Are You Competing for Market Share in a Red Ocean?

As marketers, we are constantly trying to assist the clients and organizations we work with to expand and capture market share. And while this goal is fundamental to mainstream marketing and business strategy, it overlooks a key concept often neglected by many organizations: blue ocean strategy.

As W. Chan Kim and Renée Mauborgne discuss in an article for Harvard Business Review titled “Blue Ocean Strategy,” the vast majority of businesses spend their time focusing on what is already being done. Coke and Pepsi strive to steal market share from one another in the same way that the big cellular providers and automobile manufacturers compete with each other in an already saturated market – red oceans.

As Kim and Mauborgne explain, “Red oceans represent all the industries in existence today – the known market space . . . Here, companies try to outperform their rivals in order to grab a greater share of existing demand. As the space gets more and more crowded, prospects for profits and growth are reduced.”

On the other hand, in blue oceans, the market is brand new. There is no competition, because the field has never been entered before. “In blue oceans,” write Kim and Mauborgne, “demand is created rather than fought over.”

There are two ways to create blue oceans: create a brand new industry or alter the boundaries of an existing red industry. HBR gives the example of eBay for the former and Cirque du Soleil for the latter. The first essentially invented the online auction while the second took the antiquated notion of circuses and made it appealing in a way not seen for decades.

Obviously, one challenge of blue ocean strategy is finding that blue ocean. Another is capitalizing on that blue ocean quickly. After all, while a blue ocean opportunity would be welcomed by any company, once discovered or created, other organizations are soon to jump in, driving up competition and driving down margins to the point where that blue ocean has become red.

How might you begin to consider blue ocean opportunities?

  • Get inside the heads of your target audiences.
  • Understand their needs – particularly those needs that are currently being unmet or are not being met to the extent they might be.
  • Explore the existence of competition – or, better yet, its absence!
  • Be creative – whether in a group, or independently, avoid the tendency to edit the “crazy ideas” that may come to mind; sometimes those crazy ideas can point to blue ocean opportunities.

As we begin to look ahead to 2015, consider how you might begin adopting practices that can help you identify blue ocean opportunities in your market.

Recommended Reading:

The Everything Guide to Employee Engagement

Tags: , , , ,

Leave a Reply

Complete the math problem before submitting a comment. * Time limit is exhausted. Please reload CAPTCHA.