As in many other disciplines, new theories are constantly emerging in economics, but what is interesting is that many are imbued with a psychological background that makes them particularly appealing.
This is the case with the blue ocean strategy, A concept that we will explore in detail to find out what it is and what is its use.
What is the blue ocean strategy?
Renée Mauborgne and W. Chan Kim, members of the prestigious INSEAD business school, were the creators of the Blue Ocean strategy, Which would be an untapped market space, in the perimeter in which the company is located. These authors created this concept in 2005 and made it known to the general public through a book bearing precisely this name, Blue Ocean Strategy.
Mauborgne and Chan Kim propose that any typical business is located in an already overexploited market, as there are a multitude of competitors, all contributing to saturate this space, so that growth opportunities (sell more, attract new customers) , etc.), are very small. This type of market is called the Red Ocean.
On the other hand, they would be the blue oceans, which would be unexplored corners of the market and therefore a potential means for the company to develop almost unhindered, achieving high profitability. Obviously, this is the dream scenario for any organization, as we would suddenly take any rival company out of the equation, at least initially.
How to use it in marketing
We have already defined the concepts, but now we need to explore the main question of the topic: how to find the blue ocean? Well, Chan Kim and Mauborgne indicate that there are several steps to find this long awaited pristine corner of the jungle that is the market.
It should be noted that the blue ocean is not a market place that is hidden, but a market space that has not yet been created, either because no one has ventured there, because the need to ‘a particular product or service had not been. continued until then, or for other reasons. It is not a question of searching without more, it is also necessary to know how to create this space.
More precisely, according to Mauborgne and Chan Kim, there is four principles that we must always keep in mind if we are to successfully follow the blue ocean strategy. Let’s look at each of them in detail.
1. Create a new niche market
We already expected that the blue ocean was not found, but created. that’s why any business that wants to prosper must invest in innovation and explore in the creation of new original products, New and opens the doors to sectors that did not exist until now.
The authors stress that this is not about trial and error, but that we must have a plan which, when well developed, should allow us to expand the boundaries of the market in which our industry is located. Of course, it’s not easy, you don’t have millionaire ideas every day! However, they tell us five factors to consider when approaching that end goal. Let’s see.
1.1. Direct and indirect competitors
An often overlooked problem in the corporate sector is that competition is not just a company that makes a product of the same category as yoursBut it’s also the one that generates something completely different but still has a market share of mine.
A very clear example would be the film industry versus that of book publishers, as someone may decide to spend their free time watching a movie or series instead of reading. Important to keep in mind and to know which are the indirect competitors!
1.2. Don’t neglect the little rival
Sometimes companies get caught up in the peer-to-peer struggle, studying only competitors of similar size.Obviously, there are many other small businesses that have their own market share. If we study what these companies come up with to survive among the giants, we can come up with some great ideas.
1.3. The target audience
Sometimes we have a great product that doesn’t generate the impact (and therefore the sales) that we anticipate. How is it possible? The problem may not be with the product itself, but with the audience it is intended for, which still belongs to a different industry than we initially thought.
agreed carefully study who may be interested in our product and direct marketing in this direction. Perhaps there is an unattended market sector awaiting our arrival.
1.4. Know your product
The company is the one that knows its own product the best, isn’t it? Well, this statement may not be so categorical. it is a must put yourself in the consumer’s shoes, act like them and study in detail all the behaviors and thoughts they experience during the use of our product, but also in the preceding and following moments. There may be an unmet need, a possible improvement, etc.
1.5. The power of emotion
In many cases, it is not the objectively better or most useful product that wins, but the one that is best connected with the audience, and often this goal is achieved by emotion. A very useful strategy is to know how to manage the feelings of the consumers. If done correctly, we can be extremely persuasive to convince them that they need our product.
2. The importance of the idea
After exploring the various points in the previous section, we may have come up with an interesting idea. It’s time to do it, and for that it will be necessary to abandon the typical strategies of the red ocean, where huge amounts of resources are spent in competition against other companies.
Instead, we’re now going to put all of our effort into getting to a new, hitherto unexplored marketplace (so we’re going to put some distance from our regular rivals), and make the idea a reality.
This process is carried out through these phases:
- Situation. We must have a clear comparison of our company with the rest of the companies in the sector
- Exploration. We will study what is the most appropriate way in our case to generate the new place in the market.
- Experimentation. It’s time to verify that our approach is correct, to verify acceptance of our product.
- Communication. Finally, our new creation will be announced
3. Generate more demand
usually companies tend to focus all of their efforts on meeting a very specific need of a very specific sector of the population, Which generates a limited market share.
Instead, it would be optimal to explore ways to reach other different sectors of the population and even meet needs other than the one we had established as primary. If we get this behavior under control, the size of our target audience can increase dramatically.
4. Make a project viable
Obviously, each project has its risks, especially in an environment as hostile and competitive as business. Therefore it is essential that we are particularly adept at carrying out the plan we have devised. All questions must be clear: that our product will be useful to the population we have selected, that the price is right to achieve the desired sales taking into account the cost it will entail.
In short, we need to make sure that the proposal is viable on paper, before we see it materialize in reality. It is better to devote resources to these previous studies, even if the results are not satisfactory and the project has to be seen canceled, before facing a resounding failure for not taking into account an important variable that has caused us problems. escaped.
Example with a real case
If during the In recent years there has been a company that has shown an astonishing ability to adapt to frantic changes in the market, that has been innovative and above all, has been able to see what others have in front of it and neglected it has been. Netflix, the video on demand platform.
Although many believe that Netflix is a relatively new company, the truth is that it was started in 1997 in the United States as a different video store (the movies were mailed to the consumer’s home, which was already a major innovation. in industry).
But 2007 is when they make the decision that changes the company forever: the retransmission of content via the Internet. What came next is well known: international expansion, creation of its own content and an ever-expanding catalog.
The key to this issue is that Netflix has been able to anticipate the paradigm shift (the extinction of the physical format and therefore of video stores as we know them), and the arrival of the digital age. They have undoubtedly found their blue ocean.
- Kim, WC, Mauborgne, R., de Hassan, A. (2008). The blue ocean strategy. Norma Publishing Group.
- Mendoza, T. (2013). The blue ocean strategy for entrepreneurs. Notes on Science and Society. Continental University.
- Chirinos, C. (2011). Niche Market: Approaching the Blue Ocean. Industrial engineer. University of Lima.