So was buyer power. They only buy a small fraction of it. When searching for blue ocean vs. red ocean strategy examples, you're likely to come across the same few cases over and over again. Stitch Fix a blue ocean example in the fashion retail industry, 4. About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy & Safety How YouTube works Test new features Press Copyright Contact us Creators . In short, avoid head-to-head competition and focus on innovation. In traditional tandas the winning family would spend the windfall on an important festival or religious event such as a baptism or marriage. What is blue ocean strategy? ). Yet, despite its size, the industry was intensely competitive. Traditional Competitive Strategies. A shift towards High-Value alternatives. In addition, Apple further protected recording companies by devising copyright protection that would not inconvenience userswho had grown accustomed to the freedom of digital music in the post-Napster worldbut would satisfy the music industry. [Yellow tail] was a completely new combination of characteristics that produced an uncomplicated wine structure that was instantly appealing to the mass of alcohol drinkers. The research focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean.The database and research have continued to expand and grow over the last ten years since the first edition of the book was published and the strategic moves we studied depict similar patterns, whether blue oceans were created in for-profit industries, non-profit organizations, or the public sector. Its the mindset of a red ocean strategist. Nantucket Nectars can use following Blue Ocean Strategy (BOS) tools and techniques to overcome the red ocean of cut throat competition in Innovation & Entrepreneurship industry. A French entrepreneur, Hugues Le Bret, saw hidden pain points that customers and noncustomers accepted as given when using banking services. Compte-Nickel a blue ocean in the fintech industry, 6. To customers, they were largely all different from box wines in the same way. The blue ocean strategy seeks to bring differentiation to organizations and brands like Netflix to create awareness and presence in a new market place and create demand amongst consumers. Consider the big movies of the last decade. Your current strategy reporting model will help execute the blue ocean ideas. An exmaple of a blue ocean strategy is Netflix. Stitch Fix is a blue ocean example in the fashion retail industry. the Blue Ocean strategy and how it works will be explained and demonstrated in more detail in this paper. By looking at the demand side of alternatives of beer, spirits, and ready-to-drink cocktails, which captured three times as many consumer alcohol sales as wine, Casella Wines found that the mass of American adults saw wine as a turnoff. By offering the best of commercial travel and private jets and eliminating and reducing everything else, NetJets opened up a multibillion-dollar blue ocean wherein customers get the convenience and speed of a private jet with a low fixed cost and the lower variable cost of first- and business-class commercial airline travel. Blue Ocean Strategy: FROM THEORY TO PRACTICE. 1. In the mid-1990s, computer manufacturers competed on performance, offering more features and software, and sold through distributors. With the intuitive Strategy Canvas editor you can draw Strategy Canvas in seconds. There is no magic formula or silver bullet. Think of the Blue Ocean Strategy as a way to open up opportunities and markets for a new organization, or an existing organization looking to grow. A strategic move is the set of managerial actions and decisions involved in making a major market-creating business offering. Can you create a new product targeting their pain points? The Marvel blue ocean example illustrates how a company used differentiation and low cost to restore its blue ocean business. The outcome of this analysis was [yellow tail], a wine whose strategic profile broke from the competition and created a blue ocean. It is based on practical approaches that have proven results during live market executions. Blue Ocean Shift. By keeping the cars highly standardized and offering limited options and interchangeable parts, Fords revolutionary assembly line replaced skilled craftsmen with ordinary unskilled laborers who worked one small task faster and more efficiently, cutting the labor hours by 60 percent. Cemexs answer to this dilemma came with its launch of the Patrimonio Hoy program, which shifted the orientation of cement from a functional product to the gift of dreams. Learn the key differences here: https . Even though most poor families owned their own land and cement was sold as a relatively inexpensive functional input material, the Mexican people lived in chronic overcrowding. Products are rarely used in isolation theyre part of the total experience. Compte-Nickel - a blue ocean in the fintech industry 6. Casella Wines turned this convention wisdom on its head. It doesnt need to replace your current mode of operation. Copyright 2022 Ascendant Strategy Management Group LLC d/b/a ClearPoint Strategy |. Based on an eponymously titled book, this strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Companies should instead look for new market space and ways to reinvent the industry. We learned that on any given feature, there are lots of competitors that offer good solutions. The wine industry criticized the sweet fruitiness of [yellow tail] but consumers loved the wine. . Like this article? 