The Blue Ocean Strategy is a business strategy that seeks to create uncontested market space and make the competition irrelevant by creating new demand for a product or service. The term “Blue Ocean” refers to a market space that is untapped, uncontested, and free of competition.

The strategy involves identifying a new market or segment, where a company can create unique value and differentiation, and then developing and delivering a product or service that meets the needs of that market. The focus is on creating new demand rather than competing with existing players in the market.

Today, the business world is constantly changing, so it is very difficult to compete in the market. But even more, to be able to position ourselves in a privileged place. Apply the blue ocean strategy and distinguish yourself! In today’s market, there are increasingly powerful and aggressive competitors, each fighting for their own survival.

What is the Blue Ocean Strategy

The blue ocean emerged as a concept after the publication of the book “Blue Ocean Strategy” published in 2005 by the professors of ocean strategy: W. Chan Kim and Renee Mauborgne. This book offers an alternative solution for companies in the face of market saturation.The blue ocean strategy simply makes companies see that by investigating new market niches, which have yet to be discovered (blue oceans), better product specialization and a more user-centric approach, this can be achieved. highly desired competitive advantage.

The Blue Ocean Strategy was introduced by W. Chan Kim and Renée Mauborgne in their book “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant”. The authors argue that the traditional approach of competing in existing market spaces, or “Red Oceans”, is often ineffective and leads to a bloody battle for market share. In contrast, creating new market spaces or “Blue Oceans” can lead to sustainable growth and profitability.

Advantages of Blue Ocean Strategy

To operate in a market without competition, it must be created, so innovation becomes a fundamental element: a new market can only be inaugurated if there are hitherto unknown products. Taking this step brings important advantages:

• market without competition
• new target group
• new demand
• no price war
• new cost structures

While in the red ocean the company has to be defined mainly by price and use this element to increase market share with respect to other participants, in the blue ocean this requirement disappears. If a company can start a blue ocean, it can escape competition and make the most profit possible.

How does blue ocean strategy work?

At the beginning, all efforts should be focused on innovation, as a previously non-existent market cannot be created without a new product. However, the technology used does not have to be innovative. In addition, there are examples that show that it is possible to apply a blue ocean strategy with existing technologies, as long as they are applied in contexts never seen before. In fact, one of the most promising approaches is to modify an existing product in such a way that it captures audiences who have never shown interest in the original product.

For a blue ocean strategy to be successful, it is advisable to analyze the expectations and desires of the target audience. What do consumers expect from a new product? The results can be reflected in a value curve: in one of its axes different factors of a product are ordered and, in the other, the importance or value is symbolized. From the results obtained, it is possible to determine what the end consumer prefers. You also need to analyze the competitive offers within the industry. In this way, it is possible to deduce those changes that the new product must include in order to be innovative, thus following the direction of a blue ocean strategy.

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Why is blue ocean strategy important?

As an entrepreneur, it is important for a business to be profitable in the long run. To achieve this, sometimes you have to go into unknown waters, what is called the blue ocean. That is, instead of getting bogged down in an eternal struggle that only reports small achievements to each of the participants, there is the option of making significant profits by creating an unprecedented market. With the blue ocean strategy and new and innovative products, there can be significant benefits, provided the right market is created. the four-action scheme is used . As its name suggests, this method foresees four actions with which to adjust the product so that it is successful and creates a new market space:
Eliminate : to rule out factors that customers may find annoying in a product.
Reduce : to decrease the factors that are not important to the target audience below the standards in the industry.
Increase : to increase the most important characteristics above the standards.
Create : to develop previously unknown factors in the industry in order to generate a new product.

What is a blue and red ocean strategy?

In the blue ocean environment, the limits of the market and the structures are not yet set. As entrepreneurs create this new market niche, it is up to them to rethink old structures to respond to new needs and create the rules of a whole new game. In the red ocean, margins are low and, in many cases, entrepreneurs are forced to continually compete for price, rather than looking for real value. As a result, we find ourselves in an environment with little innovation and cutbacks.

On the other hand, the blue oceans are very innovative environments that offer products and services of a unique real value for new market niches, developed thanks to the union of innovation and experience. Price competition is practically non-existent because no one else offers this product to the market segment, thus achieving higher profits.
It is important to remember that it is not about inventing a new product or developing a fantastic idea with the sole purpose of beating the competition, it is about offering something different using and rethinking what adds value to the business.

