Blue Ocean Strategy: Methodology, Application, Use Cases & Examples

After this, Netflix explores new market spaces using the Six Paths Framework, examining industries like video gaming and social media to see how they engage users and create interactive experiences. The Buyer Utility Map is a tool that identifies potential areas of customer dissatisfaction and opportunities for innovation. Red ocean comprises of the existing industries in which most of the organizations fight with each other to make more profit. Blue ocean consists of the industries which are yet to be created and promises increased profit and growth in a healthy way.

SWOT Analysis: A Strategic Model for Competitive Success

Thus, by the launch of Model T, customers could use them for everyday use. Embrace Blue Ocean Strategy to navigate these uncharted waters, where creativity converges with business acumen. Break free from the limitations of existing markets, create your unique space, and secure a competitive advantage that propels your business to new heights.

The 3-Legged Stool of Innovation: People, Incentives & Technology

As me-too businesses, Settlers will not generally contribute much to a company’s future growth. Sending a team into the field puts managers face-to-face with what they must make sense of and helps realize how customers use or don’t use their products or services. A company must avoid outsourcing this step or substituting it with intelligence reports. But in most industries, rivals tend to stay within the bounds of their industry’s product and service offerings.

1. Any business that enters this space can address the market without competition.
2. Blue ocean strategies, by contrast, are based on a worldview in which market boundaries and industries can be reconstructed by the actions and beliefs of industry players.
3. A product must reduce a customer’s financial, physical, or credibility risks.
4. It is required to flourish in a market where everyone competes with each other.
5. Blue Ocean Strategy challenges the traditional focus on competing within existing industries (red oceans).

Specifically, these new markets give a company a very high competitive advantage as well as low price/cost pressure. The blue ocean strategy might be a boon for your business, or it may unintentionally hamper your operations. Look over the blue ocean pros and cons to decide if the strategy is right for you. Businesses that use BOS successfully also benefit from an even playing field, as it does not involve battling with other firms. This allows them to concentrate on creating value for their clients instead of vying for the same market share.

Indeed, it can be argued that managers’ failure to realize the differences between red and blue ocean strategy lies behind the difficulties many companies encounter as they try to break from the competition. Blue Ocean Strategy challenges the traditional focus on competing within existing industries (red oceans). Instead, it proposes creating an entirely new market space (blue oceans) where competition is irrelevant and demand is created.

Red ocean vs. blue ocean: what’s the difference?

In 2011, JCPenney made a spectacular strategic blunder under its new CEO, Ron Johnson, who attempted to pivot the company towards a blue ocean strategy. At the time, JCPenney had some financial struggles but was still regarded as an industry leader for value shopping. Johnson attempted to differentiate JCPenney to a more upscale clientele, with in-store boutiques and exclusive merchandise.

This changed when Curves5, a women-focused fitness company introduced reasonably priced clubs and built a blue ocean market for itself. American automobile company Ford Motors is one of the perfect examples of the blue ocean technique. Before the launch of its series, there was a huge flood of luxury cars in the market. Every car manufacturer focuses on creating expensive, fashionable car models. However, it did not cater to the middle-class groups that did not want such vehicles.

Path 2: Look across strategic groups within industries:

Identifying a unique value innovation is a must for crafting a blue ocean. Companies should focus on understanding customer needs, creating an entirely new market, and providing customers with a unique blend of features and benefits. To gain the upper hand in the market, companies should strive to offer their customers something special – tipping point leadership – by offering them an exclusive combination of features and benefits. For instance, Apple utilized BOS to craft a blue ocean when they released the iPhone, an innovative device that combined a phone, music player, and internet browser all in one package. By creating something special with its unique value proposition, Apple was able to capture a large market share and become the leading smartphone brand in the world.

This step involves drawing the “to be” strategy canvas based on insights from field observations and getting feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers. This feedback will then be used to build the best “to be” future strategy. By thinking in terms of solving the major pain points in customers’ total solution, there could be an opportunity to create a blue blue ocean strategy meaning ocean.