Blue Ocean Strategy

Understanding whether your business operates in a red or a blue ocean is crucial for strategic planning and long-term success.

In today’s competitive market, being a “Me Too” business means consumers struggle to see any real value or difference in your offerings. Going the extra mile to be a “Me Better” or “Me Only” is crucial for survival.

These 10 simple questions can guide business leaders in evaluating whether the ocean is red or still blue:

1) How many direct competitors do you have in your market?

2) How often do new competitors enter your market?

3) Are your marketing efforts focused more on beating competitors than creating unique value?

4) Are you primarily competing on price?

5) Are your profit margins shrinking due to competitive pressures?

6) Do you frequently engage in aggressive marketing campaigns to maintain your market share?

7) Is your market space crowded with similar offerings?

8) Do you find it challenging to differentiate your products from those of your competitors?

9) Is customer loyalty a significant challenge in your industry?

10) Do you find it hard to innovate because of market saturation and established standards?

Moving forward, to transition from a red ocean to a blue ocean, focus on differentiation, innovation, and creating new demand by applying the principles of Blue Ocean Strategy. This strategy suggests a Four Actions Framework (FAF): Eliminate, Reduce, Raise, Create.

• Eliminate factors that are taken for granted but add little value.
• Reduce factors that are over-delivered relative to the customer’s needs.
• Raise factors that are under-delivered.
• Create new factors that the industry has never offered.

Eliminate, Reduce, Raise, Create.

Some of the most successful and well-known companies have implemented some or all of these actions, which is why they are industry leaders today.

Here some examples:

IKEA: Eliminate the need to ship fully assembled furniture and reduced assembly, and delivery services.

Ryanair: Eliminated on-board meals, seat assignments and free checked baggage. Also reduced airport fees by using secondary airports.

Decathlon, and other large retails players: Eliminated brand intermediaries by creating their own private label products.

ING Direct: Eliminated physical bank branches and with it many traditional banking fees.

Netflix: Eliminated physical movie rental stores and created streaming entertainment.

Airbnb: Reduced traditional hotel overhead costs. Created: Peer-to-peer lodging market.

Zoom: Created an accessible video conferencing platform.

Lidl: Reduced product variety.

Uber: Created the ride-sharing market.

Tesla: Created the electric car market.

SpaceX: Created reusable rockets.

OpenAI: Created the AI consumer market.

By implementing these strategies, a business can transition from a crowded and competitive red ocean to a blue ocean where competition is minimal, and new demand is created. This shift not only enhances profitability but also positions the business for sustainable growth and success.

Actual example of Blue Ocean Strategy: Cotti Coffee

Cotti Coffee, gives the perfect conclusion to this article on Red and Blue Ocean Strategies and the FAF.

Cotti Coffee, despite its Italian-sounding name, is a coffee chain from China that has rapidly expanded to approximately 7,000 outlets in 28 countries in just over 2 years.

Cotti Coffee, despite its Italian-sounding name, is a coffee chain from China that has rapidly expanded to approximately 7,000 outlets in 28 countries in just over 2 years.

Cotti Coffee eliminated traditional manual espresso machines in favor of automatic ones, aligning with the “Reduce” aspect of the Blue Ocean Strategy. This strategy, which may seem unacceptable to traditionalists, allowed them to cut down an over-delivered factor in some markets.

This strategic move allowed them to achieve:

• Cost Reduction: Automatic machines are cheaper to operate and maintain.
• Operational Efficiency: Less skill required from baristas.
• Scalability: Simplified staff training process.
• Consumer Focus: Prioritized convenience, speed, and price, appealing to consumers less concerned with traditional methods.

This strategic move has enabled Cotti Coffee to scale up quickly, meeting the increasing global coffee demand, and showing how the “Reduce” principle drives business success.

The article is available also here: https://www.gluxmarketing.com/blog/

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