Differences between red ocean and blue ocean strategy

Traditionally, companies have tried to achieve success by entering an existing market with a more or less limited circle of consumers, in which the method of competition is based on reducing costs and prices and investing efforts in marketing. That is why you must always keep the competition in mind: at what price do you offer your products? or what distinctive characteristics identify your products?

Red ocean strategies are traditional strategies. In them, companies try to differentiate themselves within an existing market to occupy a privileged place.Existing markets are often teeming with voracious competitors, willing to do anything to survive. Therefore, the competition always tries to impose itself on others, dyeing the oceans red.

Navigating a red ocean has its long-term drawbacks, since sooner or later your business may end up in a continuous war with the rest of the competent alternatives on the market.The strategies to be followed will be related to cost reduction, quality and promotion strategies. It is much more difficult to position yourself in these types of markets.

How to Blue Ocean strategy to boost your business

When we have to choose between several options, we often have a hard time deciding. We always want the best of each option or get two for the price of one.However, when we think of successful businesses, we do not think of those who move on the edge of two worlds, but rather those who are firmly positioned in one.

Thus, success as we understand it consists of beating the competition in the space in which we position ourselves, offering our product or service to the same customers as them and competing for the same market share. It is about offering our product, better or cheaper than the competition.

Blue Ocean Strategy and its Implications for Businesses

You must bear in mind that navigating a blue ocean is not an easy task since it is a new ocean with hardly any guarantees of success.There is also the possibility that this new proposal will triumph and the blue ocean will turn red, because we have managed to attract new competitors.

In that case, we must develop the 6 basic pillars on which your company’s strategy will be based:

• Restoration of the market frontiers
• Create a strategic chart where you identify new business opportunities
• Explore beyond current demand
• Analyze strategic factors : price, cost, product, utility.
• It is important to know where your company is at the moment, with respect to your competition. For this you can make use of a positioning map.
• Overcome any problem, always sailing forward
• We implement the innovation strategy
• By adopting these strategies, you will be able to implement a growth initiative in your business.

Examples of applying blue ocean strategies

Many companies created new markets with innovative products, especially in the post-industrial years, when unprecedented products were launched that created entirely new industries, such as the automotive industry. However, in recent years many companies have ended up anchored in the red oceans, hence the cases that have managed to create a blue ocean within an industry are especially relevant.

Spotify

When Spotify hit the market in 2008, it solved the problem that the record industry had at the time, which was piracy. The solution to illegal music downloading was music streaming with unlimited plays.

The blue ocean strategy led Spotify to create a new category of service that allows artists to make a profit while allowing consumers to access a wide variety of songs for just a monthly subscription.

Yellow Tail Wine

The wine sector is considered a red ocean. That is why it is difficult for those who have just entered the market to reach significant quotas. To avoid this problem, Australian wine producer Casella Wines ventured in a different direction with their Yellow Tail product. Instead of going to compete with the rest of the members of the market, it addressed a target audience unknown until now: consumers of c he beers or cocktails, who were consulted to indicate why the available wine offer did not appeal to them. . The reasons included the very bitter or very sweet taste, an extremely complicated offering or the snobbish image traditionally linked to the drink.

Circo Del Sol

In the business world, the idea of ​​circuses was already a bit outdated, circuses at that time were going through a situation of crisis and precariousness.

But then the Circo Del Sol arrived to offer a different proposal, of greater artistic value. For this he had to do without animals and many interpreters. It created a more elegant environment focused on a more adult audience.

Nintendo Wii

At the beginning of the new century, the video game console market was mainly divided between two vendors: Sony, with Playstation, and Microsoft, with Xbox. Manufacturer Sega had pulled out and Nintendo, once one of the largest video game providers with Gameboy and (Super) Entertainment System, had lost significant market share. Sony and Microsoft were betting on distinguishing themselves by the performance of their consoles and competing in a red ocean for the best graphics performance and computing power. Nintendo decided to go further and launched the Wii console with the aim of attracting consumers until then less related to video games.

Conclusion:  By moving away from focusing on the competition and enhancing their own strengths and talents, they managed to create a truly unique business. Now is a good time to look around you and analyze the possibilities that exist and that nobody is taking advantage of.

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