The goal of every company is to make a profit and to continuously improve the business. To achieve this, you must regularly compare yourself to competitors and venture into unfamiliar territory to gain new ideas.
This is where the Blue Ocean Strategy comes into play. Read on to learn how you can use this strategy to fill market gaps and achieve lasting success.
What is the Blue Ocean Strategy?
The Blue Ocean Strategy was developed by economists W. Chan Kim and Renée Mauborgne in 2005 and comes from the field of strategic management.
In their book "Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant" (German: "Der Blaue Ozean als Strategie: Wie man neue Märkte schafft, wo es keine Konkurrenz gibt"), they describe the strategy in detail and differentiate between Blue Ocean and Red Ocean . (See the section "What are the differences between Blue Ocean and Red Ocean").
The strategies can be understood metaphorically: Two business-relevant poles are juxtaposed: The blue ocean symbolizes a market or industry that has not yet been saturated by competitors . Align your company's growth concept with this. The red ocean, on the other hand, encompasses saturated markets into which no company should enter due to excessive competition .
What is the goal of the Blue Ocean strategy?
Successful companies don't follow others. They follow their own concept and are exactly right with it. They have penetrated a market segment where there is little or no competition .
That's the goal of the Blue Ocean strategy: Ignore your competitors for a moment. Instead, venture into entirely new areas and create a unique selling proposition that will secure your business success.
Those who stand out from others in a unique way will be remembered by customers as market leaders, even if competitors want to jump on the same bandwagon.
"You can't overtake anyone if you're following in their footsteps."
François Truffaut
The Blue Ocean strategy aims to identify market gaps and promise your company profitability through new avenues without existing competition . Further objectives include:
What are the differences between Blue Ocean and Red Ocean?
Chan Kim and Mauborgne distinguish between Blue Oceans and Red Oceans. The latter describe fiercely competitive markets that are – figuratively speaking – stained blood red by the mutual attacks of predators. In contrast, Blue Oceans are pristine and completely free of competitors.
The red ocean encompasses saturated markets that no company should enter due to excessive competition. Important: You can also tap into a blue ocean yourself, because it's not about finding a market, but about creating one. This allows you to initially leave the competition behind and simultaneously serve the needs of a newly created customer base.
Other points that characterize the strategies:
Blue Ocean Strategy:
Red Ocean Strategy:
This is how the Blue Ocean Strategy works
To properly implement the Blue Ocean Strategy, innovation is essential. Without a new product or product idea, you cannot tap into new markets. Following this, you analyze the industry-standard factors.
You will then use some tools , which we will now explain in more detail.
The value curve
Using a value curve allows you to directly compare your company with a competitor. The graphical representation as a value curve makes success quantifiable. The value creation curve is derived from the questions posed and analyzed beforehand. This allows you to represent the insights gained as a value curve.
The core elements of the product are visualized. This reveals possibilities for how products can be modified and new markets can be developed .
You arrange various features of your product on an axis, thereby symbolizing their importance or degree of expression . The diagram shows the core elements of a product on the horizontal axis, and the degree of expression of these elements is illustrated on the vertical axis.
This allows you to illustrate the necessary changes compared to existing products in order to develop an innovation.
The ERSK square
This tool helps you (re)define your service offerings . For a successful Blue Ocean strategy, you also need to consider the needs of your new target group. Once these needs are understood, the next step is to align your business idea with those needs.
This is where the ERSK square comes into play. With this business management tool , also known as the four-action model , you can use four actions to develop your business idea into a new, innovative product and tap into new markets .
The four actions are detailed below:
- Eliminate: Here you ensure that all factors that potential customers might find disturbing are eliminated.
The following questions are of primary importance here:
Which competitive factors, which the market takes for granted, need to be eliminated?
Which factors that are not an essential part of the core competency can be omitted?
Is there a cost factor that is not justified compared to the generated revenue?
- Reduce: Focus on only considering factors that are relevant to consumers. Reduce information to the essentials.
The following questions are of primary importance here:
Which factors need to be reduced far below the standard of the market segment?
