The Blue Ocean Strategy is based on the metaphor of the "red ocean," which represents the traditional, crowded market where companies compete for a share of the existing demand. In this scenario, companies are forced to fight for customers and market share by lowering prices and differentiating themselves in small ways. As a result, profits are often low and competition is fierce.
On the other hand, the "blue ocean" represents a new, uncontested market space where there is no competition and plenty of room for growth. According to the Blue Ocean Strategy, companies can create these blue oceans by identifying and targeting untapped customer segments, creating new market categories, and developing innovative products or services that meet the needs of these customers.
One key aspect of the Blue Ocean Strategy is the emphasis on value innovation, which involves creating a product or service that offers value to customers at a lower cost to the company. This can be achieved through a variety of means, such as finding new sources of raw materials, streamlining production processes, or finding new ways to deliver value to customers.
The Blue Ocean Strategy also focuses on creating a unique value proposition, or a clear statement of the benefits that a company's product or service offers to customers. This value proposition should be based on a deep understanding of customer needs and preferences, and should be communicated clearly and consistently to potential customers.
Overall, the Blue Ocean Strategy is a powerful approach for companies looking to differentiate themselves from their competitors and create new markets for their products or services. By focusing on value innovation and a unique value proposition, companies can successfully navigate the red ocean and create a blue ocean of opportunity for themselves and their customers.
What Is Blue Ocean Strategy?
This takes us to the third question: what would that area be? Blue Ocean Strategy Summary Part 2. They emphasize that you need to communicate clearly, because everyone on the team needs to understand the strategy in order to do their part effectively. FORMULATING BLUE OCEAN STRATEGY: 4 KEY PRINCIPLES How do you pull the tools above together to formulate your Blue Ocean Strategy? Blue Ocean is about finding a new market space where you can be the only In a blue ocean, there are no competitors. . Al Ries and Jack Trout assert that understanding your current positioning, that is, how people. People go to a restaurant for the same objective that they go to the movies: to enjoy a night out.
Here, the structure of the market will be explained. He thinks he's kind of a big deal because he writes in 3rd person but he's not. For example, Microsoft, to come out of the decline, needed to work on creating a more balanced portfolio in all businesses that not only compete in the red oceans, but also create blue oceans that will renew, expand, and build their brand value. For this, it is important to ask the following: what are the alternative sectors to my own sector? In some cases, consumers may not even know that they want something. This means taking into consideration customer preferences, as well as developing innovative solutions to solve their problems. If you buy something using a link here we may earn an affiliate fee at no cost to you. For a long time, the airlines were competing on this.
Consider Other Buyers in the Chain Kim and Mauborgne suggest appealing to under-served people in the purchasing chain. For example, an 2. Either way, you want to move with optimism tempered by cautious evaluation. Red oceans are extremely competitive, and the key to survival is to fight fiercely. This would differentiate itself from Yahoo, which was slow and often inaccurate. This cut-throat battle leaves the water bloody. Think of the rapid rise of cloud computing or the global movement toward environmental protection.
Their book provides a strategy for finding the blue ocean where your company can prosper. The winner is often the one who is willing to fight the hardest. What characteristics does your industry take for granted that could be eliminated? No, that does not mean that if you are an expert in website design, you would transform your company into a microbrewery. Buyer Utility Map This map shifts the focus to buyers, helping to identify the utility spaces that a product or service can potentially fill. Focus on that area. For example, s ome airlines eliminated the airport lounges.
Angels are those who have the most to gain from the strategic shift. Red Ocean In the 1980s, the circus industry was dominated by Ringling Bros. In this case, it meant tapping into working adults seeking education. If the end user and the person with purchasing power are not one and the same, the end user may have pain points, or persistent problems, you can address to provide unique value. For example, "premium" cars, such as BMW and Mercedes, form a group; while more popular cars, such as Volkswagen and Fiat, make up another group. Who is in the chain of buyers for your industry? Blue Ocean Strategy is a business strategy book written by W. Overtime the customers had more entertainment options, like television and video games.
These are not substitutes, but alternatives to choose from. The answer may sound cliche, but it will make sense as we dive deep into the summary: to innovate. And is Blue Ocean Strategy right for your business endeavors? This image has been adapted from figure 2. There are three tiers of noncustomers that have the potential to be transformed into customers: 1. If you want to save this summary for later, download the free PDF and read it whenever you want. Be the best in your area, not in all areas. If what you offer doesn't fit to the needs of customers, it doesn't represent greater value.
