What is Blue Ocean strategy?
The term “Blue Ocean Strategy” has become increasingly popular in business circles. It refers to an innovative and creative business model that allows companies to capture uncontested market space and create new demand. The goal of a Blue Ocean Strategy is to push companies away from the ever-competitive Red Sea (where most businesses are situated) and towards the unexplored Blue Oceans of opportunity. In this article, we will delve into what Blue Ocean strategy is, its key elements and how to create an effective Blue Ocean Strategy.
What is Blue Ocean strategy?
businesses that create “blue oceans” of uncontested market space make the competition irrelevant and seize new demand.
In business, blue ocean strategy is about creating new demand in an uncontested market space. It is about making the competition irrelevant by seizing new market opportunities and creating new value propositions.
Blue ocean strategy is based on the idea that companies can create new markets by offering products or services that are unique and differentiated from what is currently available. This differentiating factor could be a new technology, a new business model, or a new way of delivering value to customers.
The goal of blue ocean strategy is to generate high growth and profitability by appealing to unserved or underserved customer segments. To do this, businesses need to focus on creating value rather than competing on price.
There are four steps to creating a blue ocean:
1) Define your company’s unique selling proposition (USP) – What makes your company different from others in the industry? What needs does your company address that are not being met by the competition?
2) Develop a customer profile – Who are your target customers? What needs do they have that are not being met by the current market?
3) Identify adjacent markets – What other markets are similar to yours but still untapped? How can you reach these potential customers?
4) Create a blue ocean roadmap – Once you’ve identified your USP, target customers, and
The Four Actions Framework
The Four Actions Framework is the core of Blue Ocean Strategy. It is a simple yet powerful tool that helps companies to create new market space and make the competition irrelevant.
The framework is based on the belief that companies can create new demand rather than just fight for a share of existing demand. It consists of four key actions:
2. Create a unique value proposition – Develop a compelling offer that meets the needs of your target customers while differentiating you from the competition.
3. Make the competition irrelevant – Focus on creating a new market space rather than trying to outdo the competition. This may require you to rethink your business model and how you operate.
4. Build execution into strategy – Ensure that your plans are realistic and achievable by involving all relevant stakeholders in the planning process.
The Three Tiers of Noncustomers
The three tiers of noncustomers are those who: (1) don’t use your category at all; (2) use your category but are dissatisfied with it; and (3) use your category but could easily switch to a competitor’s offering. To tap into untapped demand, you need to understand what motivates each group of noncustomers and how you can better serve them.
The Value Curve
In order to create and capture value, businesses need to understand what is known as the “value curve.” The value curve plots the relationship between price and perceived value. It is used by businesses to map out where they currently stand in relation to their competitors and where they need to be in order to create value.
The shape of the value curve indicates how much value a business is able to generate at different price points. A business that has a flatter value curve is able to generate more value than its competitors at the same price point. A business with a steeper value curve is able to generate more value than its competitors at a higher price point.
The location of a business on the value curve also indicates how much room there is for growth. A business that is located on the far left of the curve has very little room for growth because it is already generating a lot of value relative to its competitors. A business that is located on the far right of the curve has a lot of room for growth because it has yet to reach its full potential in terms of generating value.
By understanding the value curve, businesses can develop strategies for creating and capturing more value. For example, a business may choose to invest in R&D in order to develop new products or services that will allow it to move up the value curve. Alternatively, a business may choose to lower its prices in order to attract new customers and grow market share. No matter what strategy a
Conclusion
Blue Ocean Strategy is a powerful tool intended to help organizations create uncontested markets and stand out in the overcrowded business world. By understanding the 4 Actions Framework, 6 Paths Framework, and Blue Ocean Tools such as their strategy canvas, companies can craft innovative strategies that allow them to reach customers they never had before while capitalizing on growth opportunities. This type of thinking should be embraced by all businesses looking for long-term success.