Notes adapted from Marketing Trends PPT, Philip Kotler – Brian Houston
Blue Ocean Strategy
W. Chan Kim and Renee Mauborgne
At the heart of Blue Ocean Strategy is differentiation.
“The land you are entering to take over is not like the land of Egypt, from which you have come, where you planted your seed and irrigated it by foot as in a vegetable garden. But the land you are crossing the Jordan to take possession of is a land of mountains and valleys that drinks rain from heaven. It is a land the LORD your God cares for; the eyes of the LORD your God are continually on it from the beginning of the year to its end.” Deuteronomy 11:10-12
Red Ocean vs. Blue Ocean
The Red Ocean is red because of competition. Two companies with similar production competing for the same customers.
Ex. Coke vs. Pepsi
Similar products, similar profits, similar people= Red Ocean. This breeds fierce competition and much blood shed.
Why not get out of the Red Ocean and into the Blue Ocean?
The Ocean is blue because its free of blood. No fierce competition and an untapped market.
Ex. The Strategy Canvas of Cirque du Soleil
Leave the red ocean of intense competition and capture a blue ocean of uncontested market space.
The key value is innovation
Start with a strategy canvas
The horizontal axis captures the range of factors the industry competes on and invests in.
The vertical axis captures the offering level that buyers receive across all the key competing factors (high to low).
The challenge is to find a new value curve to escape from the red ocean.
Use the four action framework:
1.What factors to eliminate? (cost goes down)
2.What factors to reduce well below the industry’s standard? (cost goes down) –
3.What factors to raise well above the industry’s standard? (differentiation goes up)
4.What new factors to add that the industry has never offered? (differentiation goes up)
