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A Beginner’s Guide to Cracking the Blue Ocean Strategy

Team Pepper
Team Pepper
Posted on 1/08/228 min read
A Beginner’s Guide to Cracking the Blue Ocean Strategy
The blue ocean strategy is an unconventional business model, which helps companies in non-competitive environments. We break it down in this blog.

Treading the beaten path need not always lead to success. Working on some new idea or strategy is not only exciting and thrilling, but it can also be gainful if you follow proper guides or templates. The blue ocean strategy is a distinct approach that focuses on shifting from competing to creating new openings.

an illustrated depiction of the blue ocean strategy

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Trying to grow in a highly competitive atmosphere (which is what the red ocean strategy is all about) may not always be beneficial. The blue ocean strategy is the opposite, and focuses on treading uncharted territory as far as your business is concerned.

What Is the Blue Ocean Strategy?

The blue ocean strategy revolves around operating without competitors, and although it appears to be one, it is no monopoly. It is pretty unknown to most audiences. It goes by the watchword, “Create. Do not compete.” The color blue signifies the vast ocean with no one around.

how blue ocean strategy works

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Awareness about the blue ocean strategy is slowly increasing, as the concept is being adopted by new businesses. The marketing strategy can be traced to a book by the same name, which was published in 2005. An iconic and impactful book, it was published worldwide in over 40 languages and sold over four million copies. The book was updated and expanded with fresh content in 2015. The authors studied 150 strategic moves across multiple industries, spanning a period of 100 years.

Here are a few characteristics of the strategy:

Setting up shop in a new, unknown market

Focusing on creating uncontested market space

There is no competition, simply because there are no competitors

Striving to create new demand

Aligns the business’ activities in pursuing differentiation and low cost

Innovation with a definite sense of purpose

Why You Should Adopt the Blue Ocean Strategy?

Why should anyone think of pursuing a blue ocean strategy? Especially when there are so many businesses based on the red ocean strategy, which they follow meticulously based on templates and step-by-step guides. From the point of view of the red ocean strategy followers, it may sound somewhat strange. So let’s understand how the blue ocean strategy can be beneficial.

1. To beat the competition

With so many players in the red ocean, all businesses jostle for space and the users’ attention. With too many players, sometimes the supply exceeds the demand, and unless you have the wherewithal to take on the competition, you cannot survive. Other scenarios include a situation where the entry barriers are insurmountable, making it impossible to gain a foothold. You can either gobble up your competitors, or be gobbled up yourself.

The blue ocean strategy will ensure your product is unique, while still addressing customer needs at affordable price points. There will be no competition from the powerful big names in your field.

2. To overcome low demand

Sometimes, the market you are operating in may be declining steadily, and customers may no longer want your products or services. Even if the competition isn’t increasing, the demand may be decreasing, and there is no point in sticking around in such a situation. The only alternative is to seek fresh pastures using the blue ocean strategy.

3. To establish brand identity

the difference between conventional and blue ocean thinking

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Imagine a situation where you are a new entrant, and your brand is unheard of and doesn’t have an identity. Customers don’t know anything about you, and instead of spending a lot of effort and energy among cut-throat competitors in the red ocean, you might as well seek the blue ocean and have a less overwhelming start. That is where you can make a name for yourself and establish your brand effectively.

4. To have a healthy ROI

Another advantage of following the blue ocean strategy book is that the return on investment (ROI) is high. Despite the complexity of implementing this new strategy, you can expect handsome returns. Based on the analysis of 108 companies (red and blue oceans), the authors of the book made, they found that the profit is 1.5 times higher for companies following the blue ocean strategy.

Hence, although the blue ocean strategy is rife with risks and is challenging to implement, it is worth it, because the results are highly positive. The main goal of the strategy is to fulfill consumers’ needs. You don’t have to worry about the competition, as you will be the only operator (or one of the very few) in the market.

5. To foster growth

You can create new or more value for your customers by balancing product innovation with cost and utility. This can be done seamlessly by taking the blue ocean route. When more people buy what you sell, it increases demand.

Blue ocean thinking stresses on affordability as well as value. Introducing innovations at prices your audience can afford lowers their barriers to buying your product.

5 Tips to Use the Blue Ocean Strategy to Grow Your Business

The blue ocean model can have a domino effect on other areas of your business as well, be it your custom writing or design processes. Hence, it is important to get it right.

1. Understand the meaning of the blue ocean shift

Markets with little competition or no competition are considered blue ocean markets. Before making the shift, you need to be well-aware of what it will entail. For instance, a marketing strategy involving the blue ocean strategy does not control or limit pricing, since pricing is not considered a critical criterion for capturing the market.

2. Study the scope and build users’ confidence

the pioneers-migrators-settlers map

You must first broadly view the scope of your venture in a particular market. It makes sense to view the pioneer-migrator-settler map defined in the book. It helps you assess your current business standing, and identify areas that have the highest growth potential for your business. Next, you must put together a team to help you execute your blue ocean strategy.

3. Follow the four-action grid

The eliminate-reduce-raise-create (ERRC) grid is an effective four-action strategy that entails the following:

Eliminate: eliminate those features of the industry business have long competed over.

Reduce: decide where industry standards need to be lowered.

Raise: figure out which industry standards need to be improved.

Create: what new features can the company create that others do not?

4. Adopt a resolution-oriented approach

Work towards making the lives of your customers easier and better. Identify problems by spotting customers’ pain points, and turn them into an opportunity to capture new demand.

the buyer utility map

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A buyer’s experience with a brand involves six stages, right from purchase to disposal, which is known as the buyer experience cycle. You can tweak any or all of these six stages to your advantage. The six stages are displayed in the utility map above. It can help you create a utility proposition that can convert doubtful customers easily.

