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Marketing Concept | Blue Ocean Strategy

Blue Ocean strategy | The Brand Hopper

 

Blue ocean strategy means creating the new market. The key principle of blue ocean strategy is to pursue low cost and differentiation simultaneously. Chan Kim and Renée Mauborgne wrote a book called “The Blue Strategy” in 2004 which presents analytical frameworks and tools to foster an organization’s ability to systematically create and capture “blue oceans”.  A sequel of this book “Blue ocean shift” was later published in 2017. 




 

 

Blue oceans mean new & unexplored markets. Red oceans are all the industries in existence.
Unexplored and untainted by competition, ‘blue oceans’ are vast, deep and powerful in terms of opportunity and growth. competition is cutthroat which makes the ocean( market) bloody. Hence the term ‘red ocean‘
Blue ocean strategy creates new demand. Red ocean strategy is Conventional approach of beating the competition.
Creating blue oceans is non-zero-sum. There is ample opportunity for growth that is both profitable and rapid. Competing in red oceans is a zero-sum game. Profit for a company means a loss for other market players.

 

The book involves creating value by focusing on differentiation and low cost. It discusses four action frameworks that can be used to analyse and create value.

    • Raise: What should a company raise in terms of Product, price and service level?
    • Eliminate: What areas to eliminate?
    • Reduce: Where costs can be reduced?
    • Create: Which new products can be created and can innovation be applied to existing products?

The book further discusses 4 principles of blue ocean strategy formulation. These principles are:

    • Always focus on a larger picture
    • Reconstruct and expand market boundaries
    • Reach beyond existing demand and supply in new market spaces
    • Getting strategic sequence right.

 

The best unit to analyse profitable growth is neither the company nor the industry but the strategic move that creates “blue ocean” and sustained high performance.

 

 

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