Blue ocean strategy: what it is and how it is used in marketing

As in many other disciplines, new theories are constantly emerging in economics, but interesting is that many are imbued with a psychological background that makes them especially attractive.

This is the case of the blue ocean strategy, a concept that we are going to explore in detail to discover what it consists of and what is its usefulness.

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What is the Blue Ocean Strategy?

Renée Mauborgne and W. Chan Kim, belonging to the prestigious INSEAD business school, were the creators of the blue ocean strategy, which would be an untapped market space, within the scope of the company. These authors created this concept in 2005 and made it known to the general public through a book that bears precisely that name, Blue Ocean Strategy.

Mauborgne and Chan Kim propose that any type company is located within an already overexploited market, since there are many competitors, all contributing to saturate said space, so the opportunities to grow (sell more, get new customers, etc.), are very small. They call this type of market the red ocean.

In contrast, they would be the blue oceans, which would be unexplored corners of the market and, therefore, with potential way for the company to expand with hardly any obstacles, achieving great profitability. Obviously, it is the dream scenario for any organization, because at a stroke we would be eliminating any rival company from the equation, at least in the beginning.

How to use it in marketing

We have already defined the concepts, but now we must explore the main question of the matter: how can we find the blue ocean? Well, Chan Kim and Mauborgne indicate that There are several steps to find that longed-for virgin corner of the jungle that is the market.

It must be clarified that the blue ocean is not a hidden market place, but rather a market space that has not yet been created, well because no one has ventured into it, because the need for a certain product or service had not been demanded until then, or by others reasons. It is not a matter of looking for nothing, you also have to know how to create that space.

Specifically, according to Mauborgne and Chan Kim, there are four principles that we must always bear in mind if we want to follow the blue ocean strategy successfully. We are going to see each of them in detail.

1. Generate a new market niche

We anticipated before that the blue ocean is not found, but is created. It is because of that Any company that wants to prosper must invest in innovation and explore in the creation of new products that are original, innovative and open the doors to sectors that did not exist until now.

The authors emphasize that it is not a mere matter of trial and error, but that you have to have a plan that, well developed, should allow us to expand the frontiers of the market in which our sector. Logically, this is not easy, you do not have millionaire ideas every day! However, they tell us about five factors to take into account when approaching that final goal. Let's see them.

1.1. Direct and indirect competitors

A frequently overlooked issue in the business sector is that the competition is not only that company that manufactures a product of the same category as yours, but it is also the one that generates something totally different but that also takes away market share from mine.

A very clear example would be the cinema sector compared to that of book publishers, since someone may decide to spend their free time watching a movie or a series instead of reading. It is important to take this into account and know which are the indirect competitors!

1.2. Do not neglect the small rival

Sometimes companies get carried away by the fight "as equals", studying only competitors of similar size, ignoring that there are many other small corporations that have their own market share. If we study what these companies offer to survive among giants, we can find good ideas.

1.3. The target audience

Sometimes we have a great product that does not generate the impact (and therefore the sales) that we anticipated. How is it possible? Perhaps the problem is not in the product itself, but in the public it is aimed at, which may still belong to a different sector than we had originally thought.

It agrees study carefully who may be interested in our product and direct marketing in that direction. There may be a sector of the market left unattended, waiting for us to arrive.

1.4. Know your product

The company knows its own product best, right? Well it is possible that this statement is not so categorical. Is essential put yourself in the shoes of the consumer, act like him and study in detail all the behaviors and thoughts that he experiences while using our product, but also in the moments before and after. Perhaps there is an unmet need, a possible improvement to make, etc.

1.5. The power of emotion

On many occasions, the product that is objectively better or more useful does not triumph, but rather the one that has better connected with the public, and many times this objective is achieved through emotion. A very useful strategy is knowing how to handle consumer sentiments. If done properly, we can be extremely persuasive in convincing them that they need our product.

2. The importance of the idea

Once the different points in the previous section have been explored, we may have come up with a valuable idea. It is time to carry it out, and for that We will have to leave behind the typical strategies of the Red Ocean, where huge amounts of resources are spent in competing against the rest of the companies.

On the contrary, now we are going to dedicate all the efforts to go to a new place in the market, previously unexplored (so we will put distance with our usual rivals), and materialize the idea.

This process is achieved through these phases:

• Situation. We must be clear about the comparison of our company with the rest of the companies in the sector
• Exploration. We will study which is the most appropriate way in our case to generate the new place in the market.
• Experimentation. It is time to check that our approach is correct, checking the acceptance of our product.
• Communication. Finally, it will be necessary to present our new creation

3. Generate more demand

Usually, companies tend to concentrate all their efforts on meeting a very specific need of a very specific sector of the population, which generates a limited market share.

Instead of that, the best thing would be to explore what are the ways to reach other population sectors different and even the way to satisfy needs different from what we had established as principal. If we are skillful in this procedure, the size of our target audience can grow significantly.

4. Make a viable project

Obviously, every project has its risks, especially in an environment as hostile and competitive as the business one. Therefore it is vital that we are especially skillful in carrying out the plan we have designed. All questions must be clear: that our product will be useful for the population that we have selected, that the price is adequate to achieve the desired sales taking into account the cost that we will suppose.

Ultimately, we must ensure that the proposal is viable on paper, before seeing it materialize in reality. It is preferable to allocate resources to these previous studies, even if the results are not satisfactory and we have to see the project canceled, rather than face a resounding failure for not having taken into account some important variable that eluded us.

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Example with a real case

If in recent years there has been a company that has shown a surprising capacity to adapt to the frantic changes in the market, it has been innovative and above all, it has known how to see what others had in front of and overlooked, it has been Netflix, the video on demand platform.

Although many think that Netflix is ​​a relatively new company, the truth is that it was created in 1997, in the US, as a video store different (films were sent by post to the consumer's home, which was already a major innovation within the industry).

But in 2007 is when they make the decision that changes the company forever: the retransmission of content through the Internet. What has come after is well known: international expansion, creation of its own content and an ever-expanding catalog.

The key to this issue is that Netflix knew how to anticipate the paradigm shift (extinction of the physical format and therefore of the video stores as we knew them), and the arrival of the digital. They undoubtedly found their blue ocean.

Bibliographic references:

• Kim, W.C., Mauborgne, R., de Hassan, A. (2008). The blue Ocean Strategy. Norma Editorial Group.
• Mendoza, T. (2013). The blue ocean strategy for entrepreneurs. Notes on Science & Society. Continental University.
• Chirinos, C. (2011). Market Niche: The Blue Ocean Approach. Industrial engineering. Lima University.