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Difference Between Blue and Red Ocean Strategies

10 Aug 2023

Introduction

  • 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 

  1. The blue ocean strategy is like sailing the open seas, where there is plenty of room to explore and innovate. 
  2. Companies use this strategy to create new markets and uncontested market space, thereby making the competition irrelevant. 
  3. 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. 
  4. Some companies that have successfully executed this strategy include Nintendo and Tesla.

The Red Ocean Strategy

  1. The red ocean strategy is like swimming in a crowded pool where everyone is fighting for a share of the same market.
  2. Companies that use this strategy compete in existing markets by trying to outdo the competition.
  3. They focus on offering a better product or service at a lower price.
  4. 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:

Approach

  1. Red Ocean businesses concentrate on their current clientele.
  2. They work to maintain the loyalty of their current clients and enhance the consumer experience.
  3. On the other hand, blue ocean businesses prioritize expanding the industry.
  4. They strive to carve out a new market.
  5. They pursue consumers who are new and uninitiated to that particular sector of the economy.

​​​​​​​Competitor mindset

  1. Red ocean companies often face tough competition as other companies try to copy their successful strategies.
  2. This creates a crowded market where companies fight for the same customers.
  3. On the other hand, blue ocean companies enter markets with little to no competition.
  4. When they win new customers in uncharted markets, the companies already there lose theirs.
  5. In the long term, companies in uncontested markets usually win.

​​​​​​​Customer demand

  1. Red ocean companies focus on improving the shopping experience to attract customers.
  2. They strive to gain market share.
  3. Blue ocean companies aim to create new demand and capture the market by offering high value to customers.
  4. They target customers who were not previously interested in entering the market.

Conclusion

In a nutshell, the red ocean strategy competes for market share, whereas the blue ocean strategy creates uncontested market space.

 

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