Blue Ocean Strategy: How to create your own!

In this summary article, we are going to summarising the Blue Ocean Strategy book by W. Chan Kim and Renee Mauborgne.

The subtitle says how to create uncontested market space and make the competition irrelevant. So, a perfect book for entrepreneurs and marketers especially in today’s day and age where anyone can start a business. To sustain in this era of high competition, you need to stand out from the noise, you need to differentiate and you need to create your own blue ocean strategy.

Nowadays just giving a little more for a little bit less is not good enough, you need to explore and go to untapped markets and dominate there.
Let’s dive in to learn more.

First key takeaway:

If you want to beat the competition, don’t compete and this is exactly what the entire blue ocean strategy is all about. Usually when most people are trying to compete, when they are trying to differentiate, they give a little more for a little less and this isn’t going to cut it anymore, this is just competing in what they call, the Red Ocean.

A red ocean has industries which are having defined boundaries and the competitive rules of the game are known, here companies try to outperform their rivals to grab a greater share of existing demand. As the market space get crowded, prospects for profit and growth are reduced. Products become commodities and cut throat competition turns the red ocean bloody.

So this is what you want to avoid, you want to avoid red oceans and go to blue oceans which is the better alternative which is the entire goal of this book and a blue ocean is basically, they are defined by untapped market space, demand creation and the opportunity for highly profitable growth. So in blue oceans, competition is irrelevant because rules of the game are waiting to be set. You want to go where there is no one there, where there is a blue ocean, where there is no competition fighting so you can go there and dominate where no one else is.

Second key takeaway:

Second key takeaway I got from this book is how to find your own blue ocean, book states that there are two steps:

The first step is finding the current state of the industry, basically, find what factors your industry is competing on. So for example in the wine industry, they compete on things such as price, above-the-line marketing, age, quality, vineyard prestige and legacy, wine complexity, wine range. Obviously it varies depending on your industry. So you got to find out what factors your industry is competing on.

Then, in step two which is basically creating new market space which you would use this thing he calls the four action framework.

So what the 4 action framework is basically? There are 4 things, you got to reduce, create, raise, and eliminate.

For Reducing, factors that are well below the industry’s standard should be reduced.
For Creating, factors which the industry has never offered should be created.
Raising, which factors should be raised? The answer is raise above the industry’s standards.
While eliminating, whichever factors that the industry takes for granted should be eliminated.

If you apply all these 4 steps actions, you’d find your new value curve where you can create your blue ocean.

6 Paths:

There are 6 paths that you can take to find your blue ocean strategy; we are covering two most important of them in this article.

Path number 1:

You can take to find a blue ocean strategy that would be looking across alternative industries; alternative industry basically includes products or services that have different functions and forms but have the same purpose.

This is different from a substitute industry, which is basically products or services that have different forms but offer the same functionality or core utility are often substitutes for each other.

So, an example of a substitute industry, To sort out the personal finances, people can buy, a financial software package, hire a chartered accountant, or simply use pencil and paper, and nowadays there are also mobile apps for this.

The software, the CA, the pencil, the app are largely substitutes for each other so this is an example of a substitute industry, not the industry you want to be in.

You have to look across alternative industries, so an alternative industry would be, for example, consider cinemas versus restaurants, restaurants have few physical features in common with cinemas and serve a district function, and they provide conversational and gastronomic pleasure.

This is a very different experience from visual entertainment offered by cinemas.

Despite the different forms, however people go to restaurants for the same objectives they go for movies, and that is to enjoy a night out, these are not substitutes, but alternatives to choose from.

So you want to look across alternative industries to find your ideas for your blue ocean strategies. So that’s path number one.

Path number 2:

The second path would be looking across strategic groups within an industry.

So for example, strategic groups are basically, a group of companies within an industry that pursue a similar strategy. A perfect example would be a Japan car maker company Toyota, which carved out a new blue ocean by creating the Lexus, with the quality of the high-end Mercedes, BMW, and Audi at a price closer to the lower-end mid-class cars.

Sum Up:

So some final words, on this book, we would recommend it to all entrepreneurs and all marketers and also the soon to be one, because nowadays it is so easy to start a business so it is crucial that you stand out, that you differentiate, that you create your own untapped market. So if you want to create your own blue ocean strategy then this book is defiantly for you.

Hope you liked the summary. Stay tuned for many more.

A must have in your book collection:

Other Interesting reads:

“Marketing NOOB”

“Pharmaceutical Marketing – A Lot Better Than FMCG”

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