Blue Ocean Strategy

A little off topic from digital marketing however, I recently come across the Blue Ocean Strategy Theory which was developed by Renée Mauborgne and W. Chan Kim, not only have I been introduced to the theory, I was also lucky enough to take part in the computer simulation of BOSS (Blue Ocean Strategy Simulation). The simulation puts you through your paces as the marketing strategist of a company called Blue Buddies, a games console manufacturer who is in a difficult competitive environment along with three other organisations. The simulation takes part over a nine-year period in which you have to make strategic decisions from production plans, marketing budgets, geographical expansions, right through to corporate project implementations, product attribute developments and much more.

The simulation is incredibly enjoyable, frustrating, captivating, exasperating, and whole bunch of other emotions. I thoroughly enjoyed it when my meticulous planning paid off, however when you make some bad decisions and your revenues, market share and share price index drop substantially, one is extremely embittered. However, that’s all part of the fun of the simulation.

Red Oceans

Red Oceans can be understood by the general competitive environment. The competitive market, the volatile, bloody markets which are difficult to ascertain growth and stability.

An academic understanding:

Red Oceans represent the known market space, acknowledging all the industries in existence. In this contested market space boundaries are defined and accepted, and the competitive rules of the game are well understood. Furthermore, as the Red Ocean gets evermore crowded, scenarios incorporating profits and growth are evermore condensed, leaving products turning into commodities (Kim & Mauborgne, 2007).

Blue Oceans

Blue Oceans are understood through niches. Blue Oceans are uncontested, have zero to little competition, and are created from organisations wishing to diversify through services or products.

An academic understanding:

Blue oceans are categorised by untapped market space, demand creation, and the opportunity for highly profitable growth which are created from within red oceans by enhancing, expanding and developing industry boundaries (Kim & Mauborgne, 2005). Blue oceans are concerned with creating successful new products which provide better performance than existing products. Successful new products provide benefits that significantly differ from current offerings (Hooley et al., 2004). Blue Oceans seek growth opportunities by diversifying operations, this is typically risky as it involves learning new operations and dealing with unfamiliar customer groups (Mullins and Walker, 2011). Moreover, Chang (2010) understands that “creating blue oceans is not a static achievement but a dynamic process. Once a company creates competitive advantages, and its superior performance is shown, sooner or later imitators begin to appear in the market”. Marketers seek to assimilate competitive edge by offering customers something that is not available elsewhere, which creating a blue ocean strategy is concerning (Blythe, 2008).

What better way to understand the difference between red and blue oceans than by the habitat you’re currently in, huh? 

Just incase you want to know more about blue ocean strategy, here’s an enchanting blue ocean montage to explain quicker, (and maybe better).

References

Blythe, J., 2008. Essentials of marketing. Pearson Education.

Chan Kim, W. and Mauborgne, R., 2005. Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Harvard Business School Press, Boston, MA.

Chang, S.C., 2010. Bandit cellphones: A blue ocean strategy. Technology in society, 32(3), pp.219-223.

Hooley, G.J., Saunders, J.A. and Piercy, N., 2004. Marketing strategy and competitive positioning. Pearson Education.

Mullins, J. and Walker, O.C., 2011. Marketing Strategy: A decision-focused approach. McGraw-Hill Higher Education.