Building Your Own Market: The Blue Ocean Approach

If you want to succeed as a business, you shouldn’t fight tooth and nail with rival firms but rather should seek out uncontested markets. The blue ocean strategy recommends making little adjustments to items so that they can enter a new market where there is little to no competition and high profits can be made. Although several well-known companies rode blue ocean strategies to success, doing so carries some inherent risk. Expand your present crew and find problems that can be solved by just your company to successfully implement a blue ocean approach. This piece is for entrepreneurs who would rather innovate than compete. Let’s imagine your items and services aren’t bringing in enough money. Imagine you’ve figured out how to modify your offerings to the point that they constitute their own market. Indeed, this is what the blue ocean strategy advocates, but well-known businesses employed it long before a 2004 book coined the term. Learn how others have found success by developing their own niche market and how you may do the same for your company.

Blue ocean plan entails what, exactly?
The goal of the blue ocean strategy is to assist your firm carve out a unique niche in the market where it can thrive without competition from other companies. These uncharted territories are called “blue oceans,” in contrast to the deadly, cutthroat “red oceans” of fierce rivalry.
The goal of the blue ocean strategy is to create an uncontested market by differentiating your goods from the competitors while simultaneously lowering your costs. The term “blue ocean strategy” was used to refer to the tactics outlined in the book Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. As the book’s co-author, Professor W. Chan Kim, explained in a Forbes article, “Our study reveals that blue ocean strategy is particularly important when supply exceeds demand in a market.” This is true in a growing number of sectors now and will become even more widespread in the future.
The Main Point
The blue ocean strategy advocates for the creation of novel, low-cost products that render existing market options obsolete.
The blue ocean strategy’s advantages and disadvantages
The blue ocean plan could be extremely beneficial to your company, or it could unwittingly hinder its operations. Before committing to a blue ocean strategy, it’s important to weigh the benefits and drawbacks. The blue ocean strategy has many advantages.
As a result, you tend to avoid highly competitive markets. Your company, though relatively modest in size, must compete with multinational conglomerates and other market leaders. Nevertheless, if you follow the blue ocean technique, you may create a product that is both unique and competitively priced, satisfying the demands of a large number of people. The dominant players in your field won’t bother to compete with you.
It opens up new avenues for development. Following the blue ocean strategy entails developing novel ways to provide value to consumers while keeping costs down. Word-of-mouth marketing can boost sales by encouraging new customers to try your product.
You’ll be able to relate to clients on their terms. Blue ocean thinking emphasizes both value and affordability. Your inventions will always be introduced at prices that your ideal customers can afford. Using this method makes it easier for your target market to buy what you’re offering.
Problems with the Blue Ocean Approach
The blue ocean strategy has the following drawbacks:
Perhaps the goal is too lofty. According to the blue ocean theory, any company can create a product or service that fills a niche at a price point where there is little to no competition. Being incredibly creative isn’t always a cakewalk in real life. Real-world limitations may prevent you from implementing your brilliant concept.
It could be too dangerous. Maybe you’ve figured out how to produce something truly original without charging an arm and a leg. Perhaps you’ve arrived at this crossroads because customers in your target market are interested in what you have to offer. Nevertheless, what if they represent the entirety of the market for your products? In that instance, the blue ocean strategy may impose too many limitations.
That could be temporary. Since innovators often inspire copycats, a once-promising blue ocean may eventually turn into a crowded and competitive red one. Notwithstanding how appealing a blue ocean approach may seem for your company right now, it may not be sustainable in the long run.
Methods for Creating a Blue Ocean
The book by Kim and Mauborgne recommends the following actions to be taken when pursuing a blue ocean strategy:
Plan how to introduce your new products and services, and recruit people who will aid in creating a strong team and brand.
Analyze the current team’s performance and figure out ways to enhance it.
Find the problems that your existing and potential clients are experiencing.
Create goods and services that fill these voids in ways no one else can.
Have a detailed plan for the transition and try out your new offerings (and the techniques you’ll use to implement them).
Tip
The greatest way to help your team members develop into their full potential is to conduct a SWOT analysis to identify their strengths, weaknesses, opportunities, and threats.
Blue ocean plan case studies
Although the term “blue ocean strategy” was coined by Kim and Mauborgne, firms have been implementing the concept for years with great success. Here are three cases in point.
Ford
Until Ford introduced its now-iconic Model T series, most automakers catered to individual customers by building them specially-tailored vehicles. As a result, costs skyrocketed and product quality was all over the place.
