Blue Ocean Strategy: What It Is And How It Is Used In Marketing
As in many other disciplines, new theories constantly emerge in Economics, but the interesting thing is that many are impregnated with a psychological background that makes them especially attractive.
This is the case of the blue ocean strategy a concept that we are going to explore in detail to discover what it consists of and what its usefulness is.
Renée Mauborgne and W. Chan Kim, belonging to the prestigious INSEAD business school, were the creators of the blue ocean strategy , which would be an untapped market space, within the scope in which the company is located. These authors created this concept in 2005 and made it known to the general public through a book that bears precisely that name, Blue Ocean Strategy.
Mauborgne and Chan Kim propose that any typical company is located within an already overexploited market, since there are many competitors, all contributing to saturating said space, so the opportunities to grow (sell more, get new customers, etc.) , are very small. They call this type of market the red ocean.
In contrast, they would be the blue oceans, which would be unexplored corners of the market and, therefore, with potential avenues for the company to expand with hardly any obstacles, achieving great profitability. Obviously, it is the dream scenario for any organization, since with a stroke of a pen we would be eliminating any rival company from the equation, at least initially.
How to use it in marketing
We have already defined the concepts, but now we must explore the main question of the matter: how can we find the blue ocean? Well, Chan Kim and Mauborgne indicate that There are several steps to find that long-awaited virgin corner of the jungle that is the market
It must be clarified that the blue ocean is not a place in the market that is hidden, but rather it is a space in the market that has not yet been created, either because no one has ventured into it, or because the need for a certain product or service was not there. been sued until then, or for other reasons. It is not a matter of just searching, you also have to know how to create that space.
Specifically, according to Mauborgne and Chan Kim, there are four principles that we must always keep in mind if we want to follow the blue ocean strategy successfully Let’s see each of them in detail.
1. Generate a new market niche
We already anticipated before that the blue ocean is not found, but rather created. It is because of that Every company that wants to prosper has to invest in innovation and explore the creation of new products that are original innovative and open the doors to sectors that did not exist until now.
The authors emphasize that it is not a mere question of trial and error, but that we must have a plan that, well developed, should allow us to expand the boundaries of the market in which our sector is located. Logically, this is not easy, you don’t have million-dollar ideas every day! However, they tell us about five factors to take into account when approaching that final objective. Let’s see them.
1.1. Direct and indirect competitors
A frequently forgotten issue in the business sector is that The competition is not only that company that manufactures a product in the same category as yours but it is also the one that generates something totally different but that also takes away market share from mine.
A very clear example would be the film sector compared to book publishers, since someone may decide to spend their free time watching a movie or series instead of reading. It is important to take this into account and know which indirect competitors are!
1.2. Do not neglect the small rival
Sometimes companies get carried away with the “peer-to-peer” fight, studying only competitors of similar size , ignoring that there are many other small corporations that have their own market share. If we study what these companies offer to be able to survive among giants, we can find good ideas.
1.3. The target audience
Sometimes we have a great product that doesn’t generate the impact (and therefore sales) we anticipated. How is it possible? Perhaps the problem is not in the product itself, but in the public to which it is directed, which may belong to a different sector than the one we had initially thought of.
It suits Carefully study who may be interested in our product and direct marketing in that direction There may be an unserved sector of the market, waiting for us to arrive.
1.4. Know your product
The company is the one that knows its own product best, right? Well, it is possible that this statement is not so categorical. It is essential put yourself in the consumer’s shoes, act like them and study in detail all the behaviors and thoughts they experience while using our product, but also in the moments before and after. Maybe there is an unmet need, a possible improvement to make, etc.
1.5. The power of emotion
On many occasions, it is not the product that is objectively better or more useful that wins, but rather the one that has connected best with the public, and many times this objective is achieved through emotion. A very useful strategy is knowing how to manage consumer feelings. If done properly, we can be extremely persuasive in convincing them that they need our product
2. The importance of the idea
Once we have explored the different points in the previous section, it is possible that we have reached a valuable idea. It is time to carry it out, and for this We will have to leave behind the typical strategies of the red ocean, where enormous amounts of resources are spent competing against the rest of the companies.
On the contrary, now we are going to dedicate all our efforts to going to a new, previously unexplored part of the market (so we will distance ourselves from our usual rivals), and materialize the idea.
This process is achieved through these phases:
3. Generate more demand
Generally, Companies tend to concentrate all their efforts on covering a very specific need of a very specific sector of the population which generates a limited market share.
Instead, the optimal thing would be to explore the ways to reach other different population sectors and even the way to satisfy different needs than the one we had established as the main one. If we are skilled in this procedure, the size of our target audience can grow significantly.
Obviously, every project has its risks, and even more so in an environment as hostile and competitive as the business environment. Therefore It is vital that we are especially skillful in carrying out the plan we have designed All issues must be clear: that our product is going to be useful for the population we have selected, that the price is appropriate to achieve the desired sales taking into account the cost it will entail.
In short, we must ensure that the proposal is viable on paper, before seeing it materialized in reality. It is preferable to allocate resources to these preliminary studies, even if the results are not satisfactory and we have to see the project cancelled, rather than face a resounding failure due to not having taken into account some important variable that we missed.
Example with a real case
If in recent years there has been a company that has shown a surprising ability to adapt to the frenetic changes in the market, has been innovative and, above all, has known how to see what others had in front of them and overlooked, it has been Netflix, the video on demand platform
Although many think that Netflix is a relatively new company, the truth is that it was created in 1997, in the US, as a different video store (movies were sent by postal mail to the consumer’s home, which was already an important innovation within the industry).
But In 2007, they made the decision that changed the company forever: the broadcast of content over the Internet What has come after is well known: international expansion, creation of its own content and an increasingly extensive catalogue.
The key to this issue is that Netflix knew how to anticipate the paradigm shift (extinction of the physical format and therefore of video stores as we knew them), and the arrival of the digital age. They found, without a doubt, their blue ocean.
