Blue Ocean StrategyCreate Uncontested Market Space
Make the competition irrelevant by pursuing differentiation and low cost simultaneously through value innovation.
The Core Idea: Value Innovation
Blue Ocean Strategy is about creating and capturing new demand by reconstructing market boundaries. The cornerstone is 'value innovation' – simultaneously pursuing differentiation and low cost to create a leap in value for both buyers and the company.
Red Ocean vs Blue Ocean
Red Ocean
- • Compete in existing market space
- • Beat the competition
- • Exploit existing demand
- • Make the value-cost trade-off
Blue Ocean
- • Create uncontested market space
- • Make competition irrelevant
- • Create and capture new demand
- • Break the value-cost trade-off
The Four Actions Framework
Reconstruct buyer value elements by asking four key questions
Eliminate
Which factors that the industry has long competed on should be eliminated?
Examples:
- • Complex features customers don't value
- • Costly industry standards
- • Traditional distribution channels
Reduce
Which factors should be reduced well below the industry's standard?
Examples:
- • Overengineered product attributes
- • Service levels beyond customer needs
- • Marketing and sales costs
Raise
Which factors should be raised well above the industry's standard?
Examples:
- • Customer experience quality
- • Product reliability
- • Speed of service
Create
Which factors should be created that the industry has never offered?
Examples:
- • New customer segments
- • Innovative business models
- • Unprecedented convenience
Six Principles of Blue Ocean Strategy
Systematic approach to creating and capturing blue oceans
Reconstruct Market Boundaries
Look across alternative industries, strategic groups, buyer groups, and complementary offerings to identify new market space.
Focus on the Big Picture
Use strategy canvas to visualize the current landscape and identify opportunities for differentiation.
Reach Beyond Existing Demand
Target noncustomers and their unmet needs to unlock new demand rather than fighting for existing customers.
Get the Strategic Sequence Right
Ensure exceptional utility, strategic pricing, target costing, and overcome adoption hurdles.
Overcome Organizational Hurdles
Address cognitive, resource, motivational, and political barriers to strategy execution.
Build Execution into Strategy
Involve people in the strategy-making process to foster trust and commitment from the start.
Finding Your Blue Ocean with Commercify
Our AI-driven platform helps you systematically apply Blue Ocean Strategy principles
Market Boundary Reconstruction
Our Market Intelligence Engine analyzes data from alternative industries, adjacent markets, and noncustomer segments to identify opportunities to reconstruct market boundaries.
Value Curve Analysis
Gather data on industry competing factors and customer perceptions to draw strategy canvas and identify areas for elimination, reduction, raising, or creation.
Noncustomer Analysis
Analyze data to understand the needs and pain points of different tiers of noncustomers, unlocking insights for new demand creation.
Value Innovation Testing
Model the potential impact of new value propositions, assessing their utility, pricing viability, and adoption potential before large-scale investment.
Benefits of Pursuing a Blue Ocean
Transform your competitive position and growth trajectory
Create New Demand
Tap into previously unexplored customer segments and markets
Make Competition Irrelevant
Move away from head-to-head competition in existing market space
Break the Value-Cost Trade-off
Achieve differentiation and low cost simultaneously
High Growth & Profitability
Capture uncontested market space with superior margins
Build Strong Brand
Become synonymous with the new value you've created
Drive Innovation Culture
Foster a mindset of looking beyond current industry norms
Blue Ocean Examples
Companies that successfully created uncontested market spaces
Cirque du Soleil
Reinvented the circus by eliminating costly elements like animals and star performers while raising artistic sophistication and creating a theatrical experience.
Southwest Airlines
Created a new market between driving and flying by eliminating meals, lounges, and seating choices while offering speed, frequent departures, and low prices.
Nintendo Wii
Expanded the gaming market to non-gamers by eliminating complex graphics and creating intuitive motion controls and social gaming experiences.
Ready to Discover Your Blue Ocean?
Use Commercify's AI-powered platform to systematically identify and capture new market space