Blue Ocean Strategy

The only way to beat the competition is to stop trying to beat the competition. In simpler words, blue ocean strategy helps us reduce the aspects of a potential competitor to enter your market segment.

Jebin James

Management Student at IMT Ghaziabad

The only way to beat the competition is to stop trying to beat the competition. In simpler words, blue ocean strategy helps us reduce the aspects of a potential competitor to enter your market segment.

Chan Kim & Renée Mauborgne, in their classic book, Blue Ocean Strategy, coined the terms ‘red ocean’ and ‘blue ocean’ to describe the market universe.

Red Oceans are those markets where multiple players are fighting for customers thereby those market nearing saturation. In red oceans, the industry boundaries are defined and accepted, and the competitive rules of the game are known hence, making it very difficult for a new entrant to grab market share. For example, if a new phone company tries to enter the premium segment, it would face a lot of competition from the existing competitors in the Premium Market Segment like Apple and One Plus.

Whereas in a Blue Oceans you define a new set of boundaries by creating a new market segment that hasn’t been explored yet, with no competitors, in order to monopolize the market.


So, how does it work?

1. Create a new market by placing an entry barrier
A good example is that of Reliance Jio. Until 2016, the telecom market in India was competing on voice calls and discounts on voice call plans. Jio, instead of entering the market and fighting against existing competitors, shifted the focus to data. Jio provided 1GB 4G data at a minimal price in a market where the cost of data was very high and consumption was very low. Jio changed the consumer behaviour which forced all existing major players to shift to a data-driven market approach. But by then Jio had already monopolized the market.

2. Intellectual Property Right
Intellectual Property Rights and patenting is another way to create an entry barrier for other competitors. Coca-Cola created a secret syrup in 1891 and still doesn’t face new competitors other than Pepsi, even though what they sell is only carbonated water. The secret syrup is protected under trade protection laws, protecting Coco-Cola from revealing the details of its ingredients.

3. Exclusive Rights
Another way to get market share using Blue Ocean Strategy is to collaborate with various stakeholders and buy Exclusive Rights. Currently, Flipkart has almost 70% market share in products selling under exclusive rights in India. Flipkart sells Xiaomi Phones exclusively on its portal, by which it can retain a huge amount of customer base by creating an entry barrier for other competitors.

4. Solve an Existing Industry Problem
iTunes: Before iTunes had entered the market, the music world was marred by piracy, and even the consumer had to pay a premium to buy an entire album, even if he/she preferred a particular song in the Album. Blue Ocean Strategy created an entirely new category of music sales that allowed artists to profit and consumers to buy single songs versus entire albums. iTunes has dominated this market space for years and is largely credited with driving the growth of digital music.

Looking at the present scenarios, with various industries facing the consequences of the pandemic COVID-19, it has become imperative for businesses to develop and explore new market segments in order to stay relevant. They would need to discover unconventional ways to adjust to the ‘new normal’ with alternating consumer requirements.

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