Difference Between Blue and Red Ocean Strategies | Motilal Oswal
Difference Between Blue and Red Ocean Strategies
- Discover the fascinating world of business strategy as we understand in detail the terms 'blue ocean' and 'red ocean' strategies.
- This article will explore the fundamental concepts behind these two approaches and compare them across various parameters.
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What are the Blue Ocean and Red Ocean Strategies?
The Blue Ocean Strategy
- The blue ocean strategy is like sailing the open seas, where there is plenty of room to explore and innovate.
- Companies use this strategy to create new markets and uncontested market space, thereby making the competition irrelevant.
- They focus on creating products or services that appeal to a wider range of customers. This is immensely helpful for the company to offer a significantly better value proposition.
- Some companies that have successfully executed this strategy include Nintendo and Tesla.
The Red Ocean Strategy
- The red ocean strategy is like swimming in a crowded pool where everyone is fighting for a share of the same market.
- Companies that use this strategy compete in existing markets by trying to outdo the competition.
- They focus on offering a better product or service at a lower price.
- Some companies that have successfully executed this strategy include SpiceJet and Indigo.
Which Strategy is Right for My Business?
Let’s compare both strategies across multiple factors:
- Red Ocean businesses concentrate on their current clientele.
- They work to maintain the loyalty of their current clients and enhance the consumer experience.
- On the other hand, blue ocean businesses prioritize expanding the industry.
- They strive to carve out a new market.
- They pursue consumers who are new and uninitiated to that particular sector of the economy.
- Red ocean companies often face tough competition as other companies try to copy their successful strategies.
- This creates a crowded market where companies fight for the same customers.
- On the other hand, blue ocean companies enter markets with little to no competition.
- When they win new customers in uncharted markets, the companies already there lose theirs.
- In the long term, companies in uncontested markets usually win.
- Red ocean companies focus on improving the shopping experience to attract customers.
- They strive to gain market share.
- Blue ocean companies aim to create new demand and capture the market by offering high value to customers.
- They target customers who were not previously interested in entering the market.
In a nutshell, the red ocean strategy competes for market share, whereas the blue ocean strategy creates uncontested market space.
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