What does “blue ocean” mean?

When businesses use a Blue Ocean Strategy, they look for ways to get “uncontested market space” instead of competing with other businesses that do the same thing.

“blue ocean strategy” comes from W. Chan Kim and Renée Mauborgne, who say that fierce competition leads to a “red ocean” of violence where competitors fight over a small profit pool. Instead, companies should seek out “blue oceans,” or untapped areas ready to grow.

There are five main parts to the strategy:

1. Value innovation is the core of the Blue Ocean strategy. It means simultaneously going after both low costs and differences, making the company and its buyers more valuable.

2. The Eliminate-Reduce-Raise-Create (ERRC) Grid is a tool companies use to make new value curves by getting rid of or lowering the things their competitors offer and adding or raising things their competitors have never offered.

3. Framework for Four Actions—This framework asks four questions to question the business model and strategic strategy of an industry:

• What should the company cut down on so it’s well below the norm for its industry?
• What does the industry take for granted that the company should get rid of?
• What should the business do that is far above what is expected in the industry?
• What does the industry not offer that the business should provide?

4. For the Six Paths Framework, new value curves are made by looking at different industries, strategic groups within industries, the buyers’ chain, related goods and services, an industry’s functional-emotional focus, and time.

5. Blue Ocean Idea (BOI) Index: This checks if the blue ocean idea passes four tests: does it have an exciting title, does it solve a problem, does it offer a big jump in value for the buyer, and can the idea be made real?

Companies can change the limits of their industries by using these tools and platforms. A blue ocean plan is a way to avoid competing with other businesses in a way that hurts both of them. Instead, it creates a new market through differences, which makes the competition less critical.

Synonyms

• Blue Ocean’s sales strategy
• Uncontested market

What makes a blue ocean in sales and marketing?

If you’re a business, a blue ocean is a growing market to which no one else is selling. Because of this, companies that use a blue ocean approach have their traits and ways of bringing their product to market.

A blue ocean GTM approach looks like this:

• Market area that hasn’t been used yet. There is a blue ocean when there is no competition, which lets the market grow without any problems.
• They are making demand. Businesses don’t compete for existing demands; they make new demands through marketing and cold calling.
• A unique offer of value. Blue Ocean companies offer a unique value that can’t be found in other markets.
• They are spreading out the risk. As part of a blue ocean plan, companies look into new areas that might not directly relate to their current business lines. This spreads risk and could lower it.
• There are new ways to cut costs. A blue ocean is an area where one company can offer low prices and unique products or services, which will help it get more customers.
• The first-mover edge. Being the first company to enter a new market can help a business become the market leader. People who follow them will have to live up to the standards and goals they set.

• Long-term use. The long-term goal is to turn the blue ocean into a sustainable competitive edge by making it hard for new companies to enter the market through brand loyalty and exclusive technology or content.
• Value the customer. Like the jobs-to-be-done framework, companies need to know what unmet customers want before making a product that meets them.
• Pricing that makes sense. Companies may use penetration pricing to enter a market quickly or set a higher price point for a product to make it seem more expensive.
• They are trying out different ways to sell and market. Businesses need to teach their audience about their new product by using thought leadership and top-of-funnel material that shows how it can solve problems that are already happening or are about to happen.

Plan for the Blue Ocean or the Red Ocean

There is no such thing as a blue ocean plan, only a red ocean strategy. It means competing in current markets, also called “red oceans,” where companies stay in business by doing better than their competitors by differentiating their products, making their operations more efficient, and dividing their customers into groups.

The main difference is that the lines between industries are evident in a red ocean, and everyone knows how to compete. There may be something new or different about these businesses’ products, but the main answer they’re making is already on the market.

A red ocean approach is all about

• Competing in a market that already exists
• Making use of current demand
• Coming out on top of the others
• Taking more of the market

Blue-water strategies, on the other hand, focus on:

• Making more room for the market
• Getting rid of the competition
• Meeting new customer needs
• Making the market happen

Why blue oceans are good

A blue ocean is an open, growing market that sounds like the dream of any business owner. Compared to markets that are already full, this has many benefits:

• There is lots of money to make
• The lead of the first movers
• There is less chance of competition, at least at first
• Freedom to try new things without being limited by rules or industry standards
• More people want it (significantly since emerging countries are growing)
• It’s hard to get in

A blue-ocean approach makes the most of opportunities while lowering risk. For you, your users, and your partners, it’s based on data and looks at situations where everyone wins.

