Blue Ocean strategy is a relatively new model which discusses how companies can move away from highly competitive markets and create an uncontested market space for themselves. Let’s compare marketplaces to oceans. Imagine That companies are sharks and customers are fishes. In the marketplace as the competition increases and the focus becomes on hooking the limited customers the margins start going down and there are not a lot of profits to be made. The ocean become bloody as the sharks are fighting with each other. But if the company can move away from the traditional market place concept and focus on innovatively creating a space for itself by uniquely fulfilling customer needs, it has created a blue ocean. The Model was proposed by Dr. Kim Chan and Dr. Renee Mauborgne. Here is n explanation of it:
Imagine you want to start a circus. Would you?
Not really as it is no longer lucrative due to the following reasons:
A few players holding monopoly
Animal rights issues
Tight regulations
Multiple arenas to manage
Star performers demanding more compensation
Some acts can be dangerous for the performers
The present generation of kids more interested in video games and internet activities
So instead of trying to fight it out a company Cirque Du Soliel created its own Blue Ocean
See the video below on how Cirque Du Soliel created a market space for itself
The Blue Ocean strategy suggest that you ask the following questions to identify possible Blue oceans.
What can be eliminated?
What can be raised?
What can be reduced?
What can be created?
Applying this to Cirque Du Soliel:
They Eliminated
Star performers
Animal shows
Aisle concession sales
Multiple show arenas
They Raised
Venue quality
Theatrical aspects
Story lines
They Reduced
The danger in the shows
Slapstick Humour
They Created
Theme
Refined environment
Multiple productions
Artistic music and dance
Here is a video of how they reinvented Circus
Here is one of the authors explaining what A Blue ocean is:
Another example for blue ocean strategy is the chain of Citizen M Hotels
See how they applied Blue Ocean to their industry
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