How do you use the blue ocean strategy to create new market spaces?

1 What is the blue ocean strategy?

The blue ocean strategy is based on the idea that there are two types of markets: red oceans and blue oceans. Red oceans are existing markets where competitors fight for a shrinking share of customers and profits. Blue oceans are new markets where there is little or no competition and where you can create and capture new demand. The blue ocean strategy aims to help you create blue oceans by offering a unique value proposition that appeals to both existing and potential customers, while reducing your costs and risks.

2 How is it different from the red ocean strategy?

The red ocean strategy is the conventional approach to marketing that focuses on competing in existing markets, segmenting customers, and differentiating your products or services based on features, quality, or price. The red ocean strategy assumes that the market boundaries and industry rules are given and that you have to beat your rivals to succeed. The red ocean strategy often leads to a bloody competition that erodes your margins and limits your growth potential. The blue ocean strategy, on the other hand, challenges these assumptions and encourages you to redefine the market boundaries and industry rules by creating value innovation.

3 What is value innovation?

Value innovation is the core concept of the blue ocean strategy. It means creating a leap in value for both your customers and your business by aligning innovation with utility, price, and cost. Value innovation requires you to break the trade-off between differentiation and low cost, and to offer a compelling value proposition that makes your competitors irrelevant. Value innovation can be achieved by eliminating, reducing, raising, or creating factors that affect your customers' perception of value.

4 How to apply the blue ocean strategy in four steps?

To apply the blue ocean strategy, you need to follow four steps: analyze, create, communicate, and execute. The first step is to analyze the current state of your industry and identify the factors that influence your customers' decision making. You can use tools such as the strategy canvas and the four actions framework to visualize the value curves of your competitors and yourself. The second step is to create your blue ocean by designing a new value proposition that satisfies the unmet needs and wants of your customers. You can use tools such as the six paths framework and the ERRC grid to generate and evaluate your blue ocean ideas. The third step is to communicate your blue ocean to your target market and stakeholders. You can use tools such as the three tiers of noncustomers and the sequence of utility, price, cost, and adoption to identify and reach out to potential customers. Lastly, you need to execute your blue ocean by implementing your value proposition. You can use tools such as the tipping point leadership and the fair process to overcome organizational and operational barriers.