Putting action into strategy may be the most important thing it does: it makes the idea of making something new less scary. So, you can start with an outcome-driven product development, sales, and marketing plan.

Bad things about blue oceans

There are bad things in the world besides blue waves and sunshine. When companies use a blue ocean approach, they run into problems like

• The cost at the beginning of making a new market
• Unknown or untested business plans
• You can’t be sure enough people will need your goods (market validation).

It’s possible to fail if the market doesn’t grow fast enough (or at all).

• There aren’t any set rules for the industry, which can be good or bad.
• There is a chance of trying too many new things and not having a plan without a proven way to succeed.

Also, making people want to buy in a new area will only work in the long run if a big player in a red ocean can’t get in and beat you at your own game. Because they have more market power, a company in a similar space can easily add your product as a feature or companion product. This lets them beat you on price, speed, and getting new customers.

Why companies use a “blue ocean” strategy

You can get a big part of the market and stay ahead of the competition if you successfully enter the blue ocean. You’d use a blue ocean approach to see that growth and keep the risks of making a new product to a minimum.

A business could use a blue ocean plan for the following reasons:

• Stay away from places that are too full or too saturated
• Customers’ wants (or what they think they need) for current products are going down
• New technology or rules that change the way a company works
• There is less difference between products because of competition
• To expand and grow a business beyond what it already does or what it offers in the market
• Find unmet customer wants and develop new products to meet them.

Ultimately, it gives innovators and businesses a step-by-step plan for balancing new product ideas with cost and usefulness while still giving their customers value. It’s a way to come up with new ideas predictably.

How to Be Successful with Blue Ocean Strategies

What You Need to Do to Make Your Blue Ocean Strategy Work

This step-by-step guide will help you use a blue ocean plan to get your product on the market:

Use the BOI Index to check that your idea is good.

Before you go ahead with a blue ocean strategy,  you must ensure your product can be made. If you want to know if your business idea is a blue ocean plan, the Blue Ocean Idea Index can help you.

These are the four critical criteria:

• Utility: Does your product or service solve a problem or meet a need in a very different way from how other things do it? In some fundamental way, the idea should make customers’ lives easier or better.
• Price: Will your choice of price appeal to most of your target buyers? Your product needs to have many people willing to pay money to use it to be scalable.
• Cost: Can you keep your strategy price point to meet your cost goals? Getting the best price is only half of the issue. You need to get your product to customers at a price that lets you offer it at a reasonable price.
• Adoption: Do you talk about the problems with adoption right away? These usually include customers who don’t want the new value proposition and have problems with how to give it. It would be best if you had plans to get past these problems.

You need to develop a set of measures unique to your product, service, and market to use the BOI Index. To get information on the four things listed, this could include polls of customers, interviews with experts, trying prototypes, and other market research methods. The goal is to look at your strategy’s ability to open up a new market with growth prospects unbiasedly.

2. Look at the six ways to get to a new marketplace.

After using the BOI Index to ensure your idea is good, you can look at the six ways to create a blue ocean by seeing how companies in other fields have done it successfully.

If you want to use the Six Paths Framework, pay attention to the following:

• Other types of businesses
• Industry-based strategic groups
• Your group of buyers
• The set of systems or goods that work well together and serve a market
• The functional-emotional attitude of buyers in a particular industry
• Time (in the future and backward)

3. Describe your new business area.

The third step, defining your new market area, is the most important. This means getting a clear picture of how you can give your customers value and set yourself apart from other options.

When you define your new market, there are four main ideas to keep in mind:

If you want your product or service to stand out, you need a unique selling proposition (USP). What does it offer that no one else does?

• Trade-offs: What parts of your product will you give up to make something new and valuable for customers?
• The customer experience: How will the customer connect with your product from when they first hear about it until they use it daily? Find possible pain points and ways to make things better.
• The customer journey: How will the customer become a loyal user from the time they first learn about the product? How can you help them through this process?

Now might also be an excellent time to think about non-customers or people who don’t use a product like yours but might be interested in its value.

4. You can change the way your business competes by using the ERRC grid.

Get rid of or lessen the things that are taken for granted. Bring up the things that should be highlighted. And add things that the industry has never had before.

This is where the Blue Ocean Strategy starts to take shape. It’s all about giving your product a new value curve that sets it apart from other options and makes it more appealing to buyers.

4. Make a strategy board.

Draw a picture of your market space that shows the current situation (the red ocean) and your suggested plan (the blue ocean). This shows how your plan differs from the competition and draws attention to what you will compete on.