The Model T, on the other hand, was only available in one basic color and trim level. As personalization was not an option, costs were reduced and product quality was standardized. Ford’s method eventually became the foundation of the contemporary auto industry.
Nintendo
Nintendo didn’t try to compete with Microsoft and Sony’s consoles in terms of visuals when it released the Wii in 2006. Nintendo, on the other hand, focused on wireless motion-control games that couldn’t be played on any other platforms. Because of this, Nintendo was able to release the Wii Sports console and its related games, which emphasize physical interaction. The games and the system both skyrocketed in popularity.
Netflix
Twice, Netflix has been successful with the blue ocean strategy. The company was established in 1997 by Reed Hastings and Marc Randolph as the first mail-order DVD rental service. Obviously, Netflix ultimately pioneered the streaming TV model that spans the entire current world. The plan worked both times, elevating Netflix’s profile to that of a retail behemoth like Walmart or Amazon.
Is That So?
Companies like Apple, Yellow Tail, Amazon, and Home Depot have also employed blue ocean techniques to expand their businesses.
Locating Uncharted Waters
Kim and Mauborgne avoided directly criticizing Harvard Business School professor Michael E. Porter, but they did take aim at his well-known five forces market analysis. When comparing a company to its competitors in the same industry, Porter’s model takes a number of important aspects into account.
Supporters of Kim and Mauborgne’s technique would argue that this approach encourages cutthroat competition and a continued focus on the red ocean.
Redefining the parameters of competition and entering the blue ocean, where you have the water to yourself, is the key to extraordinary commercial success, according to Kim and Mauborgne. The point of these methods is not to just win against rivals but rather to render them moot.
To find this elusive blue ocean, Kim and Mauborgne suggest using a framework they call “four acts” to reconstruct buyer value pieces in order to create a new value curve. There are four major queries raised by the framework.
What criteria should be increased significantly above market norms?
What factors emerged from having to compete with other industries and can now be diminished?
Which factors on which the industry has traditionally competed should be abandoned?
Which factors should be developed that the market has never before provided?
By examining every facet of the competitive landscape, this activity helps firms and their leaders uncover the assumptions they’ve been operating under. The next step is for them to look for blue oceans in their respective sectors.
Tip
Be forthright about the strengths and accomplishments of competitors while performing a competitive analysis to enhance your business and better serve your customers.
Using the Blue Ocean Strategy
Kim made the observation that Amazon has evolved from a simple online store to a comprehensive digital marketplace.
Think about how Amazon created a “blue ocean” in the bookselling industry by providing customers with “the largest selection of books in the world,” “good prices,” “automatic confirmation of buyers’ orders,” “people who bought this book also bought,” and “firsthand reviews on what readers found useful or not in a book,” as he put it.
Amazon, unfortunately, does not always succeed in developing viable blue oceans. Against Zappos, eBay, and Apple, Mauborgne claims it failed on a few occasions.
The startups Amazon faced off against “had all constructed blue oceans of their own,” and the e-commerce giant “failed every time it tried to copy them,” as noted by Mauborgne. Blue ocean strategy teaches us that the best defense is a good offense, and the best offense is to construct your own blue ocean. Most businesses today operate in highly competitive markets, making imitation a losing strategy.
According to Kim, Home Depot is another firm that produced a blue ocean by pioneering a new value-cost frontier that spawned the multibillion-dollar do-it-yourself industry.
“Rather than fighting head-on with Amazon,” he added, “they doubled down on delivering what Amazon could not: information and help to execute sophisticated do-it-yourself projects like remodeling your bathroom on your own.”
Modifying your approach to focus on the blue ocean
When expansion opportunities are scarce, organizations should aim to diversify into untapped markets by exploring new “verticals.” The goal is to win over new customers by offering them a superior product that can’t be beat. But, this doesn’t always work.
Retailers are having financial difficulties as a result of the ongoing expansion of outlets and the shifting buying patterns of Americans. A large number of enterprises, including a large number of retail chains, have declared bankruptcy in recent years.
In her more recent book with Kim, Blue Ocean Shift: Beyond Competition, Mauborgne recommends the strategy canvas as a tool for struggling firms. A strategy canvas is an analytical tool that may be used by organizations to zero in on a specific market and the aspects that make it unique.
It forces you to “look at yourself as the market sees you,” as Mauborgne put it. If stores put it into practice, they’d realize they’ve been competing in the same market for 30 years and are essentially carbon copies of one another. That’s a huge wake-up call, unites the team, and generates tremendous momentum for change.
The best piece of advice she has for companies is to stop competing and start creating.