Introduction
Competitiveness among organizations is increasing every day, so they seek to differentiate themselves and be a leader in the market through branding, advertising, accessories, quality, aesthetics, design, price, guarantee, customer service, sales method, channel of distribution, among other strategies.
Traditional practices are known as "red ocean" which is all that already exists, and it is a fight to the death, between organizations, so when a company disappears it is said that the ocean is dyed red.
For this reason, a new proposal called “blue ocean” arises, which tries to find unexplored markets that go beyond common borders, where there are no competitors. An invitation is also made to innovate simultaneously adding value to products.
Definition
Currently in the industry two types of oceans are observed: the red and blue oceans.
Red ocean
Red oceans represent all the industries that already exist, everything that is already known, is an eternal struggle for power, capturing the attention of customers, prevailing in the market, being number one in the market, in turn they are in constant danger of saturating that segment, affecting its profitability and growth. That is why it is called competition to the death because it seeks to make other companies disappear before its own.
Blue ocean
Blue oceans nobody knows because they do not exist, in other words it is to locate unexplored market segments, in which there is no competition, that is, it is the reinvention of a market. The expectations in this ocean is to have high yields, greater demand and growth opportunities. These can emerge from a red ocean when looking to go beyond the existing market segment limits.
Characteristics of a strategy
The strategies of a blue ocean must have the characteristics described below:
- Focus. It must be reflected in the strategic profile or the value curve of the company, that is, it is the variable to be reinforced. Differences between ideas and trends Strong message. A good message should not only clearly communicate the idea but announce the offer with the truth, otherwise it will lose the customer's interest and trust.
Factors that drive the creation of blue oceans
There are causes that lead companies to innovate in their products or look for new alternatives to avoid bankruptcy or disappear in the market.
- The increasing technological advances. When companies improve productivity they begin to exceed demand, creating a larger stock that is often unnecessary. Generic brands. Global competition causes supply to grow and they begin to produce similar goods at prices, this causes profits to decrease. The saturation of a segment causes a marketing fight to be generated trying to prevail in the market through offers to overshadow the competition. Customer service. It all depends on the strategy that the organization uses, it is not only about differentiating the competition in price and quality but also in the service provided to customers.
Principles of the Blue Ocean Strategy
There are six principles of the blue ocean strategy, however they are divided into principles of formulation and principles of implementation.
The principles of the formulation are:
- Reconstructing the borders in the market has an attenuated risk of searching Focusing on the global perspective, not the figures has an attenuated risk of planning Going beyond the existing demand has an attenuated risk of scale Developing the correct strategic sequence has an attenuated risk of the business model
The principles of execution are:
- Overcoming the organization's key obstacles has an attenuated organizational risk Incorporating execution within the strategy has an attenuated management risk
Strategic movements
You can analyze the blue oceans that met the objective to achieve it, they must be based on the strategic movements that are "movements from which products and services have emerged that opened and captured new spaces in the market, thus causing huge leaps in demand" (W Chan Kim, Renee Mauborgne, 2005). Blue oceans do not occur in an industry with specific characteristics, it can occur in any field, but a constant in the analyzes carried out previously is that no company has been unswervingly successful.
Blue ocean methodology
A new space in the market
To stop trying to beat the competition, is to look for a segment in the market where there are no rivals, to be innovative, to reinvent a market. Everything is done from an analytical point of view, planning what you want to do while respecting the process to carry out a project, you should not just have an idea and do it with what is believed to be the right thing, it is necessary to rely on bases.
The global idea vs. numbers
You must have a clear idea of what you plan to do, take into account the numbers, but base it primarily on current globalization and seek to move away from the competition with what you seek to implement.
Seeking to expand the market
The focus of organizations currently focuses on specializing in a market or segmenting excessively one to locate, this orientation is wrong, you must look for potential customers, that is, observe who are not customers and observe their needs to satisfy them, in order to gain a competitive advantage.
Increasing the possibilities
Not everything is based on planning, you have to investigate so that everything happens favorably in the implementation of the strategy or idea, reducing possible risks. The objective of the blue ocean is to offer the customer an unexpected, original good and service that satisfies a need, making a difference with the products that come before while remaining useful to the customer.
