In the world of marketing, the term “Blue Ocean” refers to a market space that is untapped and packed with entrepreneurial potential. It is an unexplored marketplace that isn’t drowning in competition. A Blue Ocean represents an uncontested market space where businesses aren’t fighting to stay on top, but rather a place where demand is created and grown. A Blue ocean market space is a gold mine for entrepreneurs.
The term “Blue Ocean” was formally coined in the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne proposed the idea of marketing with the approach of creating new marketing spaces rather than competing in the existing ones. The creation of a blue ocean market means that companies can develop new and lucrative opportunities for growth and success. This approach doesn’t follow the traditional industry boundaries but instead highlights the value of creating and innovating.
Origins of Blue Ocean
The complete title of Kims and Mauborgne’s book is Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant published in 2005. In the book, Kim and Mauborgne, introduce the idea of a blue ocean market along with 150 strategies that numerous companies have implemented over the last 100 years.
Included in the book is a 5 step process to implementing a Blue Ocean strategy, briefly listed below:
1.Begin the Process by creating a starting point
2. Define and Recognize strengths, weaknesses, and your plan
3. Set goals and define where you’re headed and who you’re trying to reach
4. Set market boundaries and create the path you’ll take to meet your goals
5. Start testing your blue ocean strategy
Blue Ocean Challenges
A Blue Ocean marketing model is not simple to create and implement. It requires a lot of research into finding untapped markets. If it were that simple, then everyone would be doing it and marketing would be fairly easy. Because entrepreneurs have to seek out where blue ocean market spaces might exist, the risk remains high but the results can prove to be worth every second of time spent and resources used. Blue Ocean marketing isn’t a one-time once in a lifetime opportunity, although it can be, but rather it is an ongoing process of continually seeking to reinvent the market and market boundaries to stay relevant and competitive.
Blue and Red Ocean Differences
Blue Ocean and Red Oceans differ vastly in the following areas:
● Competition: Red Oceans are usually saturated markets where the competition remains high and businesses fight for market share in existing market spaces. Blue oceans, on the other hand, are unexplored market spaces where competition doesn’t exist altogether or is very minimal.
● Market boundaries: Red oceans are comprised of existing market segments and boundaries with business vying for market shares. Blue oceans however are designed by circumventing existing industry boundaries and creating new market spaces.
● Customer needs: Red ocean businesses hone in on meeting existing customer needs in a highly competitive space while Blue ocean markets highlight unmet customer needs and addressing them in a new and unique way.
● Profit margins: In red oceans, businesses are always competing in prices because products and services are so similar, but this also results in lower profit margins. In blue ocean markets, companies can set their prices and offer additional propositions to their consumers which can result in higher profit margins because there is a lack of competition.
Blue Ocean Companies
There are many examples of Blue Ocean companies that broke into an untapped market and offered consumers unique solutions to problems many customers didn’t even know they had. This is a trademark of Blue oceans; offering innovative solutions to unique problems or needs that were never thought of previously. Below are multiple examples of Blue Ocean businesses:
Cirque du Soleil: Cirque du Soleil changed the circus industry by creating a new style of entertainment that combined circus arts with theater and music. By targeting adults and families, and not just little kids, Cirque du Soleil created a new market space and was able to stand out against the backdrop of traditional circuses.
Uber: Uber created a blue ocean in the transportation industry by offering an on-demand ride-sharing service that was convenient, affordable, and easily accessible through a mobile app. This allowed Uber to generate new demand and differentiate itself from traditional taxi services that have been around for decades.
Airbnb: Airbnb created a new market space in the hospitality industry by offering a platform for people to rent out their homes or apartments to people traveling. This allowed travelers to experience what it’s like to live in a local spot and immerse themselves in the region’s traditions all the while giving homeowners an opportunity to earn extra income.
Dollar Shave Club: Dollar Shave Club created a blue ocean in the razor industry by offering a subscription-based service for affordable, high-quality razors delivered to customers’ homes. This allowed Dollar Shave Club to capture new demand and differentiate itself from traditional razor companies that sold expensive, brand-name razors through retail stores.
Netflix: Netflix started a blue ocean market space that reinvented the entertainment industry. Instead of relying on video rental stores and other traditional sources of movie entertainment, Netflix offered consumers a subscription service to endless entertainment at the tip of their fingers, no extra hassle involved. Unsurprisingly many entertainment subscription services shortly followed creating a red ocean.
Blue Ocean Takeaway
Blue Ocean Markets offer monumental opportunities for businesses to create new markets and untapped demand by differentiating themselves from competitors. By creating innovative products or services that are unique, reducing costs, and improving the customer experience, companies can generate new demand and build profit. Blue ocean markets can also give businesses the benefit of protection from price wars and constant competition. It is important to remember though that identifying and creating Blue Ocean Markets requires significant research, planning, and execution and not without risks involved. In an ever-increasingly competitive market, blue ocean markets possess endless value and power because they offer businesses the potential for sustainable growth and long-term success.
