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Blue Ocean Strategy is a concept given by INSEAD professors W. Chan Kim and Renee Mauborgne. The strategy, based on decades of extensive research on hundreds of companies across multiple industries, argues that companies can create new markets for themselves rather than compete with competitors. In other words, unlike the Red Ocean, which is a saturated market with differentiation or cost competition, companies can create a blue ocean or brand new market for themselves through value innovation, thereby creating value in the entire supply chain. with customers. , and suppliers. The main premise of a blue ocean strategy is that companies should unleash new demands and make competition irrelevant, rather than rest on their laurels and focus on saturating the market.
What exactly is a blue ocean strategy?
A blue ocean strategy is all about designing and acquiring an undisputed market forum by creating new demand. Since the industry is in a state of non-existence, there is absolutely no peer comparison relevance. This strategy responds to new demands by familiarizing unique products with advanced features that stand out from the crowd. In other words, the strategy encourages companies to offer products of great value to consumers. Hence, it helps the company to achieve decent profits and outperform its competitors.
Importance of Blue Ocean Strategy
The Blue ocean strategy allows companies to walk out of the ocean of bloody competition by creating undisputed market space and accomplishing irrelevance. Since then, Blue Ocean’s strategy has been to increase demand and differentiate itself from the competition by allocating existing demand and benchmarking against competitors. The corporate universe can be seen as a complex of two oceans, the first being the red ocean and the second being the blue ocean. The Red Ocean is a collection of all the industries that exist today and is known as the market space. But on the other hand, the blue ocean can be considered an industry that does not exist today, known as an unknown market space. In the Red Sea, industrial boundaries are well-defined and generally accepted. In the Red Sea, the rules of competitive play are very clear. Companies are trying to take away most of the existing demand. Because the fierce competition has turned the ocean blood red, the product has become a commodity.
How to Implement a Blue Ocean Strategy?
Kim and Mauborgne’s book recommends the following steps to implement a blue ocean strategy:
- Find a place to start marketing your new product and hire people who can help you establish the best team and brand image possible.
- Determine how to improve the strengths and flaws of the current team.
- Identify potential pain points for your present and new clients.
- Develop products and services that are unlike anything else on the market to address these pain points.
- Create a formal service plan and put your new products and services to the test (and the process followed to achieve your goals).
Example of Blue Ocean Strategy
Let’s see how organizations that follow the blue ocean strategy path achieve extraordinary growth and profitability!
1) Uber: Uber Taxi is the brainchild of a blue ocean strategy that has revolutionized the image of the transportation industry by eliminating issues such as taxi bookings, denials of service, measurement issues and unnecessary hassles.
It’s a carpooling service that makes it easy for customers to book rides. It also allows users to track the driver’s progress to the pickup point in real time through the Uber app, a smartphone app.
Uber created a new market by combining advanced technology and modern equipment. It is trying to differentiate itself from traditional taxi companies by developing a low-cost business model that offers flexible payment and pricing strategies and generates good revenue for drivers and companies.
In the initial stages, Uber managed to capture an undisputed market space, but was eventually overtaken by its competitors. Nonetheless, it continues to dominate the market and is growing rapidly across the globe. In 2019, Uber served approximately 110 million riders worldwide and had a 69 per cent market share in the United States.
2) iTunes: In 2003, Apple entered the digital music space with its unique and prominent product, iTunes. Traditionally, traditional media such as compact discs (CDs) were used to stream and listen to music.
iTunes entered the market and solved a fundamental problem in the recording industry. As a result, iTunes has reduced the practice of illegally downloading music while satisfying the demand for singles rather than digitised versions of entire albums.
High-quality, affordable music from Apple has become the talk of the city. All available Apple products have iTunes for music downloads and have dominated the market for decades. It is also credited with driving the development of digital music.
These blue ocean strategy examples can provide future startups with information on how to execute strategic planning initiatives and successfully unlock new demand.
Conclusion
The revolutionary blue ocean strategy is a pacifist marketing plan that is considered a strategic planning tool for evaluating companies. It is about designing and acquiring undisputed market space by generating new demand.
Since the industry is in a state of non-existence, there is absolutely no peer comparison relevance. This strategy responds to new demands by familiarising unique products with advanced features that stand out from the crowd.
Blue Ocean’s approach eschews the ideology of beyond competition and claims to recreate market boundaries and operate from the start. Today, when the market is oversupplied, a blue ocean strategy becomes necessary.
