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Blue Ocean Strategy

Blue ocean strategy involves creating new market space and demand rather than competing in existing markets. It focuses on making competition irrelevant by delivering new value to buyers. Studies show launches using blue ocean strategy see higher revenue, profit, and growth compared to launches in existing red ocean markets. The six principles of blue ocean strategy are reconstructing market boundaries, focusing on the big picture rather than numbers, appealing to unexplored demand, strategic sequencing, overcoming organizational hurdles, and building execution into strategy. The four actions framework helps create a new value curve through reducing, eliminating, creating, and raising different factors.

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Aarthee Sundaram
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231 views14 pages

Blue Ocean Strategy

Blue ocean strategy involves creating new market space and demand rather than competing in existing markets. It focuses on making competition irrelevant by delivering new value to buyers. Studies show launches using blue ocean strategy see higher revenue, profit, and growth compared to launches in existing red ocean markets. The six principles of blue ocean strategy are reconstructing market boundaries, focusing on the big picture rather than numbers, appealing to unexplored demand, strategic sequencing, overcoming organizational hurdles, and building execution into strategy. The four actions framework helps create a new value curve through reducing, eliminating, creating, and raising different factors.

Uploaded by

Aarthee Sundaram
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Blue ocean strategy

High profit growth at low risk Industries not in existence today ( only a few engaged in blue ocean marketing). Untapped market demand

Uncontested market space

RED OCEAN VS BLUE OCEAN STRATEGY :

Compete in existing market space Beat the competition Exploit existing demand Make the value-cost trade-off

Create uncontested market space Make the competition irrelevant Create and capture new demand Break the value-cost trade-off

Align the whole system of a firms activities with its strategic choice of differentiation or low cost

Align the whole system of a firms activities in pursuit of differentiation and low cost

Value Innovation:

Cost savings are made by eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered.

VALUE = BENEFITS-COST
Value innovation focuses on making the competition irrelevant by creating a leap of value for buyers and for the company. Thereby opening up new and uncontested market space.

The Profit and Growth Consequences of Blue Oceans


Launches With Red Oceans Launches With Blue Oceans Business Launch

86%

14%

revenue impact

62%

38%

Profit Impact

39%

61%

The Six Principles of Blue Ocean Strategy


Core/Formulation Principles
Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right

Execution Principles
Overcome key organizational hurdles Build execution into strategy

Four Actions Framework: Key to Value Curve


Reduce What factors should be reduced well below the industry standard?

Eliminate What factors that the industry has taken for granted should be eliminated?
Creating new markets: A new value curve

Create/Add What factors that the industry has never offered should be created or added?

Raise What factors should be raised well above the industry standard?

What the industry offers


Premium Wines
Polarised Strategic Groups

Budget Wines

Massive Choice

Yellow Tail created a Blue Ocean


Premium
Creating a Blue Ocean

Budget

12

The Case of Yellow Tail Eliminate-Reduce-Raise-Create Grid:


Eliminate
Aging qualities Above-the-line marketing

Raise
Price versus budget wines Retail store involvement

Reduce
Wine complexity

Create
Easy drinking

Wine range
Vineyard prestige

Ease of selection
Fun and adventure

Conclusion:
Tomorrows leading companies will succeed not by battling competitors, but rather by creating blue oceans of uncontested market space ripe for growth.

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