Blue Ocean Strategy concept is about creating uncontested markets and making competition irrelevant. This is a timeless and relevant concept for any product or service category.
The dissatisfaction with doing business in the “red oceans” is the primary cause why blue oceans have come up. Red Ocean is the known market place for any industry where the players operate by established rules, compete on attributes which are agreed by most players in the industry & compete for the custom of the same set of consumers. This is a brutal place to be in, as players are competing for a piece of the existing pie and they will have to wrest it from one another. In the process, they compete fiercely on price, features, value etc. to capture the existing demand. This results in lower profits and dissatisfaction among the market players.
When blue oceans are created, they create new market space, which was not there before. In this process, they are side stepping competition, making them irrelevant and having the market to themselves till competition catches up. A recent example is ipad. Apple launched ipad a couple of years back and created a new category of device, which did not exist earlier. They were able to draw a mass of users who were also using computers, laptops, netbooks etc., into using tablets and the market exploded. Competition realized that a new category has been created and they came in with their own offerings. But, by that time, ipad had become an entrenched player, so much so that Apple still has half the market to itself, in spite of the many players jumping into the fray. Apple also enjoys premium positioning in the customer’s mind and is willing to buy its product, in spite of the premium it charges.
Value Innovation is the cornerstone of Blue Ocean strategy. The focus is on creating a leap in value for the buyers through a focused offering. Value without innovation, is incremental - like getting 20% extra of a product, for same price. This is not value innovation. It is at best a promotion, or at its worst, it can compromise the brand equity. Innovation without value is at best futuristic and does not constitute a Blue Ocean strategy. An example of this is Motorola Iridium Satellite phone network, which became known for its powerful slogan – Geography is History, to let the customers know that they can initiate and receive calls from anywhere. But the futuristic idea never took off as the offering did not deliver value at a price that the mass of buyers would want to subscribe to. Also, it had other complications due to which a potentially good innovation did not take off.
In the financial advisory field too, the Blue Ocean strategy can be applied. The services being offered are undifferentiated for the most part and players compete for a portion of that pie. It will be immensely beneficial for financial advisors to look to create a Blue Ocean for themselves. For Blue Ccean strategy to work, the advisor would have to be willing to completely reorient the offering & the business itself, if needed. Blue Ocean strategy applies for products and services and applies and works equally well across industries. Blue Oceans are seldom created by luck.
This looks like a dream but it can be attained by using the analytical tools and framework to create Blue Oceans
