• Vignesh LS

What is Blue Ocean Strategy?

Blue Ocean Strategy is a marketing theory from a book published in 2004 which was written by W. Chan Kim and Renée Mauborgne, professors at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute. Before proceeding further let us know something about Red Ocean as it is famously quoted. This is related to the ocean of already existing opportunities where competition is neck to neck to attain dominance. Red Ocean signifies a saturated market where companies try to dominate and the mistake of trying to do that reflects in their operational costs whereas Blue Ocean presents a systematic approach to making the competition irrelevant and capture their own blue oceans. Red Ocean can be considered as a place which has been filled with blood due to killing each other in order to attain dominance.

Blue Ocean Strategy can be applied across sectors or businesses. It is not limited to just one business. For example, when Apple ventured into the Music Industry with its IPod, there was no player already in this market of selling music. The competition was made irrelevant by choosing a new area/market. The book suggests that it is better to find new avenues than fighting for space in the already filled pool. Blue Ocean is a lifetime opportunity to create, control and conceive the market by strategic choices and align it with long term goals and depends on Value Innovation. Value Innovation is the simultaneous pursuit of differentiation and low cost, creating a leap in value for both buyers and the company. The concept of Value Innovation is developed by W. Chan Kim and Renée Mauborgne and is the cornerstone of market-creating strategy. Value to buyers = offering’s utility – price Value to company = offering’s price – cost Value innovation is achieved only when the whole system of utility, price, and cost is aligned.

Cost savings are made by eliminating and reducing the factors an industry competes on.

Buyer value is lifted by raising and creating elements the industry has never offered.

Pic Credits : © Kim & Mauborgne.