Whether you own a small independent business or work as part of a much larger organization, you have probably heard of the Blue Ocean Strategy.
This way of doing business was popularized by the book Blue Ocean Strategy, How to Create Uncontested Market Space and Make the Competition Irrelevant.
This book explains that the best way of doing business is to not try to force yourself into a market and push out competitors but to create a market of your own.
If you are a business owner, then understanding how this strategy works may be vital to the success of your business.
In this article, we will cover everything you need to know about the Blue Ocean strategy and the pros and cons of this strategy.
Table of Contents
What Is A Blue Ocean Strategy?
The Blue Ocean Strategy’s objective is to simultaneously pursue uniqueness and cost reduction. This is achievable by opening up new market space and generating new demand.
In other words, you start from an existing market and expand it in a completely new direction.
It is about creating and grabbing uncontested market space, which makes any competitors irrelevant.
The Blue Ocean Strategy is based on the idea that market borders and the structure of an industry are not fixed features.
They rather may be recreated depending on the behaviors and attitudes of participants in the business. This idea underpins the concept of behavioral economics.
Which One is Better Blue or Red Ocean Strategy?
In the business world, the notions of “red ocean” and “blue ocean” were first proposed by two writers, Chan Kim and Renée Mauborgne in their now-iconic book Blue Ocean Strategy.
The writers used these terms to categorize the two main ways companies grow and build their businesses.
Red Oceans
“Red Oceans” is a metaphor for markets full of competitors and in which there isn’t much differentiation between competitors.
In marketplaces with red oceans, the borders between different industries are clear and easy to recognize. The parameters of the competitive environment are extremely evident.
At this point, businesses compete with one another to achieve higher levels of success than their rivals, intending to secure a bigger share of the demand that already exists.
As you can imagine…
When an accessible market region gets more saturated, there is a corresponding slowdown in profits and growth.
When items are devalued to the point that they are considered commodities, the market may become extremely cutthroat, even “bloody.” This is where the moniker “red oceans” came from in the first place.
Blue Oceans
On the other side, the term “Blue Oceans” describes industries that do not exist currently.
This undiscovered market region is unaffected by the presence of competition because it is still in its infancy.
Businesses operating in blue waters don’t focus on gaining market share as much as they do on expanding their customer base.
There is a considerable amount of opportunity for growth that is not just feasible but also lucrative to pursue.
The competition is pointless in blue oceans since no one has defined the game’s ground rules yet. Therefore there is nothing to compete for.
The phrase “blue ocean” metaphorically alludes to the immense number of prospects that have not yet been exploited and which may be found in markets that have not yet been explored.
A market that is vast, and potentially fruitful in terms of the expansion of business prospects is an example of a blue ocean.
Key Features Of Blue Ocean
Backed By Data
The core of the Blue Ocean Strategy is a ten-year-long investigation into more than 150 different strategic maneuvers across more than thirty different industries over the length of one hundred years.
Looks To Differentiate Itself While Also Cutting Costs
The term “Blue Ocean Strategy” refers to a business approach that focuses on both achieving “differentiation” and “low cost.”
This is not an “either-or” strategy; rather, it is an “and-and” approach. Neither option is more important than the other.
It Creates A Zone In The Market That Is Free From Competition
When pursuing a Blue Ocean Strategy, the goal is not to outperform the companies that are already in the market.
Reconstructing the boundaries of an industry helps make competition irrelevant.
Gives You The Right Tools Needed To Grow Your Business
The Blue Ocean Strategy is a set of standardized tools and frameworks you can use to make the transition from the red ocean of existing rivals to the blue seas of untapped market potential.
Guides You Through Each And Every Step
The Blue Ocean Strategy provides a step-by-step process for developing your very own blue ocean.
This process starts with examining the current position in a sector.
Then it moves on to an assessment of the six possible paths to additional market space.
And finally concludes with an understanding of how to convert noncustomers into customers.
Minimum Risk With Maximum Reward
The blue ocean technique gives you the ability to evaluate the potential profitability of your business ideas. It also demonstrates how to improve those ideas to maximize potential rewards while limiting potential losses.
Additionally, the blue ocean technique enables you to evaluate the potential profitability of your competitors’ business ideas.
It Allows For a More Seamless Integration Of Strategy And Execution
Starting Blue Ocean is a process that is not intimidating.
It is an effective approach to integrating strategy into execution since the technique and tools are simple to learn and visually attractive.
Win-Win Results
The Blue Ocean Strategy is an integrated technique that explains how to combine the three strategy propositions of value, profit, and people to create a successful business.
The Best Blue Ocean Strategy Book
Do you want to learn more about this strategy?
Then the best book you can get is Blue Ocean Strategy – How to Create Uncontested Market Space and Make the Competition Irrelevant.
The argument that is made in Blue Ocean Strategy, which is regarded as one of the most influential books ever published on the subject of strategy, contends the following:
Intense competition leads to nothing but a bloody red ocean of competitors battling over a shrinking profit pool.
This book provides a step-by-step plan for making your competitors irrelevant. It also covers the ideas and methods that every company may use to create and grab their blue oceans.
In addition, it explains how to gain a competitive advantage over existing markets.
Pros And Cons of the Blue Ocean Strategy
Evaluate the pros and disadvantages of the Blue Ocean Strategy to see if it is suitable for you.
Pros
- Don’t Have To Contend With Saturated Markets – Your little company must compete against international corporations and other industry heavyweights. However, if you employ the Blue Ocean Strategy, your product will be distinct while still satisfying customer needs at an affordable price. You will not face competition from the strongest corporations in your industry.
- It Provides The Opportunity For Expansion – To develop new customer value, the Blue Ocean Strategy involves balancing product or service innovation with cost and usefulness. Word-of-mouth marketing may increase demand as more people buy your goods or service.
- Customers Will Receive Service On Their Level – Blue ocean thinking lays equal emphasis on cost and value. You will constantly provide innovations at affordable pricing for your target market. This method lowers the barriers for your customers to purchase your product.
Cons
- It May Be Excessively Ambitious – The premise of the Blue Ocean Strategy is that any company may build a low-cost, uncontested product or service. In actuality, it is not always easy to be that inventive. Even if you have a brilliant idea, practical constraints may prohibit you from realizing it.
- It Could Be Risky – You have found a way to develop a unique product without charging an extravagant price. Perhaps you’ve reached this crossroads as a result of the fact that clients in your small business’s specialization would purchase from your firm. But what if just these people are interested in your products? If this is the case, the blue ocean method may restrict you to the point where you cannot grow your business.
- Possibly Temporary – Because innovations create imitators, a blue ocean might quickly become a red ocean over time. Even though a Blue Ocean Strategy looks suitable for your company at the time, it may not be feasible in the future.
What Kind of Innovation Does the Blue Ocean Strategy Offer?
Russell Brunson also talks about the Blue Ocean Strategy in his famous book Expert Secrets.
He explains how to identify your market and how to dig deeper to find a specific audience to serve.
In other words, he shows that you can use the Blue Ocean Strategy to create a new blue ocean for your business.
That’s where innovation comes from…
From creating your own ecosystem in which success is a lot easier.
The alternative is to jump into a red ocean and dramatically reduce your chances of success.
Summary
The Blue Ocean Strategy is becoming increasingly popular in the business world.
This strategy is ideal for smaller businesses that cannot match or outperform bigger competitors. It allows you to grow your business and reach your customers without worrying about competition from larger companies.
For the ultimate guide on the Blue Ocean Strategy, you should read Blue Ocean Strategy – How to Create Uncontested Market Space and Make the Competition Irrelevant.
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