The blue ocean strategy consists of relaunching an activity in a saturated and hyper-competitive market, and therefore with limited growth prospects. For this, the company must abandon the confrontation with its competitors to seek to create new demand and capture it thanks to a new innovative offer. The implementation of the blue ocean strategy is carried out using two tools: the strategic framework and the grid of 4 actions.
This file explains everything you need to know about the blue ocean strategy :
- The blue ocean strategy: definition
- What is the point of the blue ocean strategy?
- How to implement the blue ocean strategy?
The Blue Ocean Strategy: Definition
The Blue Ocean Strategy is a marketing strategy developed by W. Chan Kim and Renée Mauborgne. Its objective is to create and capture new demand to avoid confrontation with strong competition ( the red ocean ).
Here is what to remember about the differences between these two market environments:
|Blue Ocean||Red Ocean|
|The markets are already known||The markets are new and pristine|
|You have to beat the competition||You have to stand out from the competition|
|We must gain market share||We must create a new market and meet demand|
|Confrontation on the quality / price ratio||Creation of value, and therefore profitability|
|Differentiation that does not create value||Differentiation that creates value for all stakeholders (company and customers)|
What is the point of the Blue Ocean Strategy?
The interest of the blue ocean strategy is to allow the company to develop in an environment with little or no competition. Therefore, it will create value by positioning itself in virgin markets, different from those in which the competitors are located.
The blue ocean strategy makes it possible to escape the red ocean, an environment in which there is a known market and in which many competing companies compete for market share. Competition is very high there, so the environment is not conducive to creating value (but rather to its destruction).
Here are the objectives:
- Create new markets and new demands,
- Differentiate themselves from competitors by excluding them from the race,
- Therefore to create value.
How to implement the Blue Ocean Strategy?
The blue ocean strategy involves abandoning the logic of confrontation with competitors. The objective is to create a market devoid of all competition. This implies, at the outset, creating new demand. Indeed, without demand, a market does not exist.
Improving the offer is not enough. The creation of new demand requires “value innovation”, which means that the proposed innovation must create value for the customer. Innovation is not necessarily technological; it can consist of innovating on an already existing product or service.
The strategy is implemented in two stages: the strategic outline and the grid of 4 actions.
The strategic framework
The strategic framework makes it possible to identify competitors’ strategic space and detect a new strategic space. It’s about :
- To represent the offers present in a sector,
- To take up the different purchasing criteria of your offer and customers,
- To ask questions about these different criteria (exclusion, mitigation, reinforcement, creation),
- To question the company’s offer to create a new strategic space for it.
The 4 actions grid
The grid of 4 actions makes it possible to work on differentiation. For each criterion, it is necessary to ask questions to know whether it is necessary:
- Exclude it because it does not create any value at the level of the offer (a criterion accepted without reflection),
- Attenuate it because it does not need to be so high,
- Strengthen it, as this increases the value of the offer and the current level is insufficient,
- Or create it because it does not exist, or it has been neglected when it can increase the value of the offer.
- For the market to be attractive to exploit sustainably, competitive barriers must also be erected. The more difficult the access to the new market, the more the company will prosper there. Otherwise, many new competitors will enter. The blue ocean will then become a red ocean.