Blue Ocean Strategy

Blue Ocean Strategy is a marketing theory from a book by W. Chan Kim and Renée Mauborgne of INSEAD, published in 2005. They argue that companies can succeed by creating “blue oceans” of uncontested market space, as opposed to “red oceans“, turned red with blood from vicious competition.

Blue Ocean Strategy

The four principles of blue ocean strategy formulation are

  • Creating uncontested market space by reconstructing market boundaries,
  • Focussing on the big picture,
  • Reaching beyond existing demand and supply in new market spaces
  • Getting the strategic sequence right.

This is done by following the four actions framework

  • Eliminate: This questions which areas of a company or industry could be completely eliminated to reduce costs and to create an entirely new market.
  • Raise: This questions which factors must be raised within an industry in terms of product, pricing or service standards.
  • Reduce: This questions which areas of a company’s product or service are not entirely necessary but play a significant role in your industry, for example, the cost of manufacturing a certain material for a product could be reduced. Therefore, it can be reduced without completely eliminating it.
  • Create: This prompts companies to be innovative with their products. By creating an entirely new product or service, a company can create their own market through differentiation from the competition.

These are plotted on a ‘Strategy Canvas’, comparing the proposed strategy with the competition’s current position.

Blue Ocean Four Actions

If you would like to discuss how this kind of thinking might be applied to your new product strategy, please contact us.