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Marketing Strategy: Are you Red or Blue?

Blue Ocean Strategy

by Georgie Gallagher

Big picture thinking is imperative for any business.

I recently reacquainted myself with a strategic approach that is a very powerful way of analysing your business and its opportunities for the future. It's called blue ocean strategy and I think it's well worth a revisit.

In October 2004, W. Chan Kim and Renee Mauborgne published an article in the Harvard Business Review called 'Blue Ocean Strategy'. I'm sure you have heard of this and may have even read their book.

In a nutshell,  red oceans represent all the industries in existence today - they are defined and understood and participants compete for market share. Over time, competitors are forced to compete on price as there is little differentiation left in the marketplace. 

Blue oceans, on the other hand, represent all the industries not in existence today. This is the unknown market space, untainted by competition. This is a new and exciting offering for consumers.

The study looked at businesses over the past 100 years and identified those that had created new space to operate in - they called these 'blue oceans'. What they found was that competing in overcrowded industries does not sustain high performance. The real opportunity is to create blue oceans of uncontested market space. This is nothing new. Creative companies are doing it all the time.

Great examples are:

Cirque de Soleil - They've reinvented circus moving from a traditional and dying circus industry to a high end theatre performance that just happens to be in a circus tent.

IKEA - Affordable furniture, great design and (love it or hate it) flat pack furniture sold directly to the end user, minimising overbearing transport costs and middleman margins.

iPhone and iPad - Since this article was written, Apple have again transformed the way we use technology. It's incredible to think that the iPad is just 4 years old. Apple have made us rethink phones, cameras, music, calculators, the internet access, work processes and much, much  more. You name it. They transformed the way we do things. They 'get' blue ocean.

These are all large organisations - how would it work for us?

What interests me is how we put this strategy into practice in smaller and medium sized businesses and organisations.

Here's what you can learn. The companies that have created blue oceans for themselves have a few key character traits that anyone can adopt into their strategic thinking. 

  • Blue ocean organisations are not necessarily born out of technology innovation. If technology was involved, it usually was around in some form before. These organisations have adapted the technology to fit a new market space. 
  • New entrants often create their own blue ocean - either by expanding a known market place or creating a whole new industry.
  • Blue ocean organisations never use the competition as a benchmark. They look to their current and potential customers for what they want and need.
  • The blue ocean helps build a lasting brand and it takes competitors a while to catch up.  In fact, most blue oceans can enjoy their new space without credible challenges for 10 to 15 years.
  • Most importantly, successful companies who have created blue oceans pursue differentiation AND low cost simultaneously. This drives up buyer value. This is a fundamental change in strategic thinking.

Blue ocean strategy introduces a way to analyse your marketplace in a new and fresh way. With the technology we have today, organisations have access to incredible market insights on what customers are looking for. These help form the basis of how you view the world your organisation operates in, and more importantly, where new opportunities lie.

What's your blue ocean?

Georgie Gallagher is the founder of Wildmoon, a specialist consultancy focussing on brand development, marketing strategy, marketing communications and strategic content marketing for SMB's.