Building a business is no easy task. Typically, it takes years for businesses to establish their strong-hold among customers. But, the modern world boasts of many success stories wherein businesses have reached the million-dollar mark in just a couple of years. These businesses are offering innovative products and services and creating a niche, untapped market. This article explains the Blue Ocean Strategy, which looms in this realm of untapped, potential markets. Find out what it is along with examples, benefits and how to make the shift.
What is Blue Ocean Strategy?
Based on the eponymously titled book authored by INSEAD professors W. Chan Kim and Renée Mauborgne, ‘Blue Ocean Strategy’ is a marketing theory. In the book, the professors assert the hypothesis that strategic moves can create a leap in a company’s value, along with its employees and buyers. At the same time, it unlocks a new demand and makes the competition irrelevant. The strategy revolves around devising innovative products and services and acquiring the uncontested market by creating new demand. It further states that there is no relevance of peer competition since the industries designed under this strategy are non-existent. Businesses can create new products, and in turn, generate demand, by making unique products familiar to their customer base and by adding advanced features that make it stand apart.
Blue Ocean Strategy Examples
Here are some Blue Ocean Strategy examples of companies that have captured the imagination of consumers
1. The Ford Motor Co.
With its introduction of the Model T car, The Ford Motor Co. in 1908, created an automobile which was less expensive and more reliable. It created the mass-producing manufacturing process offering cars at a fraction of the price offered by competitors. The company captured 61% of the market share by 1921, also replacing the principal mode of transportation, i.e., horse-drawn carriages.
2. Apple Inc. iTunes services:
Apple Inc. created the first legal music downloading format in 2003 with iTunes. It effectively curbed the pirated music industry and created a new stream for revenue, in which consumers were more than willing to participate. The downloading service offers high-quality music with easy navigation functions.
3. Cirque du Soleil
Cofounded by Canadian businessmen Guy Laliberté and Gilles Ste-Croix, Cirque du Soleil combines the circus with sophisticated adult theatre. Cirque du Soleil reinvented the circus, giving it a modern appeal that both children and their parents can enjoy. The show features acrobatics and jaw-dropping physical feats, set to original music and fresh storylines.
How companies can adopt the Blue Ocean Strategy – the five-step process mentioned in the book
1. Choose the right place to begin by constructing a Blue Ocean team
2. Get on board with the current situation your company is in
3. Detect the hidden pain points which are responsible for limiting the current industry size and uncover the untapped customer potential
4. Reconstruct market boundaries systematically to develop alternative opportunities
5. Select the right move by conducting a rapid market test. Finalise and launch the shift once done.
Benefits of incorporating the Blue Ocean Strategy
1. The strategy helps companies find uncontested markets while avoiding matured, saturated markets
2. It helps companies overcome the impediment of constant competition and break free from traditional business models to expand their demand and profitability
3. It helps companies increase their value, innovate, and create new value for customers, thus developing their growth potential.
The Blue Ocean Strategy is indeed path-breaking. It is recognised as a formidable strategic planning tool that helps companies acquire new markets. For more information on Blue Ocean Strategy, reach out to Angel Broking advisors.