The Blue Ocean Strategy: Finding Untapped Markets and Opportunities
The concept of the Blue Ocean strategy offers an effective approach for businesses to tap into previously untapped markets, ultimately leading to more success and higher profits for businesses willing to take the plunge. By changing the way we think about the marketplace and striving to create markets that are uncontested, firms can benefit from increased revenues, open the door to new customers, and improve their competitive landscape.
What is the Blue Ocean Strategy?
The term “blue ocean” is used to describe an untapped market that holds the potential to generate higher levels of growth and profitability. The concept of the Blue Ocean Strategy (BOS) was developed by Renee Mauborgne and W. Chan Kim in their 2005 bestseller, Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. In it, they present a systematic approach to developing and executing a strategy based on differentiation rather than copying competitors and cutting prices.
The goal of the Blue Ocean Strategy is to identify uncontested markets to provide business with new customers and better profitability. It challenges traditional wisdom of competition and instead encourages businesses to create a demand for their products and services by offering new, innovative, and often disruptive products, services, or pricing.
Generally, traditional strategies involve focusing on taking customers from competitors, which can decrease margins, leading to a “red ocean” or a market filled with competitors. By focusing on differentiating from those competitors and creating an uncontested market instead, businesses can tap into new markets and attract customers that were previously overlooked or untapped.
Advantages of the Blue Ocean Strategy
The Blue Ocean Strategy offers several benefits for businesses seeking to move into an untapped market. First, it offers the potential for higher profitability by cutting out the costs of fighting competitors in a red ocean. Second, it allows businesses to focus on creating demand rather than competing against each other which gives them the opportunity to design products, services and prices that appeal to new customers. Third, it can open up new opportunities for growth in both geographical and customer segments, giving them the opportunity to expand their reach and attract new customers who were previously out of reach.
Finally, the Blue Ocean Strategy can help businesses to differentiate themselves in a crowded marketplace. By utilizing the principles of innovation and disruption, businesses can find unique ways to serve their customers and stand out from the competition. This is especially beneficial to smaller firms, who find it difficult to compete with bigger, more established players.
Applying the Blue Ocean Strategy
The best way to apply the Blue Ocean Strategy is by using the four steps outlined in the book. These steps are “Create”, “Execute”, “Operate”, and “Trenduate”. The “Create” step involves accurately evaluating the market and identifying any existing or potential demand for the product or service that the firm is considering offering. During the “Execute” stage, firms should plan and map out how to turn their vision into reality by creating the new product or service and pricing it accordingly.
The “Operate” step is designed to ensure that the process is properly rigorously executed to achieve the desired outcome. It involves tracking performance metrics, researching industry trends, understanding customer needs, and ensuring that the firm is achieving its goals. Finally, the “Trenduate” step focuses on tracking potential changes in the market to identify new opportunities and adjust strategies if necessary.
Examples of Businesses Using the Blue Ocean Strategy
In today’s competitive marketplace, there are numerous examples of businesses that have successfully adopted the Blue Ocean Strategy. One company that has made the most of it is Airbnb. By opening the door to unique travel and lodging opportunities, the company has created an entirely new market that has revolutionized the hospitality industry. Another example of a successful Blue Ocean Strategy is Apple. By providing innovative products and services that differentiated themselves from their competitors, they have become one of the most profitable and respected companies on the planet.
Finally, a third example of a successful Blue Ocean Strategy is Amazon. Using innovative pricing, logistics, and customer service, they have changed the way people shop and opened up a new market for e-commerce businesses.
The Blue Ocean Strategy is a powerful concept for businesses seeking to tap into previously untapped markets. By applying the four key steps outlined in the book, businesses can identify untapped market opportunities, create demand, and differentiate themselves from their competitors, ultimately leading to greater growth and profitability. With appropriate research and planning, businesses can make use of this concept for a successful long-term business strategy.