8 It allowed for easy and affordable access to millions of songs and artists. An example of a red ocean strategy is the European airline Ryanair. By combining the decisive factors of both groups and eliminating or reducing everything else, Polo Ralph Lauren not only captured share from both strategic groups, but also drew many new customers into the market. Blue Ocean Strategy Canvas. What is blue ocean strategy? With the need for aging reduced, the working capital required was also reduced. At the foundation of Patrimonio Hoy was the traditional Mexican system of tandas, a community savings scheme. Shows cost only 5 cents and played from morning to night. Casella Winerys Yellow Tail or [yellow tail] as its written is often cited as a classic example of blue ocean strategy. HealthMedia is a blue ocean strategy example of looking across strategic groups within an industry to create a blue ocean. While Apple has dominated this blue ocean for more than a decade, as other online stores zoom in on the this market, the challenge for Apple will be to keep its sights on the evolving mass market and not to fall into competitive benchmarking or high end niche marketing. The winner however, did not receive the total sum in pesos but rather received the equivalent building materials to complete an entire new room. iTunes also provided a leap in value beyond free downloading services via sound quality as well as intuitive navigation, search and browsing functions. Cirque du Soleil is one of those examples they used to show the relevance of Blue Ocean Strategy. Wine alternatives like beer and spirits accounted for the majority of sales, so clearly most Americans saw wine as a turn off. Blue Ocean Strategy enables a fundamental transformation in mindset. . In 1914 Palace Theaters created a blue ocean by moving upmarket, creating plush theaters showing longer films with more mature plots. Blue Ocean challenges companies to push the boundaries of their industries and offer consumers something unique of immense value. Until that time, America's five hundred automakers built custom-made novelty automobiles. For anyone tired of competing head-to-head and wanting to seize new growth. Few families built additions, and those that did took on average four to seven years to build a single additional room. ; In a red ocean, companies vie for market share, exploit existing demand, and try to beat the shit out of the competition. As a result, most of Mexicos poor had insufficient and inconsistent savings to purchase building materials, even though having a cement house was the stuff of dreams in Mexico. The result: Patrimonio Hoy participants build their homes or additions three times faster at a lower cost than the norm in Mexico. They played only a few times a week and were located in wealthy neighborhoods. Learn theessentialsof blue ocean strategy and shift created by #1 Management Thinkers in the World. Another compelling aspect of Cirque du Soleils success is that it did not win by taking customers from the already shrinking circus industry, which historically catered to children. Before Shortform, he co-founded PrepScholar, an online education company. To learn how Stitch Fix created a blue ocean in the retail industry, read the blog Stitch Fix: A Blue Ocean Strategy in Retail. Slack and Dropbox are examples. This reduced cost and training time. Diabetics needing insulin had to deal with vials, syringes, and needles several times a day. Learn how you can implement these strategies within your business. Profit opportunities come from disparities in information. Unless youve been living under a rock for the last 50 years, you have certainly heard of Marvel, or at least, youll be familiar with Marvel characters such as Spiderman, The Hulk, and many others. Children cried out for video games rather than a visit to the travelling circus. Here are a few organizations that successfully captured a blue-ocean market: Netflix:In this David versus Goliath story, Netflix came on the scene when Blockbuster was at the top of the video rental game. A good example of Red Ocean Strategy is the European airline operator Ryanair (or Southwest if you like in the US). Many in the business world hold to the conventional belief that companies can either create greater value to customers at a higher cost or create reasonable value at a lower cost. At a low enough price, computers went mainstream. Cuneo and Marvels most vital blue ocean strategic move was entering the motion picture industry, a blue ocean strategic pivot that saw the company roar back to success in the 21st century in the form of Marvel Studios. Henry Ford created the Model T, the first standardized, mass-produced automobile. Significantly, one of the first Cirque productions was titled We Reinvent the Circus.. Further blue oceans include the tablet with Apples iPad, cloud computing services, and mobile phones. Neither the pencil nor other software packages could compete. Furthermore, you attract a new type of customer the industry hadnt previously supported, thus growing the market. Coffee shops and baristas have been around much before the rise of Starbucks. Well before the internet offered such services, traders could use Bloomberg online services to buy items such as flowers, clothing, and jewelry; make travel arrangements; get information about wines; or search through real estate listings. Lets look at the Strategy Canvas of [yellow tail]. HealthMedia explored why buyers traded across these strategic groups and found that despite all the factors players competed on, buyers traded up to telephonic counseling for one overriding reason high efficacy while they traded down to digitized content for low cost. Blue Ocean Strategy is a powerful framework for finding new business opportunities. Bloomberg saw that