In other words, Blue Ocean strategy represents a game changing idea of creating new markets and unlocking the inherent demand in these markets.
Indeed, the cornerstone of the Blue Ocean Strategy is the creation of new playing fields and which entails opening up entirely new markets as opposed to the Red Ocean where the existing market conditions are such that companies must pursue either differentiation or low cost strategies. On the other hand, Blue Oceans represent many opportunities for growth and where the irrelevance of competition is the norm because the markets are yet to be saturated.įurther, Blue Oceans represent markets where demand is large and unmet and where growth and profits can be actualized through value innovation, which is the simultaneous pursuit of low differentiation and low cost. This results in the Commodification of products, which means that the intense and cutthroat competition in the existing markets turns them bloody, or makes the ocean red. If we compare the Blue Ocean with the Red Ocean we find that whereas the former denotes all the industries not in existence now and hence, are potential opportunities for companies to enter and unlock demand, the latter denotes the existing industries and the known market space, which is characterized by reduced profits and growth because of saturation. The key premise of the Blue Ocean strategy is that companies must unlock new demand and make the competition irrelevant instead of going down the beaten track and focusing on saturated markets. In other words, as opposed to Red Oceans that are saturated markets where differentiation or cost competition is prevalent, companies can instead create Blue Oceans or entirely new markets for themselves through value innovation, which would create value for its entire stakeholder chain including employees, customers, and suppliers. This strategy, which is based on extensive research of hundreds of companies spanning across decades and including several industries, proclaims that instead of battling competitors, companies can create new markets for themselves.
Blue Ocean Strategy is a concept that has been pioneered by INSEAD Professors, W.