Blue ocean strategy: what is it and how is it used in marketing?
A summary of 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 of them are imbued with a psychological background that makes them particularly attractive.
This is the case of the blue ocean strategya concept that we are going to explore in detail to discover what it consists of and how useful it is.
What does the blue ocean strategy consist of?
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 company's scope. These authors created this concept in 2005 and made it known to the general public through a book of the same name, Blue Ocean Strategy.
Mauborgne and Chan Kim propose that any typical company is located within an already overexploited market, since there are a multitude of competitors, all contributing to saturate that space, so that the opportunities for growth (selling more, getting new customers, etc.) are very small. They call this type of market a red ocean.
In contrast, there would be blue oceans, which would be unexplored corners of the market and, therefore, with a potential way for the company to expand, with hardly any obstacles, achieving a great with hardly any obstacles, achieving high profitability. Obviously, this is the dream scenario for any organization, since at a stroke of a pen we would be eliminating all rival companies from the equation, at least initially.
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 state that there are several steps to finding that longed-for corner of the jungle that is the marketplace.
It should be made clear that the blue ocean is not a place in the market that is hidden, but a market space that has not yet been created, either because no one has ventured into it, or because the need for a certain product or service has not been demanded until now, or for other reasons. It is not a question of simply looking for it; you also have to know how to create that space.
Specifically, according to Mauborgne and Chan Kim, there are four principles that must always be borne in mind if we want to follow the blue ocean strategy successfully. Let's look at each of them in detail.
1. Generate a new market niche
We anticipated before that the blue ocean is not found, but created. That is why that every company that wants to prosper must invest in innovation and explore the creation of new products that are original, novel and open doors to sectors that did not exist before.and open the doors to sectors that did not exist until now.
The authors emphasize that it is not a mere question of trial and error, but that it is necessary to have a plan that, if well developed, should allow us to expand the frontiers of the market in which our sector is located. Logically, this is not easy; you don't come up with million-dollar ideas every day! However, they tell us about five factors to take into account when approaching this final objective. Let's take a look at them.
1.1. Direct and Indirect Competitors
An often overlooked issue in the business sector, is that competition is not only the company that manufactures a product in the same category as yours.The same is true for the one that generates something totally different but which also takes market share away from mine.
A very clear example would be the movie industry compared to 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 to know which are the indirect competitors!
1.2. Don't neglect the smaller competitor
Sometimes companies get carried away by the "peer-to-peer" fight, studying only competitors of similar size, ignoring the fact that there are many other small competitors.They ignore the fact that there are many other small corporations that have their own market share. If we study what these companies have to offer in order 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) we expected. How is this possible? Perhaps the problem lies not in the product itself, but in the target audience, which may belong to a different sector than the one we had originally thought.
It is advisable to to study carefully who might be interested in our product and direct the marketing in that direction.. There may be an unattended market sector, waiting for us to reach it.
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 to put yourself in the consumer's shoes, act like him and study in detail all the behaviors and thoughts he experiences while using our product. while using our product, but also in the moments before and after. Perhaps there is an unmet need, a possible improvement to be made, etc.
1.5. The power of emotion
In many cases, it is not the product that is objectively better or more useful that wins, but the one that has connected better with the public, and many times this objective is achieved through emotion. A very useful strategy is to know how to manage the consumer's feelings. If done properly, we can be extremely persuasive in convincing them that they need our product..
2. The importance of the idea
Having explored the different points in the previous section, we may have come up with a valuable idea. It is now time to implement it, and to do so, we will have to leave behind typical the typical red ocean strategies, where huge amounts of resources are spent on competing against the rest of the companies. against other companies.
On the contrary, we will now devote all our 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 how our company compares 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, verifying the acceptance of our product.
- Communication. Finally, we will have to publicize our new creation.
3. Generate more demand
Generally, companies tend to concentrate all their efforts on covering a very specific need of a very specific sector of the population, which generates a limited market share.This generates a limited market share.
Instead, the best thing to do is to explore ways to reach different population sectors and even ways to satisfy needs other than the one we had established as our main one. If we are skillful in this procedure, the size of our target audience can grow significantly.
4. Make a project viable
Obviously, every project has its risks, especially in such a hostile and competitive environment as the business one. Therefore, it is vital that we it is vital that we are especially skillful in carrying out the plan we have designed.. All the issues must be clear: that our product is going to be useful for the population we have selected, that the price is adequate to achieve the desired sales taking into account the cost it will entail.
In short, we must make sure 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 for not having taken 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 ability to adapt to the frenetic changes in the market, has been innovative and above all, has been able to see what others had in front of them and overlooked, it has been Netflix, the video-on-demand platform.
Although many think Netflix is a relatively new company, the truth is that it was created in 1997, in the US, as a different kind of video store (movies were sent by mail to the consumer's home, which was already an important innovation in the industry).
But in 2007 is when they made the decision that changed the company forever: the retransmission of content over the Internet.. What came after that is well known: international expansion, creation of own content and an ever-expanding catalog.
The key to this issue is that Netflix was able 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 era. They found, without a doubt, their blue ocean.
- Kim, W.C., Mauborgne, R., de Hassan, A. (2008). La estrategia del océano azul. Grupo Editorial Norma.
- Mendoza, T. (2013). The blue ocean strategy for entrepreneurs. Science & Society Notes. Continental University.
- Chirinos, C. (2011). Niche market: The blue ocean approach. Industrial Engineering. Universidad de Lima.
(Updated at Mar 28 / 2023)