it was traders and analysts, not IT managers, who make or lose millions of dollars for their employers each day. Figure 4: Four Action Framework (Eliminate-Reduce-Raise-Create) Example: Cirque du Soleil To illustrate their ideas, Chan Kim and Mauborgne used several real-life examples in their book. Your email address will not be published. Free Blue Ocean Strategy Examples to Download Cash flow was so tight they struggled to make payroll. By doing this they made the competition irrelevant, creating and capture new demand for a service not currently available on the market. The limescale accumulated in kettles as the water was boiled, and later found its way into the freshly brewed tea. To the kettle industry, the water issue was not its problem. Learn the essentials of blue ocean strategy and shift. Most of families extra money was spent on village festivals, quinceaeras (girls fifteen-year birthday parties), baptisms, and weddings. Start by identifying what your target market needs and doesnt currently have. Offering complements to your product even at cost may add additional value through bundling. Chan Kim and Rene Mauborgne. In fact, Endgame is the highest-grossing movie ever. While traditional banks focused on developing financial technology to make their offerings more appealing, the fintech Compte-Nickel created a blue ocean by looking at the noncustomers the other banks ignored: low-income earners and people facing financial exclusion. This was a Blue Ocean Strategy example. Save my name, email, and website in this browser for the next time I comment. By 1924, CTR held 85% of the tabulating market and became IBM. Source The conventional interpretation of the red ocean vs. blue ocean analogy is that: Each industry has its own red ocean and competitors are sharks hunting down fish (market share) implying there's blood, hence the "red" ocean. Market-leading ERP software for private and public businesses. Other notable examples include Samsung, LG, Agricultural Bank of China, Kimberly Clark, Citizen M Hotels and many others. Going to the movies also requires finding a babysitter, parking, and possibly a drink afterward. Here's an example of the tool applied to Southwest Airlines, who are an interesting case. The content was fun and accessible. They also introduced features around the users personal lives, like the ability to buy flowers and make travel arrangements through the terminal. Cirque du Soleil succeeded because it realized that to win in the future, companies must stop competing in red oceans. It was expensive and difficult to use and required maintenance. Despite being unreliable, they cost $1,500, twice the average annual income. Stitch Fix is a personal styling company that mails its customers boxes of stylish, carefully selected clothing. It has now sold more than 25 billion songs, with users downloading on average fifteen thousand songs per minute. In the 1890s, the horse and buggy was the primary mode of transportation. The product was so simple, easy to use, fun and productive that buyers fell in love with it. The result: Philips created a kettle with a mouth filter that effectively captured the limescale as the water was poured. It cost $850, half the price of existing cars. It didnt feel like a special night out any longer. Choosing the right blue ocean strategy must be the result of a deliberate and detailed process, backed by the right research. Shortform has the world's best summaries of books you should be reading. Blue oceans, where a market space is new and uncontested, and strategy centers around value innovation. HealthMedia, a player in the industry with a revenue of US$6 million, was drowning in a red ocean of intense competition. In the 1970s, Japanese manufacturers created a blue ocean of small, efficient, high-quality cars. During this time, management pocketed hundreds of millions of dollars while decimating Marvels staff and retail channels, leaving customers alienated and confused. NetJets observed that business travelers, the most lucrative mass of customers in the airline industry, had two principal choices: They could fly business class or first class on a commercial airline or the company could purchase its own aircraft to serve its corporate travel needs. How to Shift From Red Oceans to Blue Oceans, Powerful tools to create your business strategy, a blue ocean example in the fashion retail industry, Stitch Fix: A Blue Ocean Strategy in Retail, Viagra created a blue ocean in lifestyle drugs, Fintech: Compte-Nickel, Creating New Demand In The Retail Banking Sector, Blue Ocean Practical Introduction Online Course, How to Be a Blue Ocean Strategist in a Post-pandemic World, A Blue Ocean Compass for Your Post-Covid Strategy, Which factors that the industry takes for granted should be, Which factors that the industry has never offered should be. Blue Ocean Strategy Example 1: Automobile Industry In the 1890s, the horse and buggy was the primary mode of transportation. Marvel - a super-powerful blue ocean strategy example 2. Here are a few examples of blue ocean strategic moves from a variety of different industries and sectors. Blue Ocean EventsBlue Ocean Strategy Q & ABlue Ocean Shift Q & ABlue Ocean Leadership Q & A, TRADEMARKS PRIVACY POLICY TERMS OF USE, These business strategy examples will inspire you to rethink your business. Blue ocean strategy examples exhibit the following principles: Create new factors to reduce competing factors and lower costs Tap into uncontested spaces in the market to make competition irrelevant Use 4 actions framework and common strategic patterns Offer step-by-step processes for the management in place of traditional strategies