If our company's boat sailed in a red ocean, we should know that it has this color due to the continuous fighting that takes place on it to get the best fishing.
It is a dangerous but well-known ocean, where we try to scratch the market share of others and generally we will have to compete on the basis of prices.
Create added value or fight on the cost side? The rules of the game are known to those in a red ocean, and even the estimated levels of demand being handled are known.
The opportunities to achieve a winning strategy decrease as the number of competitors increases and commercial efforts are directed to highlight the differences with respect to the rest of the alternatives.
Even so, businesses tend to proliferate around well-known markets and products, because although in the long run they are condemned to a cannibal war, they take less risks.
Beyond the red ocean a new horizon opens up, where the waters are still blue and the opportunities are totally new. Fish jump on the waves and our boat opens the sails of innovation, as it is the only way to get there.
Here the competition will not matter, because we will have created a unique and particular market, breaking the rules and creating new demand.
Red Ocean and Blue Ocean
The red ocean and the blue ocean are different strategies for acting in competitive markets and knowing how good ideas create new demand.
Red Ocean is the description of high competition, a space where what you get is at the expense of others, either by lowering prices or improving quality. Blue Ocean departs from the red ocean to reach unknown waters implementing new ideas. In the red ocean there is the rule of competition; In the blue ocean, competition does not exist.
The trip to the Blue Ocean starts from the Red Ocean and must be done with imagination. There it is not a struggle to maintain itself, but it is enjoyed and it grows rapidly. It is about separating the important from the urgent and that improvisation is included in the strategy. Blue Ocean does not offer what is demanded now but something better. Red ocean is the sector of the ideas used and the products or spaces known, defined and accepted. As it fills up with competitors, the low profit and the fight become fierce. Blue Ocean is a virgin, unexplored space and has high value prospects for those who enter it. Represents what could be, the unknown. In its waters the demand is created.
Red Ocean strategies
- Compete in the existing space of the market. Challenge the competition. Exploit the existing demand in the market. Choose between the choice of value or cost. Align all ideas to the system of activities of a company with the strategic decision of differentiation. or the low cost.
Blue Ocean Strategies
- Create a space without competition in the market. Make competition irrelevant. Create and capture new demand. Break the choice of value or cost. Align all ideas to the system of activities of a company in order to achieve differentiation and low cost. (The Blue Ocean Strategy, 2010)
Early Blue Ocean
- Reconstruct the borders of the market.
Seek blue oceans where competition is not present: in industries that provide alternatives to their products; among users, rather than among buyers; in complementary services (such as after-sales maintenance services); in emotional or functional attractiveness; or beyond time, anticipating trends.
Netjets, the creator of the aircraft company, searched alternative markets and filled the gap between owning a private jet and traveling in first class.
Home Depot did the same by offering advice from a professional decorator at lower prices than from a hardware store.
In Japan, where men's hair salons were expensive, slow, and cut hair anyway, QB House offered cheap, fast, functional haircuts.
Swatch traded the economical and purely functional watch for a statement of modernity guided by emotion.
- Focus on the big picture, not the numbers.
Kim and Mauborgne describe how to map out a strategic tapestry instead of drowning in spreadsheets and budgets.
- Go beyond existing demand.
Instead of focusing on customers, Callaway Golf found that many people did not play golf because hitting the ball was too difficult, so they designed a golf club with a larger head.
Create a correct strategic sequence.
You have to build the strategy in the following order. When the answer is no, you have to rethink the question.
- Utility for the buyer.
Does your business idea offer any exceptional utility for the buyer? Think that utility is not the same as technology.
Price
Is the price of your product affordable for buyers? Launches in innovation almost always start with a high price that goes down (the so-called "skimming strategy"). But in the blue ocean strategy it is important to know from the outset what price would quickly attract the mass of potential buyers. Volume generates higher returns than it used to, and for buyers, the value of a product is often closely tied to the number of people who use it.
Cost
Can you beat your target cost and make profit at a strategic price?
Adoption.
What are the obstacles to adoption? Are you facing them? Blue ocean strategy ideas threaten the status quo and can create fear and resistance among employees, company partners, and the public. Instruct the fearful. (Benítez, 2013)
Impediments of the Blue Ocean
Despite its advantages, it is not known how to turn into tools and methods to test, calibrate and analyze decisions that serve to operate in the red ocean. What companies learned is how to compete, but as supply is increasing, the key is to invent demand by putting energy into ideas that come out of the vicious circle of more of the same. On the client side, custom prevents them from imagining new forms of consumption. When asked, they usually reply, "I want more for less than I know." To create fresh demand, you have to take the focus off the competitor, look for alternatives and the non-consumers of today. (Krell, 2012)
Success Story: Cirque Du Soleil
This company, which was founded in Quebec by two street artists who decided to change the history of the circus, is a clear example of the blue ocean.
At Cirque Du Soleil, they sought to innovate and reach another audience with a higher purchasing power. His creative approach is based on presenting a circus without animals, a job with social responsibility and offering a real show. For this, it combines music, theater, dance and the highest technology, elements with which they create unimaginable stories that captivate and enchant the public.
Its vision is to be an international organization dedicated to the creation and realization of works of art whose mission is based on invoking the imagination, provoking the senses and evoking the emotions of people around the world.
The goal is to pursue dreams, as Cirque Du Soleil in its business practices strives to position itself in the community as a responsible and engaging advocate for change.
Among its values we find:
- Maintain integrity in the creative process. Recognize and respect the contribution of each individual. Extend the limits of what is possible. Draw inspiration and artistic and cultural diversification. Stimulate the promotion of youth potential.
The main powers it has to carry out its acts are:
- AcrobaticsActivity.DanceAudacityDexterityGraceEleganceArt
The differentiating elements of the circus are:
- Creating stories with imaginary worlds. Evoking feelings with stories according to the culture of each country. Reaching the adult audience, which has greater purchasing power. Contributing to the defense of animals. Investing in R&D for which it has its own Creativity Lab, where the world's brightest and most creative minds come up with projects for which the idea generator takes the lead role from start to finish.
The management carried out in Human Resources:
- Include young people with financial difficulties in the workforce. Recruit the best singers, dancers, athletes, acrobats, technicians and professionals in all disciplines. Conduct casting tours each year at the same time in different countries to recruit the best. Recruit groups of people for countries so that when they arrive at the circus they feel supported by their team. Offer all employees the possibility of imagining their dreams and making them come true by putting together their own history. Managing the motivation of the staff, providing the opportunity to pursue a professional career in the circus. while working. These can be Show Production, Costumes and Accessories, Marketing, Sales or Communication.
Cirque Du Soleil has managed to reach a market where it has no competition thanks to its innovation and generation in value. This company works tirelessly and requires its employees to rehearse each act as many times as necessary so that there are simply no mistakes. They propose to present acts with the highest quality. (Gutiérrez, 2013)
conclusion
In a highly competitive market, one of the best strategies is innovation, that is, presenting something new and different to the public, where there is no competition, that is, opening a new market with a new product or service. This is mainly the blue ocean strategy.
There are blue oceans that have nothing to do with today's industries, although most arise from red oceans as the limits of existing businesses expand. The bottom line is that when blue oceans appear, competition becomes irrelevant, as the rules of the game are waiting to be set.
References
Benítez, R. (2013). Blue Ocean Strategy. Obtained from
Gutiérrez, M. (2013). Red oceans and blue oceans. Obtained from
Krell, H. (2012). Red Ocean and Blue Ocean. Obtained from
Download the original file
