Marketing Strategy

Blue Ocean Strategy has been developed by Chan Kim and Renee Mauborgne’s in 2005 and became the most known strategy in worldwide. This strategy recommends that companies should stop to compete in existing market ( red ocean), should try to create new market (blue ocean) where there are no exist competitors yet.

This is done by creating a leap in value both for the buyers as well as for the organization thereby creating a new and uncontested market space. Companies left out in the red ocean usually follow a conventional approach, running to beat competition by creating a defensible position in the current market space order.

2004 the two authors Kim and Mauborgne wrote the book Blue Ocean Strategy. They suggest that companies can sustain high performance through creating uncontested market space, rather than competing in overcrowded industries. This enables companies to create and capture new demand and makes the competition irrelevant.

Blue oceans are uncontested market spaces where the competition is irrelevant… you invent and capture new demand, and you offer customers a leap in value while also streamlining your cost. Results? Handsome profits, speedy growth – and brand equity that lasts for decades while rivals scramble to catch up (Mauborgne, 2007).

Nowadays many new companies have emerged in the markets this will cause a lot of conflicts in the crowded marketplace in order to stay in the competition, success and gain profits. The competition is often so severe that some companies cannot sustain themselves and may stop operating. Therefore, W.Chan Kim and Renee Mauborgne whom are professors of strategic management they develop a blue ocean strategy as a new way of thinking to make this competition irrelevant and creating new market space. It is also demonstrates how the companies traditionally work in red ocean conditions where companies are fighting fiercely against each others to gain a share of the market.

The purpose of the blue ocean strategy is to focus on making the business itself better without focusing on the competition. Kim and Mauborgne (2005) state that “blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant” (p. x). There are several analytical tools that have been created to challenge companies to become part of the blue ocean.

Give one example of a company pursuing blue ocean strategy and one example of a

Blue Ocean Strategy is a book written and published by Chan Kim and Renee Mauborgne in 2005. More than a decade of research was performed by the authors, and this research is analyzed extensively in the book. The authors were looking for successful companies that broke through the accepted norms of their industries to find greater success. Many of the companies they researched are still leading their industries today. These companies created what the authors define as a blue ocean- that is, “uncontested market space that is ripe for growth,” as opposed to a red ocean- “companies competing with each other over a shrinking profit pool.”

Blue Ocean Strategy is a recently established marketing concept obtained from the devises of W. Chan Kim and Renée Mauborgne. This term is used to describe instead of working in conditions, known as the red ocean, where companies are savagely hostile against each other for a share of the marketplace, businesses should attempt to discover a means to work in a

Blue Ocean Strategy advocates that for a company to be successful, creating and opening a new market space that no one has entered before is essential. In order to gain and to sustain the value-innovation, every single corporate and business owner should create and discover contentious areas of the market that is ready to grow. This market place is called the 'blue ocean ', a term that should be, but still is not, a keystone for the managers. The book accepts the fact that this strategy is not seen applicable enough by saying "too risky

Red Oceans represent the existing market space which is known market. Companies in red oceans are competitive-base; they are fighting each other and aim to get a bigger market share from their competitors. The world now is globalized, the competitions are fiercer than ever, they are battling on the same demand thus this is bloody competition. That’s why it’s called red oceans.

A distinctive aspect of Blue Ocean Strategy is that instead of looking to serve existing prime customers in the existing market place, it is largely concerned with modifying a product or service offering, and establishing new market space by targeting dissatisfied customers and non-customers, the potential customers for the new venture. Blue Ocean Strategy provides an approach to conceiving ventures that allows you to reconfigure your product or service offering and its market.

Understanding a new market’s needs and developing a business model capable of delivering on those needs relies on a solid strategy. A solid strategy is predicated on understanding barriers to playing within the institutional framework. Understanding

Strategy is needed in company policy to enable innovation, above average returns, to develop core-competencies and to guide management and staff on an effective plan to proceed. Mike Porter proposes that A company can outperform rivals only if it can establish a difference that is can persevere. It must deliver greater value to customers or create comparable value at a lower cost, or do both. (Mike Porter, https://books.google.co.nz/books?hl=en&lr=&id=Q8SKiG6bqpkC&oi=fnd&pg=PA10&dq=need+for+strategy&ots=4EySdrNZjw&sig=dIHSPYGcmR8AZhAQxa_Oc4XtPds#v=onepage&q=need%20for%20strategy&f=false)

The Red Ocean could be defined as the existing market space which is currently used globally. Where the boundaries have been created and followed by each and every competitor in the market. In the Red Oceans firms try to outperform their rival’s or competitors in order to obtain a greater market share. Since the Red Ocean acquire a highly competitive environment the profits and development of the firms who compete in the Red Ocean is reduced. A Red Ocean strategy could be defined as a strategic decision taken by firms to compete in the existing market using conventional methods of outperforming the competitors in the market. The Red Ocean strategy focuses on competing in an already existing market which has a number of competitors also in it. Firms implementing the Red Ocean strategy emphasize on beating the competition in the market through the production of better quality goods and services than the existing products and services in the market yet at a higher price. The Red Ocean strategy also focuses on the existing demand and is dependent on reducing the production cost along with a well executed marketing strategy in order to obtain a high market share. Firm who implement the Red Ocean strategy make to strategic decision about obtaining a better market share namely product