An important point that should not be ignored is the price, it must be strategic, so that customers consume the product, not only once but periodically, thus creating buyers who are faithful to the organization.
Implementation of the change
After generating the structure of the idea, it is time to carry it out, carrying out an analysis of what is happening and what is generated around it, in order to carry out a control.
Process debugging
Like any innovation, it must be polished, so based on the analysis of the changes that have been made, it is necessary to detect failures or areas of opportunity to eliminate or modify them so that the proposed blue ocean is a success story.
Continuous improvement
It is never good to lose perspective, when the blue ocean is successfully established, the ideal is to start looking for a new one so as not to risk falling back into a red ocean.
Necessary skills and abilities
To get into a blue ocean, some of the following characteristics are necessary:
Innovation. It is introducing something new, creating or modifying something, it is focused on technology.
Value. It seeks to increase its "degree of usefulness or aptitude for things, to satisfy needs or provide well-being or delight" (Real Academia Española, 2015)
Innovation in value. "It happens when companies manage to align innovation with profit, price and cost positions." (W Chan Kim, Renee Mauborgne, 2005)
Ability to make judgments. Make good decisions at the right time
Equanimity. Focus on what is due.
Courage. Having the courage to decide and to take risks.
Analysis. Thinking with a cold head so as not to get carried away by emotions.
Blue ocean tools
The strategic picture
It is a diagnostic tool and a scheme for making blue oceans. In the first stay, it reflects the current scheme of the competition, what the client receives and what the others offer. They represent the most representative variables of a product or service, however the information that must be taken into account are the alternatives, not the competitors and the potential clients, not our clients, to be able to observe beyond the borders of the company.
Outline of the four actions
This tool is designed to break the dilemma between differentiation between differentiation and low cost, for this it is necessary to answer four questions:
- What variables that the industry takes for granted should be eliminated? What variables should be reduced well below the industry norm? What variables should be increased well above the industry norm? What variables should be create because the industry has never offered them?
The first question eliminates variables from which industries have revolved for a long time, sometimes customers value different things but companies do not perceive it.
The second determines if there are variables that have been unnecessarily exaggerated by trying to stand out from the competition by increasing their costs without generating profits.
The third question brings up and removes the omitted or minimized variables that the industry imposes on customers.
Finally the fourth discovers new values for buyers, creating demand and modifying industry prices.
Matrix “eliminate- reduce- increase- create”
It is the complement of the scheme of the four actions and the following benefits are obtained:
- Seeking differentiation and low cost simultaneously to eliminate the dilemma between value and cost. Identify what they are aimed at. Easy understanding, which increases commitment to change. Due to the requirement of filling, it provokes a comprehensive analysis.
Red ocean strategy vs blue ocean strategy
The red ocean strategy has established and specific characteristics:
- Based on competition, they only look for differentiation in cost or quality looking for optimization. Use benchmarking to beat the competition. Cover existing demand. Decide between strengthening / modifying the value or cost of the product. Focus on the existing process in order to stand out from the competition. or to reduce costs.
In contrast, the blue ocean has the following characteristics:
- Based on innovation in value, that is, that there are no barriers or established structures It has no competitors so it is not important for the organization Entering into an unknown target market Achieving the possibility of managing the value and cost of the product simultaneously activities to achieve differentiation and low cost.
Examples
NetJets (lessor of business planes). This company observed that people who traveled for business only had two options to travel in business class on a commercial airline or for the company to buy their own plane, so they implemented offering their clients a sixteenth of a plane to be shared with fifteen others. clients, obtaining the right to fifty flight hours per year. Clients get the service of a private jet at a very low cost. This company created the blue ocean of fractional jet ownership.
Canyon. For a long time this company was dedicated to selling photocopiers to organizations, they had a large capacity and capacity, however they decided to change their focus giving rise to a new blue ocean, focusing on those who were not their customers but required a product. similar, so I create small and easy to use desktop printers.
Ralph Lauren, an American designer, generated "haute couture without fashion" combining the characteristics of haute couture, that is, the designer's name, elegant shops, fine materials; with characteristics of basic lines, classic look and low prices. Not only do I cover strategic markets, but it also attracts new customers every day.
