Think of your business as one of many fishes—big, small, and terrific, all competing in one part of a vast sea area. Beyond the fierce battle for top stakes and the trail of red blood in its wake, there is the promise of a safe haven elsewhere.
This haven is the blue ocean. It depicts uncontested waters, away from the clutch of rampaging sharks and rough tides—the fierce competition. This article discusses the blue ocean strategy and its prospects for any business that adopts it.
What is it?
A blue ocean strategy encourages businesses to chart new courses in search of better prospects. It holds that brighter business prospects lie in untested waters—with fewer competing brands and less saturated markets.
When a business creates a new or unique product, it can create a new market. The business can offer lower prices for all these products without lowering its standards. And because the market is new, there is little competition to face in the stakes for the largest market share.
The business is said to have found a blue ocean when this happens. This blue ocean depicts the potential in an uncontested market. Greater profit margins and increased stability mark it.
When do we use it?
There is a right time and place to use the blue ocean strategy, and we explore them here.
When the competition is at its highest
So you find your business struggling to stay afloat in a sea of rival brands? This could be your cue to try new waters. A blue ocean strategy tows the path of least resistance, which is good news for your business.
When you find a breakthrough product
Your team has just developed a groundbreaking innovation, and you need to create space for it to thrive. Will you launch it in a crowded market with only pockets of breathing space? Or will you explore alternative options?
When you find a gap or opportunity to explore
Have you recently discovered a more efficient and cheaper solution to a societal problem? Or have you found a way to source materials cheaper and faster? A blue ocean strategy can give you exclusivity and patency if your answers are yes.
What business questions is it helping us to answer?
A blue ocean strategy will provide answers to the following questions:
What unique value can you provide?
If you have the right answer to this question, you may be best served using the blue ocean strategy. This way, you can negotiate your best position when you meet your customers.
What can you do to gain a competitive advantage?
What can you do differently, and what unrecognizable but valuable product/service can you offer? Then, if you find that product, remove it from the crowd, and you'd have increased its value; and the demand for it.
What new prospects can you explore?
A blue ocean strategy thrives on going out of your comfort zone and testing new waters. It scours the market for the subtlest of opportunities and sees the big picture.
How do we use it?
To implement the blue ocean strategy, carry out the following actions.
First, study the market for any existing gaps. Find out what the customers need (especially if it isn't available) and evaluate the cost of producing it. When you settle for the product to focus on, ask yourself the following questions:
Does this product satisfy a customer's need? Does it provide unique value and fulfill a specific buyer utility? Is there a similar product in the market?
What price is right for this product? Will it be affordable for those who need it?
Can the production costs be managed to create profit? How sustainable is your current pricing policy, and how will it affect sales?
The next step revolves around surmounting the adoption hurdles. Ask yourself the following questions:
Can I face the risks associated with the business by myself?
Can I survive the threats posed by internal and external factors in this new business terrain?
Can I get the right funding, resources, and support needed to thrive?
If your answers to these questions are a resounding Yes, you can set up shop in no time. You now have to find the right channels to market your products. Your marketing campaign should focus on the product's price and value differentiation.
Practical example
The taxi industry has become the bane of public transportation in an overpopulated city. Unorganized, unsafe, and unsightly, these taxes have become a problem that the city can not live without. Step in a car-for-hire company that sees the prospects in ride-sharing. It introduces an unconventional system where private persons can use their cars to transport people and share the profits. It also promises cheaper, safer transport to sway public interest and launches an app.
Next, it introduces car tracking, flexible payment options, and other choice features at the flick of a few buttons. Fast forward a few years later. This company has revolutionized the transport sector. It is the biggest name in the market, the envy of the growing competition. If this story seems familiar, then you might have heard of Uber.
Advantages
It helps you avoid saturated markets. Instead, the blue ocean strategy encourages you to set sail in new waters. This translates to lesser competition and better prospects for growth and profit.
It promotes innovation. People often decide to use this strategy after having discovered a breakthrough product. They create a niche product and shape the niche market for these products.
It provides increased profit potential. One of the biggest advantages of this strategy is the increased profit opportunities that it presents. This happens because of the reduced competition for the largest market share.
It creates first-mover advantages. If you enter a blue ocean market early, you can control all the key resources and market forces. And if you're lucky enough to find the floodgates, you can become the gatekeeper.
Disadvantages
It may be difficult to find the blue ocean. The major difficulty lies in identifying the prospects to explore in a sea of uncertainties. One wrong step could plunge you into the deep end and harm your business. And when you find it, there's no guarantee of immediate or eventual success
The danger of increasing competition. Once word spreads about your business, you'll have to brace up for the competition.
Sole Responsibility for any challenges. With this strategy, you may face any industry challenges alone. You bear all the risks: taxes, tariffs, government policies, etc.
The danger of arriving too early or being too different. You'll need to find the perfect time and place to move. And that in itself is no mean feat. Instead of reinventing the wheel, how about adding a few gears?
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