BLUE OCEAN

Blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is
both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are
waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is
not yet explored.

When there is limited room to grow, businesses try and look for verticals or avenues of finding new
business where they can enjoy uncontested market share or 'Blue Ocean'. A blue ocean exists when there
is potential for higher profits, as there is now competition or irrelevant competition.

The strategy aims to capture new demand, and to make competition irrelevant by introducing a product
with superior features. It helps the company in make huge profits as the product can be priced a little
steep because of its unique features.

CASE : iTunes Apple

Apple was successful in capturing the growing demand of music for users on the go. All the available Apple
products have iTunes for users to download music.

Apple users can download legal and high quality music at a reasonable price from iTunes making
traditional sources of distribution of music irrelevant. Earlier compact disks or CDs were used as a
traditional medium to listen and play music.

CASE: OYO Rooms

The triumph of OYO to the successful execution of Blue Ocean Strategy in the hospitality sector. Value
innovation, the cornerstone of Blue Ocean Strategy, by offering superior customer value and concurrently
reducing the cost of the business. The business concept of OYO Rooms eliminated extravagant features
of 3-star and higher hotels, such as stylish lounges, sports club, spa, and so on but, at the same time
retaining standardized services and hygiene of sophisticated hotels. As a result, OYO Rooms could
significantly reduce the price per room compared to three-star hotels and outperformed in providing
superior customer value.

CASE: Philips

Philips’ blue ocean strategic move in the teakettle industry is an example of looking across complementary
product and service offerings, path four in the six paths framework. Despite its importance to British
culture, the British teakettle industry had flat sales and shrinking profit margins until Philips Electronics,
the Dutch consumer electronics company, came along with a teakettle that turned the red ocean blue.

By thinking in terms of complementary products and services, Philips saw that the biggest issue the British
had in brewing tea was not in the kettle itself but in the complementary product of water, which had to
be boiled in the kettle. The issue was the limescale found in tap water. The limescale accumulated in
kettles as the water was boiled, and later found its way into the freshly brewed tea. The phlegmatic British
typically took a teaspoon and went fishing to capture the off-putting limescale before drinking home-
brewed tea. To the kettle industry, the water issue was not its problem. It was the problem of another
industry—the public water supply.

By thinking in terms of solving the major pain points in customers’ total solution, Philips saw the water
problem as its opportunity. The result: Philips created a kettle with a mouth filter that effectively captured
the limescale as the water was poured. Limescale would never again be found swimming in British home-
brewed tea. The industry was kick-started on a strong growth trajectory as people began replacing their
old kettles with the new filtered kettles.

RED OCEAN

Red oceans represent all the industries in existence today the known market space. In the red oceans,
industry boundaries are defined and accepted, and the competitive rules of the game are known. Here
companies try to outperform their rivals to grab a greater share of product or service demand. As the
market space gets crowded, prospects for profits and growth are reduced.

In today's environment most firms operate under intense competition and try to do everything to gain
market share. When the product comes under pricing pressure there is always a possibility that a firm’s
operations could well come under threat. This situation usually comes when the business is operating in
a saturated market.

CASE:E-Commerce

Bigwigs like Amazon,Flipkart,Alibaba are giving cut throat competition to each other. Different merger
accusations are happening .Different strategies are being made to counter each other.

CASE: Telecom Sector

It’s JIO vs Reliance vs Idea-Vodafone in India.

It has been data battle all around in India. Jio coming with cheap data plans and free calls has led a
revolution in Indian telecom industry. It has led to biggest merger in telecom history of india Idea-
Vodafone. Every one in this market is coming up with counter offers every day ,exploiting each other’s
weakness.

Major differences

RED OCEAN BLUE OCEAN

Compete in existing market place Created Uncontested Market Place.
Beat the competition Make the competition irrelevant
Exploit Existing demand Create and Capture new demand
Make the value-cost trade-off Break the value-cost trade -off
Align strategy choice of low differentiation or low Simultaneous pursuit strategy of low
cost differentiation or low cost