The following should be on your plan canvas:

• The most important things buyers think about when picking a product or service
• How well your program works on these factors right now?
• You want to change what each factor offers and how well it works.
• Your plan for going to market

5. Make a canvas for your business plan.

Here, you’ll list the most essential parts of your business plan, such as your cost structure, revenue streams, and customer segments. This can help you determine the problems and chances you might face when selling your product.

6. Get your goods out there and test them.

When everything is ready, it’s time to release your product and have customers test it. You can tell here if your plan will work or if you still need to work on things.

Blue ocean strategies are shown in real life.

This list shows some of the best companies that have used a blue ocean approach and done well:

Nintendo

When the Wii came out in 2006, Nintendo used a blue ocean approach. The goal was to appeal to people who don’t usually play games by making the game easy to understand and fun. This move created a new market, which helped the Wii sell more than Sony and Microsoft’s games.

Nintendo continued this trend when it released the Switch in 2017. The Switch was a versatile console that merged the portability of a handheld device with the power of a home console. In this way, they met the need for small and easy-to-reach games. The Switch had sold more than any other system in the US by 2018.

Apple

When Apple made iTunes in 2003, it found a “blue ocean.” It was the first digital store where people could properly buy music. People could do that for just 99¢ per song.

This change shook up the music business and gave artists, fans, and Apple brand new opportunities. It also won over millions of people stealing music on sites like Napster by giving them an easy, legal, and cheap option.

Booking.com Airbnb

In 2008, Airbnb changed the rules of the hospitality business as part of a “blue ocean” plan. It wasn’t trying to compete with regular hotels; instead, it gave people unique, cheap places to stay for short periods.

Airbnb built a whole new market and business model by using existing resources (people’s homes) and tapping into the sharing economy. The company has since grown into other travel-related areas like experiences and adventures.

Uber

People often use Uber as an example of the blue ocean approach. When Uber looked at the problems with standard taxi services, like long wait times and unclear prices, it created a new value curve with its ride-sharing platform.

This made it possible to enter a whole new market, appealing to people who were unhappy with traditional cab services but still needed a way to get around. Today, Uber does more than share rides. It delivers food and offers other services as well.

Robert Hood

When Robinhood started in 2013, it was the first company to offer commission-free selling and the chance to buy fractional shares. Robinhood made a “blue ocean” in the financial services industry by going after young, tech-savvy people who wanted to invest but couldn’t because of the high account fees and one-time costs of buying shares in total.

Apple Inc.

Salesforce used a blue ocean strategy to offer businesses a cheap and new way to manage customer relationships. It was the first SaaS platform and the real founder of the subscription economy.

Doing this opened up a new market of customers who were sick of the old on-premises software approach and wanted more flexible solutions. The SaaS company Salesforce is now one of the biggest and best in the world.

How to Do It Right for Blue Ocean Selling

Find out what needs aren’t being met in the market.

You don’t have to make a brand-new product that no one has ever seen. That most likely won’t work, though. Find holes in the market you already have and develop new ways to fill them.

Apple learned that people were stealing music on third-party sites, for instance. This proves that people want digital music and that a community could grow in a way that makes money.

Pay Attention to Unknown Pain Points

When customers can’t find a product that solves their problem, they either don’t know their pain points or can’t put them into words. A blue ocean seller finds problems people don’t discuss and makes a product to solve them.

This is shown very well by Salesforce. Larger companies used pricey on-premises software to handle their customer data, while smaller companies that couldn’t afford it didn’t have any way to do it. Salesforce fixed this problem by making a SaaS model, which made businesses more efficient and made CRM available to small businesses through low-cost subscriptions.

Describe what makes your business unique.

Without a solid way to explain what your product does and how it changes people’s lives, you won’t be able to sell in a blue ocean. Not many people are looking for your goods, so you need to make them want them in the first place.

This means you need to figure out your unique value proposition (UVP) and make sure that all of your marketing and sales tools make it clear what it is. This promise of value sets your goods apart from others on the market.

What Your Customers Have to Say

Blue Ocean Strategy are hard to understand initially because you don’t have much information about your customers. People who don’t know about your product will have different needs than people who buy similar goods in the red ocean.

This is why learning as much as possible about your customers is essential. Find out what drove them to buy your product and how they see it working in their lives. Talking to them and trying to sell to them will help you better understand their wants and speak their language.

Use a consultative method.

They probably don’t fully understand what you’re selling yet because it’s something new. Your job as a salesman is to help them through this process by showing them how your product meets their needs in ways they might not have thought of. You can do this by helping them figure out their pain points.