following Blue Ocean Strategy. It
is seen that by following this strategy CAZOO is able to attract customers. These are the ways in
which the company is able to satisfy the needs of customers by serving them with online facility
of cars. The cars being delivered to the doorstep and there is option of exchange available.
CONCLUSION
It can be summarized that since the environment is changing, it is important for all business
organisations to recognise the value of change. To survive in this highly competitive
environment, businesses must constantly innovate the goods and services they provide. It is a
concept that is related to transformation of goods into a market is referred to as innovation. The
report is based on the use of Blue Ocean Strategy and its importance for a business. The two
perspectives of the strategy are also discussed. In the end of the report there is discussion related
to advantages of following blue ocean strategy by the company.

REFERENCES
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Bennink, H., 2020. Understanding and Managing Responsible Innovation. Philosophy of
Management, pp.1-32.
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the development of smart farming: From a fragmented to a comprehensive approach for
responsible research and innovation. Journal of Agricultural and Environmental
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Gaynor, G., 2017. Managing technology and innovation. IEEE Engineering Management
Review, 45(4), pp.15-17.
Ingram, J., Gaskell, P., Mills, J. and Dwyer, J.C., 2020. How do we enact co-innovation with
stakeholders in agricultural research projects? Managing the complex interplay between
contextual and facilitation processes. Journal of Rural Studies, 78, pp.65-77.
Konstantinov, V., Sakulyeva, T. and Makeeva, V., 2019. DEVELOPMENT OF ECONOMIC
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innovation and dynamic capabilities in emerging economies: Evidence from the Indian
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Zhang, S.K., Tang, T.Y. and Wu, F., 2021. The ambidextrous patterns for managing
technological and marketing innovation. Industrial Marketing Management, 92, pp.34-
44.