Blue Ocean Strategy— Why you should consider it?
Usually, there is a natural tendency for any business to beat the competition and run faster than the competition and capture a large part of the market by beating the competition. This is very much required for any business, it is important to run the race but it may lead to disaster when the market landscape changes or when new market spaces pop-up. The existing market spaces are referred to as the Red Oceans because of the fight between the competition the water becomes bloody!
In the book, Blue Ocean Strategy by Chan Kim and Renee Mauborgne says that Blue Oceans are the uncaptured market spaces or the new market spaces that do not exist as of today. These are often created by “Value Innovation”, this can be done by always looking out for various ways to create new or additional value for the customers and also working on lowering the cost simultaneously.
Why is it important for businesses to work on Blue Oceans?
Blue oceans or creating new market spaces gives high benefits to the businesses and it can put them in a very different place in the market. Once a blue ocean is created the competition is irrelevant and businesses reap amazing benefits in terms of profit and increase in brand value.
10 to 15 Years of benefits
Based on the study of more than 30 industries, companies that create blue oceans often reap their benefits for 10 to 15 years because it is hard to copy, and also other businesses would not know anything about the new market space which is newly created. It would take a long time for them to learn and catch up.
1.5x Higher Profit
According to the analysis of 108 companies, the profits of companies implementing the blue ocean strategy has profits 1.5 times higher than that of the red ocean.
Easily create Brand Identity
If you are a small player, then creating a brand identity for your business would be hard in the Red Ocean and it would require you to spend more on marketing and cutting your profits to make your product compelling in the market space. But if you are able to create a new market your brand identity automatically improves without spending much.
I hope this gave you some insight into the Blue Ocean Strategy. Let me know what you think?