What Is Blue Ocean Strategy? Steps To Making A Blue Ocean Shift
- 10 December 2020
- Posted by: Namita Ahuja
- Category: Marketing & Advertisement
All along firms have been trying to grapple and survive in the competitive world. But we have finally come to the realization that success is not about fighting for existence, it’s about growing the economic pie. The analogy is utilized to explore the unfathomable potential of the market space in terms of profitable growth. Blue ocean strategy is all about taking a leap into a new way of thinking about business strategy.
What Is Blue Ocean Strategy?
Blue Ocean Strategy originated from a study that took place over a decade ago where it analyzed company successes and failures in more than 30 industries. Hence, it’s known to be based on proven data rather than on unproven facts. The strategy involves identifying what the customers value and providing that value instead of having the customers choose between value and affordability.
The eponymously titled book by W. Chan Kim and Renée Mauborgne argues that “cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool.”
Interestingly companies are bound to lesser risk, infact, they lead to greater success and increase profits in the blue ocean market. So, why fall into a red ocean ie. a competitive market when there are ample benefits in the blue ocean market!
There are several famous organizations that followed the path of the blue ocean strategy and succeeded.
Companies That Succeeded In The Blue Ocean
Netflix– Netflix not only disrupted the tv industry but changed the whole scenario of renting DVDs. The use of Eliminate-Reduce-Raise-Create wherein they eliminated stores, raised the comfort of watching movies, and created unlimited watching on a monthly fee. Netflix has proved to be an absolute game-changer since it entered the market.
iTunes– The growth of digital music came into the picture when iTunes solved the problem of illegal downloading of music. It changed the entire market by creating a category that allowed artists to profit and consumers to download legal and good quality music at a reasonable rate. iTunes succeeded in the strategy of “elimination” and “created” a whole new network for music lovers.
Uber- Uber being the brainchild of the blue ocean strategy, grew faster than any other company. The reinvention of the market by developing an uncontested market space instead of competing with the already existing taxi industry. This helped them create profits rapidly enough for anyone to even fathom. Their idea of thinking differently, not creating a race, and choosing to create a business that is cheaper and better has made the brand one of the most recognized worldwide.
Ways To Become A Blue Ocean Strategist
Make The Competiton Irrelevant
Since competition makes rivals focus on outperforming each other to achieve a competitive advantage, they ironically end up forming a strategy that looks like their competitors. However, blue ocean strategists don’t believe in indulging themselves in a competition, they instead make the competition irrelevant.
Since the wake of the pandemic, various products and services have been put to test. This is where the blue ocean strategy comes into the picture as it has a lot of firms put value before anything else during this difficult time. Thinking through ways to win over the mass of buyers without marketing help create offers extremely compelling.
Capture New demand
Companies are often blind to the wider potential of the demand that exists outside the industry. Especially in times of shrinking demand, it doesn’t seem practical to over a bigger share of existing customers. Since understanding the needs of the customer has always been the key for industrial growth, focusing on why your non-customers shy away from your industry will help in converting latent demand into real demand.
Pursue differentiation and low cost
The differentiation strategy is all about reflecting the value-cost trade-off while pursuing a low-cost strategy is about cutting back of industries existing competitive factors without creating a new one which helps the industry to stand out from the rest. This is where the Eliminate-Reduce-Raise-Create comes into the picture. The most ideal way would be to reframing your thinking create your own strategy in ways that will help your industry grow.
Blue ocean strategy works wonders if you want people to admire and love your brand. Creating untapped markets gives an opportunity for industries to grow rapidly. Since the strategy is about having a different mindset, there is vast potential for the industries to profit.