1. Blue & Red Ocean Strategy:(a description by Rajat Sharma)
Blue Ocean strategy was given by W. Chan Kim and Renée Mauborgne in 2005
where they talked about an uncontested market space which can be used to
create a new demand for high growth and profit.The name "Blue Ocean Strategy"
was introduced in the Harvard Business Review article published in October 2004.
In contrast, Red Ocean, consists of the known or the existing market space,
competitive rules of the game are known and due to cut throat competition the
ocean turns bloody. The whole idea is that companies try to outperform the rivals
by getting a greater market space and as the market space becomes crowded the
profits get reduced so the Blue Ocean strategy suggests that we should jump into
the uncontested or untried market space where a new demand and opportunity
can be created to get profitable output.
Consider this, I went to Tank Road in New Delhiwhere there is a wholesalemarket
for ‘Jeans’. When I stepped into the market there were so many of them selling
their clothing and they kept on calling & advertising their product and even had
paid people to convince and taketo their respective shops. There was cutthroat
competition on margins.Isn’t this much the same behavior we see in our
industries? Thus the term, Red Ocean.
The Blue Ocean, on the other hand, is calm, smooth, little or no competition. This
is where everyone would like to be and it is possible for you to have a Blue Ocean.
The first example they have quoted in their book is of ‘Cirque du Soleil’ who
revived the circus business by giving their first Cirque productions the title“We
Reinvent The Circus”. They created an uncontested market space that appealed to
a whole new group of customers including adults and the corporate. They realized
that the only way to beat the competition is to stop trying to beat the
competition.
One important point to this strategy is ‘Value Innovation’ which entails the
alignment of innovation with utility, price and cost positions. Also published a
Harvard Review article by Kim and Maurborgne titled ‘Value Innovation’ in
1997.They have made a decade long study of 150 strategic moves on more than
30 industries to come with astrategy which has become extremely popular and
more industries have come realize the strategy.