Based on the last post on Ouch! Competition Hurts! Competitiors Please Get Lost! and The Secret Recipe of Competitors and Competitions, where we talked about the stall owner’s little story regarding his neighbours do not welcome competition. In my opinion, competition doesn’t come from the stall owner, instead from themselves.

Having been through selling their products for the past one year without much competition, would pretty much kept them in the state of comfort, or otherwise known as the comfort zone. Breakaway from the comfort zone ain’t easy. It is only if the parties are willing and prepare to move themselves forward.

Lately, a systematic approach for making the competition irrelevant has surfaced. It is known as the Blue Ocean Strategy. This strategy is a result that came from more than 30 industries over a century between 1880 to 2000. The study comprises of 150 strategic moves through a decade long of study. Here’s a little read about the red and blue oceans…

The red and blue oceans described market universe, in which red oceans are defined as the market space, in which industry boundaries and the competitive rules are defined and accepted. In the red oceans, companies try to outperform their rivals by trying to grab a greater share of the product or service demand. And as the space becomes more crowded, it is logical that the profits and growth decreases. The whole cut-throat competition process turn the whole competitive ocean into a red ocean.

On the opposite, blue oceans referred to market space that is untainted by competition. In blue oceans, instead of fighting and grabbing for a market share, demand is created. There is in fact plenty of opportunity for profits and growth. There is a difficulty in creating competition due to the fact that, the game rules are not yet set, and there is ample of chances to explore and create the rules of the game. Put it simply, blue oceans refer to a market space that is having much wider, deeper potential which is not yet being explored.

The bottom line of Blue Ocean Strategy is Value Innovation. Innovation could be in term of product, service, etc which must enhance and create a value to the market, while at the same time eliminating or removing features or services that are less valued by the current or future market and demand. The well-known Michael Porter’s idea of needs was commented that most successful businesses are either low cost providers or niche players. Hence, they are looking for finding value that crosses conventional market segmentation as well as offering value at lower cost.

In summary, the basic, core idea is to create a leap distinct in value for both the business and its buyers, with the use of differentiation or low cost trade-off, with the possibility of aligning product value and profit propositions.

business strategy, marketing resources

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This entry was posted on Saturday, February 9th, 2008 at 9:24 am and is filed under Business Resources, Marketing Resources. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.