Blue Ocean Strategy – Part 1 Comparative of Red Ocean and Blue Ocean Red Ocean Blue Ocean Compete in existing market Create a new market Concern with competition Make competition irrelevant Focus on existing customers Focus on non-customers W ork with existe nt d emand/ market share Create a new demand an d mar ket s hare Deal with value and cost trade-off(creating value at higher cost OR creating reasonable value at low cost) Don’t use value/cost trade-off(create both, greater values and low cost) Whole company is aligned with the strategy of differentiation OR low cost Company is aligned with the strategy ofdifferentiation AND low cost. The first highlighted case from the Blue Ocean Strategy book is the Cirque du Soleil. • They created a new market. One of the first shows was titled “We Reinvent the Circus”. • They didn’t compete in the same market from the conventional circus. • They didn’t use animals or Hollywood stars. • They focused on other customers: adults and corporation clients, and, by consequence, caused a different perspective about prices and motivation/capacity to pay for a different experience. Why it is so important, nowadays, the Blue Ocean Strategy? With the current technological stage, productivity is at high levels, the supply exceeds the demand, so the prices are falling, the globalization adds a component that facilitates new entrants and low production cost, and to make it worst, the rich countries (with more consuming power/demand) have their population decreasing. So to create new markets and develop focus on non-customers to create demand, blue ocean strategy will be a fundamental approach, besides other aspects. One key point of Blue Ocean Strategy is how to create value and how to make customercomfortable and willing to pay for it. Innovation has a key role on this matter, but not only . It must be aligned with utilit y , price and cost.