Are there any components that the company cannot or does not want to completely eliminate yet?
Are there factors that are merely "followers" but not core components or defining characteristics of the product?
- Increase: The most important features of your product must be highlighted.
The following questions are of primary importance here:
Which factors need to be improved far beyond the standard of the market segment?
Which aspects of the company should be emphasized more?
- Create: Design new features for your product that offer significant benefits to customers and are not yet known to them.
The following questions are of primary importance here:
What factors, not yet offered by the market segment, should be created?
What new things can be added to give your product or service an innovative benefit?
The Six Search Paths
Using the six search paths, you can reshape market boundaries:
- Alternative industries: What are alternatives to your company's products or services? What could entice customers to switch?
- Strategic Groups: In which strategic group does your company belong? What factors would cause customers to switch from one group to another?
- Buyer groups: Which buyer groups exist in this market segment?
- Complementary products and services: In what context is your product/service used?
- Functional and emotional buying motives : Does the product have a functional or emotional appeal?
- Sustainable trends: Which trends will have a strong impact on your own market segment, are irreversible, and are developing in a clear direction?
PMS square
This tool allows you to review your existing and planned product portfolio. The results of this analysis will enable you to realign your strategy.
The PMS square depicts the current and planned portfolio and categorizes it into the following three categories:
The size of the respective products/services is determined based on the market volume or market potential.
Identifying obstacles
You need to be aware of and plan for the following hurdles :
- Awareness hurdle : Clear communication that a change is taking place in the company and that this change is also necessary.
- Resource hurdle : The power of habit. Major changes would require immense resources to break through.
- Motivation hurdle: Getting managers to achieve their goals, i.e., to deliver high performance in terms of both quality and quantity.
- Political hurdle: Innovation is not welcome everywhere and in every company structure.
Finally, make these hurdles clear to yourself and overcome them in order to launch your successful product in the Blue Ocean.
Here's how you can visualize your Blue Ocean strategy using PowerPoint.
Use the methods we have explained to successfully implement the Blue Ocean Strategy. The combination of tools can look like this in the process:
For visualization purposes, feel free to use slides on the Blue Ocean Strategy from PresentationLoad!
Examples of successful Blue Oceans
- The Body Shop
The Body Shop, when it was founded, embraced the new idea of focusing more on sustainable packaging and animal welfare, combined with natural ingredients. This innovation led to its breakthrough.
- Nintendo Wii
The Wii was released in 2006. Prior to its release, Nintendo pursued a long-planned Blue Ocean strategy. Nintendo reduced the graphics and processing power of the components and withdrew from direct competition with Sony (PlayStation 3) and Microsoft (Xbox 360).
With the development of a new control concept using motion sensors, Nintendo created a new market that brought great success.
- Starbucks and McDonald’s
Starbucks leveraged self-service as a Blue Ocean strategy. First in the USA, and then in its global conquest, Starbucks continues to conquer the market today with high-quality coffee in a living-room atmosphere.
With the introduction of McCafé, McDonald's was able to attract new customer groups and build a new image through co-branding. By reducing costs and offering self-service similar to Starbucks, McDonald's scored points with its customers.
- DM and Lush
The cosmetics chain "alverde" from the drugstore chain dm and the company LUSH differentiate themselves from other cosmetics companies through a completely different approach. Both brands consciously forgo a luxurious image, thus skillfully emphasizing their use of natural ingredients and ethically sound production methods .
Conclusion: Skillfully apply the Blue Ocean strategy and create new markets
Do you have a new, innovative idea or want to explore new markets without competition? Then rely on the Blue Ocean strategy . Skillfully develop your product and adapt it to customer needs.
Use the methods presented to mature your product and achieve sustainable success.
Do you have questions about the Blue Ocean strategy? Feel free to contact us by email at info@presentationload.de . We're happy to help!
Are you looking for visually appealing and professionally designed slide templates ? Feel free to browse our shop. We have numerous slides on a wide variety of (business) topics available for download. Visit us today! ► To the shop
You might also be interested in these articles: