A summary about the characteristics and peculiarities of this marketing strategy.
As in many other disciplines, new theories are constantly emerging in economics, but the interesting thing is that many are imbued with a psychological background that makes them especially attractive.
This is the case of the blue ocean strategy, a concept that we are going to explore in detail to discover what it consists of and what its usefulness is.
What is the Blue Ocean Strategy?
Renée Mauborgne and W. Chan Kim, from the prestigious INSEAD business school, were the creators of the blue ocean strategy, which would be an untapped market space within the scope of the company. These authors created this concept in 2005 and made it known to the general public through a book that bears precisely that name, Blue Ocean Strategy.
Mauborgne and Chan Kim propose that any typical company is located within an already overexploited market, since there are many competitors, all contributing to saturate said space, thus providing opportunities to grow (sell more, get new customers, etc.) , are very small. They call this type of market the red ocean.
In contrast, there would be the blue oceans, which would be unexplored corners of the market and, therefore, with potential way for the company to expand with hardly any obstacles, achieving great profitability. Obviously, it is the dream scenario for any organization, because at a stroke we would be eliminating any rival company from the equation, at least in the beginning.
How to use it in marketing
We have already defined the concepts, but now we must explore the main question of the matter: how can we find the blue ocean? Well, Chan Kim and Mauborgne indicate that there are several steps to find that coveted virgin corner of the jungle that is the market.
It must be clarified that the blue ocean is not a hidden place in the market, but rather a market space that has not yet been created, either because nobody has ventured into it, because the need for a certain product or service had not been sued until then, or for other reasons. It is not a matter of looking for nothing, you also have to know how to create that space.
In particular, according to Mauborgne and Chan Kim, there are four principles that we must always bear in mind if we are to pursue the blue ocean strategy successfully. We are going to see each of them in detail.
1. Generate a new market niche
We anticipated before that the blue ocean is not found, but is created. That is why any company that wants to prosper has to invest in innovation and explore the creation of new products that are original, novel and open the doors to sectors that did not exist until now.
The authors emphasize that it is not a mere matter of trial and error, but that we must have a plan that, well developed, should allow us to expand the borders of the market in which our sector is located. Logically, this is not easy, you do not have millionaire ideas every day! However, they tell us about five factors to take into account when approaching that final goal. Let’s see them.
1.1. Direct and indirect competitors
A frequently forgotten issue in the business sector is that competition is not only the company that manufactures a product in the same category as yours, but also the one that generates something totally different but also reduces market share from the company. Own.
A very clear example would be the cinema sector compared to that of book publishers, since someone may decide to spend their free time watching a movie or a series instead of reading. It is important to take this into account and know which are the indirect competitors!
1.2. Do not neglect the small rival
Sometimes companies get carried away by the fight “as equals”, studying only competitors of similar size, ignoring the fact that there are many other small corporations that have their own market share. If we study what these companies offer to survive among giants, we can find good ideas.
1.3. The target audience
Sometimes we have a great product that does not generate the impact (and therefore the sales) that we anticipated. How is it possible? Perhaps the problem is not in the product itself, but in the public to which it is directed, which may still belong to a different sector than the one we had thought at first.
It is convenient to study carefully who may be interested in our product and direct the marketing in that direction. There may be a sector of the market left unattended, waiting for us to arrive.
1.4. Know your product
The company knows its own product best, right? Well, this statement may not be so categorical. It is essential to put yourself in the shoes of the consumer, act like him and study in detail all the behaviors and thoughts that he experiences while using our product, but also in the moments before and after. Perhaps there is an unmet need, a possible improvement to make, etc.
1.5. The power of emotion
On many occasions, the product that is objectively better or more useful does not triumph, but rather the one that has better connected with the public, and many times this objective is achieved through emotion. A very useful strategy is knowing how to handle consumer sentiments. Done properly, we can be extremely persuasive in convincing them that they need our product.
2. The importance of the idea
Once the different points in the previous section have been explored, we may have come up with a valuable idea. It is the moment to carry it out, and for this it will be necessary to leave behind the typical strategies of the Red Ocean, where huge amounts of resources are spent in competing against other companies.
On the contrary, now we are going to dedicate all the efforts to go to a new place in the market, previously unexplored (so we will distance ourselves from our usual rivals), and materialize the idea.
This process is achieved through these phases:
- Situation. We must be clear about the comparison of our company with the rest of the companies in the sector
- Exploration. We will study which is the most appropriate way in our case to generate the new place in the market.
- Experimentation. It is time to check that our approach is correct, checking the acceptance of our product.
- Communication. Finally, it will be necessary to publicize our new creation
3. Generate more demand
Generally, companies tend to concentrate all their efforts on meeting a very specific need of a very specific sector of the population, which generates a limited market share.
Instead of that, the best thing would be to explore which are the ways to be able to reach other different population sectors and even the way to satisfy different needs than the one we had established as the main one. If we are skilled in this procedure, the size of our target audience can grow significantly.
4. Make a viable project
Obviously, every project has its risks, especially in such a hostile and competitive environment as the business one. Therefore it is vital that we are especially skillful in carrying out the plan we have designed. All questions must be clear: that our product will be useful for the population we have selected, that the price is adequate to achieve the desired sales taking into account the cost that it will entail.
Ultimately, we must ensure that the proposal is viable on paper, before seeing it materialize in reality. It is preferable to allocate resources to these previous studies, even if the results are not satisfactory and we have to see the project canceled, rather than face a resounding failure because we did not take into account some important variable that we missed.
Example with a real case
If in recent years there has been a company that has shown a surprising capacity to adapt to the frantic changes in the market, has been innovative and above all, has known how to see what others had in front of and ignored, it has been Netflix, the video on demand platform.
Although many think that Netflix is a relatively new company, the truth is that it was created in 1997, in the US, as a different video store (movies were sent by post to the consumer’s home, which was already an important innovation within the industry).
But in 2007 is when they make the decision that changes the company forever: the retransmission of content over the Internet. What has come after is well known: international expansion, creation of its own content and an ever-expanding catalog.
The key to this issue is that Netflix knew how to anticipate the paradigm shift (extinction of the physical format and therefore of video stores as we knew them), and the arrival of the digital age. They undoubtedly found their blue ocean.
- Kim, WC, Mauborgne, R., de Hassan, A. (2008). The blue Ocean Strategy. Norma Editorial Group.
- Mendoza, T. (2013). The blue ocean strategy for entrepreneurs. Notes on Science & Society. Continental University.
- Chirinos, C. (2011). Market Niche: The Blue Ocean Approach. Industrial engineering. Lima University.