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Red Ocean Strategy Vs Blue Ocean Strategy Know The Difference


With the number of businesses increasing daily, businesses strive to survive amid tough competition. Blue-ocean and red-ocean strategies are paramount among the different strategies they employ to stay relevant in the market and fetch new customers. The term blue and red ocean was coined by Chan Kim and Renee Mauborgne, who used oceans to denote the market. Let's understand the difference between the strategies in these two markets strategies.

What is a red ocean market?

Red ocean is a term used for a familiar market space where companies of the same industry attempt to establish themselves through fierce competition. Companies in such a space attempt to outperform each other and establish dominance for the largest market share. The primary feature of this market is cut-throat competition. 

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What is a blue ocean market?

Blue ocean denotes a market space that is not yet in existence and is essentially an untapped market. This market remains unexplored and untouched by competition. Like a blue ocean, this market space is powerful and deep, signifying growth and profitability opportunities. 

What is the difference between red and blue ocean strategies?

The difference between these two strategies can be drawn based on the following parameters: 

Parameters  Red ocean strategy Blue ocean strategy
Focus area  Companies in a red ocean focus on the existing customers. Companies focus primarily on expanding the size of the industry. 
They work to improve customer satisfaction to retain customers for the long term.  They try to create brand-new domains and attract customers who are new to their industry. 
Competition  Companies try to copy one another and use a similar concept as their competitors to enter the market.  Companies enter a new market, so there is no competition. 
Hence, the market experiences cut-throat competition. Companies that come first in this space usually emerge as the market leader in the long run. 
Demand Companies in this market tend to exploit the existing demand and fight for their share of the demand.  Companies work to create new demand and capture new customers. 
Agenda of companies In this market, companies work to offer a choice of differentiation to customers or offer the same product at a lower cost.  In a blue ocean market, companies align towards differentiation and low cost to attract new customers. 

Bottom line

Indigo and Spice Jet are red ocean companies in India, while Apple Inc. is a blue ocean company. One can see the difference in the strategies these two companies employ to attract new customers to retain the old. So a business needs to identify its market as red or blue and employ strategies accordingly to make huge profits.


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