Blue Ocean Strategy

In: Business and Management

Submitted By rzlowe99
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Blue Ocean Strategy

Robert Lowe
Principles of Marketing

December 2, 2013
For a long time many businesses have use a military strategy in order to find profit in an existing market. Fighting for a competitive advantage and battling competitors over a piece of the profit. Taking this head-on approach only leads to an overcrowded market with a shrinking profit pool. This is what the book calls a “red ocean”. Blue Ocean on the other hand wants you to look outside the box and make the competition irrelevant. In the future companies will not succeed battling competitors, but instead finding uncontested market space ripe for growth. Swimming in an area that only has a few swimmers is a lot better than swimming with the sharks. This book shows you six principles that will help companies create a Blue Ocean Strategy. The authors use data collected from over thirty different industries, and have studied more than hundred different strategies from the last century.

Creating Blue Oceans
It is suggested that companies and organizations need to create demand in uncontested market space, rather than competing head-to-head with competitors in an existing market space. These two strategies are called “Blue oceans” and Red Oceans”. Red oceans are existing companies in the market. Their goal is to compete with competitors for a bigger slice of the pie. This strategy leads to overcrowded markets which make the profit shares shrink. Blue oceans is the opposite, demand is created and not fought over. The ultimate goal is to drive the cost down and increasing the value for the buyer. It is argued that the cornerstone of Blue Ocean Strategy is “value innovation”, which creates value for the company and the buyer. Value innovation is only achieved when the system of utility, price, and cost are aligned. The book gives the example of Cirque du Soleil and how they…...

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