5. Create better value at affordable costs

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Most small business owners have a limited budget, and you may be one among them. However, the good news is that you don’t have to spend a fortune to make a difference. And lowering your prices need not necessarily mean that you are compromising on quality. The best way is to stand apart by offering exceptional, unmatched value. To achieve this, you must focus on the factors that need to be eliminated to cut costs.

3 Things to Keep in Mind Before Adopting the Blue Ocean Strategy

Before following the blue ocean principles, there are three crucial factors to consider. They are as follows.

1. Perspective

Adopting the blue ocean strategy is a deft management move, essentially to do with your perspective or mindset. It is all about breaking away from the traditional, and so-called safe business concepts to boldly explore uncharted, uncontested territory. Changing your perspective requires you to expand your mental horizon to step out into areas rich in untapped opportunities and potential. The approach must include defying the existing process by asking an entirely new set of questions to discover what new demands you can create.

One great blue ocean strategy example is Salesforce, which upped the ante as far as the customer relationship area was concerned, and offered companies a cloud-hosted CRM service that was essentially subscription-based.

The Salesforce example demonstrates how a company can endeavor to transition from the traditional fold to the blue ocean, simply by fine-tuning its thinking abilities. Thinking outside the box enables you to sidestep competition and create an all-new market for yourself.

2. Tools

To make a systematic shift to the blue ocean mindset, one of the first things you essentially need is the appropriate management tools. It is crucial to remember that moving to an all-new area is a gradual process, and can never be a one-off change in policy matters. It is a giant leap for the company, so you should be mindful of where you land and how quickly you adapt to new surroundings. In short, the entire process has to be undertaken in an orderly manner.

There are many change management tools available, which are applications companies can use whenever there is a change in the business strategy. Such management tools help make the transition smooth and seamless, not only for the higher management, but for the employees, managers, and customers too.

3. Being humane

You must ensure that your shifting to the blue ocean has a humane touch to it. Unless you win over the confidence of the team, it will be challenging to settle down. Managing change can be pretty challenging. No five employees in your organization will have the same answers when asked to share their views about shifting to a new strategy.

how to humanize the shift to the blue ocean

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Hence, CEOs and management gurus must focus on soft issues like motivation, leadership, culture, etc., throughout the transition period. Changing attitudes and relationships is never an easy process, as they have been ingrained over several years, not just in people but in an organization as a whole. Hence, adding a human touch to the transition process helps smoothen it.

Companies have adopted the blue ocean strategy in order to set their businesses up in uncontested terrains. The blue ocean strategy helps find success easily, mitigates risks, and fetches increased profits within a short period. It is, however, location- and timeline-centric. Apple, Salesforce, and Ford are some of the best blue ocean strategy examples that focus on attaining high product differentiation at a proportionately low cost.

Effective blue ocean strategy marketing helps you thrive in a no-competition environment. This is, however, not achieved overnight; it takes some effort to build your blue ocean strategy. Buyer utility, price, and cost, are some of the crucial factors that create a viable blue ocean business model.

If you’re in the midst of making the blue ocean shift, you will need outstanding, highly engaging content. And Pepper, with its vast network of expert and skillful writers, can fulfill that need. Simply click on the link below to get started.

Key Takeaways

The blue ocean strategy is all about capturing a market that is uncontested by other, similar businesses.

The blue ocean strategy involves pursuing low-cost and high product differentiation concurrently, making the competition irrelevant.

This strategy is more relevant when supply exceeds demand. This situation is applicable to more and more industries today, and will be prevalent in the future as well.

Businesses should try to find new sectors where they can enjoy uncontested market share. The focus is to capture new markets and create new demand with a superior product.

FAQs

1. What is meant by the blue ocean strategy?

A blue ocean strategy can be defined as a market that has little or no competition at all. The eponymous book describes the strategy as an effort focused on looking out for an industry where few companies operate.

2. What are some successful blue ocean strategy examples?

One of the best blue ocean strategy examples is the Nintendo Wii, a form of the giant Nintendo computer game. Right from launch, it focused on value innovation, the primary principle any blue ocean strategist must follow.
Yellow Tail, a wine brand from Casella Wines, is another excellent example of the blue ocean strategy working perfectly. It took just three years for the brand to become a top seller in the U.S. Yellow Tail did not target wine buffs. Instead, it focused on beer and punch drinkers, offering them a sweet intoxicant as an alternative.

3. How can I compare the blue ocean with the red ocean strategy?

The term “red ocean” denotes stiff competition that forces a price war. The blue ocean strategy, on the other hand, denotes an unknown and unconquered market space that few businesses are aware of. Businesses adopting the blue ocean strategy seek new pastures to open up new opportunities. Their focus is on achieving differentiation and low costs, and one of the best blue ocean strategy examples is Airbnb, a company that does not own any homes, resorts, or hotels, and yet, it is one of the most successful hospitality brands today.

4. Why is it crucial for my business to adopt the blue ocean strategy?

Companies adopting the blue ocean strategy have a goal to set up business in uncontested terrains, where there is great scope for growing markets. They avoid the red ocean strategy, which focuses on competing in overdeveloped and saturated markets where the competition is stiff. Any company adopting the blue ocean strategy finds success easily, encounters fewer risks, and realizes increased profits within a short period of time.

5. What benefits can I expect by incorporating the blue ocean strategy?

The blue ocean strategy can help you identify uncontested markets, thereby avoiding mature, saturated markets where opportunities are low due to stiff competition. The best way to beat the competition is by moving away from traditional business models. It helps you expand your demand and increase profitability. Moreover, you can easily add value to your company through new ideas, in addition to creating a better experience for your customers.

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