W. Chan Kim and Renee Mauborgne’s work, Blue Ocean Strategy,
differentiates blue ocean strategy from red ocean strategy
to argue the merit and superiority of the blue ocean
strategy. Red oceans are defined by an industry with crowded
market space resulting in a bloody, cutthroat competition of
reduced profits and growth. Blue oceans, however, are
defined by “untapped market space” created by expanding
existing industry boundaries to reach new levels of profit
and growth. Blue oceans are increasing necessary because of
increased competition from globalization and every day low
prices.
The underlying theme of blue ocean strategy is “value
innovation.” Value innovation is defined as, “creating a
leap in value for consumers to create new market space.” It
is achieved by the alignment of utility, price and cost.
Rather than seeing low cost and great value as a trade-off,
blue ocean strategy drives costs down while driving value
up.
A good strategy is defined by three characteristics, focus,
divergence and a clear tagline. A good strategy focuses on a
small set of factors rather than competing across all
factors. Cirque de Soleil focused on drama and theatre
rather than the traditional circus that focused on animals
and star performers. A good strategy diverges itself from
the traditional competition by looking across alternatives.
Yellow Tail Wine differentiated itself from other wines by
bringing in factors traditionally seen in the cocktail
market. The wine was created to be simple and fun. Lastly a
clear tagline that delivers a truthful promise to the
consumer makes the brand easy to conceptualize.