Curves. They built their blue ocean by leveraging the distinctive strengths of two strategic groups, women who want low-cost health and easy-to-use machines, eliminating and reducing all aspects of the traditional health club that are of little interest to the great mass of women. women: the profusion of special machines, food, spa, swimming pool and even changing rooms. The Quickfit training system uses hydraulic exercise machines that do not need adjustment, are safe, easy to use, and non-threatening.
Apple iTunes watched the flood of illegal music file sharing that began in the late 1990s. As the recording industry struggled to stop piracy of physical CDs, the download of illegal digital music continued to grow. With the technology in place for anyone to digitally download free music, the trend towards digital music was clear. This trend was underscored by the rapid growth in demand for MP3 players that played mobile digital music, as Apple's hit iPod. iTunes broke a key customer nuisance factor: the need to buy a full CD when they wanted just one or two songs on it.
Cirque du Soleil. In Spanish called Circo del Sol it was aimed at a specific market, which was children, however that segment was too saturated; reason why it was decided to look for another type of market, so I implement the motto “we reinvented the circus” and I modify its presentation combining the acts of the circus with the drama of the theater so that its market was adults and children, as there was no similar circus It was a resounding success.
Cemex. Also in Mexico there is a success story of Blue Ocean, this company changed its orientation from the functional to the emotional. On average, it took 4-6 years for a middle-class family to build an additional room, because these families gave priority to parties such as weddings, baptisms, XV years. So this company carried out a program called "Heritage Today", where a group of families cooperated each week and the winner of the "boat" was raffled, each family could only win once, whoever won received enough materials to make a complete bedroom.. This program managed to increase the profits of this industry.
Fable
The eagle and the chicken coop.
One day a man found an egg on the ground on his way home. The egg was from an eagle, but when he got home he placed it in the nest of one of his chickens he was hatching.
After a few days the eaglet emerged from the shell, raising itself with the chicks of the farm.
The eagle spent its life behaving like a chicken. He scratched the ground looking for small seeds and insects to feed on. It clucked and clucked like chickens. When he wanted to fly, he only flapped his wings slightly so that he barely rose a meter above the ground. None of this seemed abnormal to her since that was how the other chickens behaved.
One day he saw a majestic bird fly through the clear sky.
- What a beautiful bird! she said to one of the chickens next to her. What kind of bird is that? It is an eagle, "the queen of the birds" - answered her companion. But don't get your hopes up and don't look at her any more than you will never be like her.
The eagle was carried away by the advice of the other chickens and simply stopped paying attention to the eagles flying over the farm. In the end the eagle died believing it was a chicken. (The eagle and the chicken coop, sf)
Companies have the potential to grow and develop in new areas of opportunity, in unexplored markets, but the fear of failure, the lack of courage and courage provokes their permanence in saturated market segments, in a red ocean. So if you don't have the power to innovate and make your way to a blue ocean, you're probably heading for obsolescence.
conclusion
There are different ways of incorporating blue oceans into an existing company, creating innovative extensions, reaching beyond borders, targeting potential customers, these practices provide more profit than previously managed products.
However, companies refuse to use the blue ocean strategy because they are comfortable with the common practices and methods that are used today, thus remaining in the red ocean.
It is worth mentioning that there is no successful company in perpetuity, but there is a notable difference when strategic movements are used to enter the blue ocean, thus marking new and remarkable trajectories.
When a blue ocean is created it does not mean that it will prevail like this for a long time because the competitors usually emerge later, so you must continue to look for new markets and stay ahead.
References
- (sf). Retrieved on February 12, 2015, from http://walterteran.com/como-el-guila-o-como-la-gallina-tu-pensamiento-es-lo-que-t-eres/la strategy of the blue ocean. (2015). Retrieved on February 12, 2015, from http://www.blueoceanstrategy.com/Real Academia Española. (2015). Retrieved on February 12, 2015, from http://lema.rae.es/W Chan Kim, Renee Mauborgne. (2005). The blue Ocean Strategy. Bogota: Campus.
