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Useful business ideas from the best-selling book ‘Blue Ocean Strategy’
Fighting for every customer, endless offer optimization and lowering prices at the expense of one’s own profit are common phenomena in the economy. But there are companies that have managed to avoid bloody battles for their market share. Not only do they escape competition, but they also work actively with other companies in their industry. What is this – excessive self-confidence or a successful marketing approach?
In their bestseller, ‘Blue Ocean Strategy’, W. Chan Kim and Renée Mauborgne used examples from 150 companies in various industries to analyze the business approach that enables them to achieve high profitability without having to cope with tough competition. This book contains not only numerous case studies, but also an action guide for anyone working on a new product or seeking an effective marketing strategy to promote their brand.
Despite the fact that ‘Blue Ocean Strategy’ was published 15 years ago, it is still considered one of the best business books of modern times. We believe that such popularity has been earned for at least three reasons: it provides a simple explanation of economic and marketing laws, a multitude of vivid and well-known examples, and step-by-step guidance for entrepreneurs – a kind of ‘do it yourself’ book.
What’s the book about?
The central themes of the book are markets and the laws of entrepreneurship. The authors compare highly competitive markets with new, still free niches. The latter are characterized by a high growth potential, the lack of competitors and the ability to establish one’ s own game rules. These characteristics are the dream of every entrepreneur, aren’t they? ‘Blue Ocean Strategy’ describes in detail how to make this dream come true.
Most importantly, you don’t necessarily have to develop an absolutely innovative product. All you need is to adjust your existing product by adding unique value to it.
- ‘Red Ocean’ – highly competitive markets, limited profit opportunities, trade-offs between price and quality, tough fight for every customer and ‘bloody’ battle for market share. Examples: Restaurants in the same segment and convenience food with similar content.
- ‘Blue Ocean’ – new markets free of competition, creation of market shares, control over supply and demand and the possibility of unlimited growth. Examples: Cirque Du Soleil in the entertainment industry, ‘understandable’ party wine [yellow tail] from Casella Wines, low-priced SWATCH watches that have become a youth trend.
How do you create the ‘Blue Ocean’?
Step 1: Find the differences.
The essence of the blue ocean is to differentiate from the competition by reaching a free niche. To accomplish this, it is necessary to analyze other players from all price segments and identify their key offerings and characteristics. When you compare your product with the competition, look for differences or opportunities to work with another consumer segment.
Step 2. Answer these four questions.
To reduce costs, analyse:
- Which of the formats commonly used in the industry can be eliminated? For example, instead of employing waiters in fast-food restaurants, taking orders via digital panels.
- Which industry standards can be significantly lowered? For example, attention to the ripening, production and flavor attributes of low-priced wines.
To add value to the offer, think about:
- Which of the industry standards should be significantly improved? For example, how Zalando offered free deliveries and returns.
- Which formats are not yet available in the industry and can be created? For example, the mobile app from Uber has made ordering a taxi much easier, more transparent and cheaper.
Step 3: Think outside the market frames.
Look for additional ways to position your product or service. One way to do this is to analyze alternative industries. For example, if you run an airline company in Europe, not only other airlines, but also express trains, cars, buses or ships can be alternatives for customers. The main objective is to understand what motivates clients to choose a particular type of transport for their travels.
Another possibility is to combine emotional and functional components. In a classic, competitive environment, brands focus on one of these characteristics. By combining emotions and functionality, you can reach a new level and create your own niche. This is how SWATCH has gained international popularity: it has transformed inexpensive functional models into fashionable accessories and has become a trendsetter for young people all over the world.
In the book, you will find detailed instructions about how to develop and implement a blue ocean strategy, which you can use at any stage of your business development. And on our website, you can read the detailed story of how an ETH Zurich graduate has moved away from the competition, by transforming the aviation industry through computer vision. Or how chocolatier, Kadri Eek, has created a unique offer for adults and children, by developing a programme of fun chocolate events.
Do you know any examples of companies in Switzerland that have created their own ‘Blue Ocean’? Share them in the comments.