Strategic Marketing

ASSIGNMENT

SUBMITTED TO

Sir. Arif Vaseer

SUBMITTED BY

Orakzai

DEPARTMENT OF MANAGEMENT SCIENCES

RiPHAH SCHOOL OF LEADERSHIP & MAMANGEMENT SCIENCES, I -14, ISLAMABAD

Red Ocean Vs Blue Ocean

“Blue ocean strategy” was created by W.Chan Kim and Renee Mauborgne after a decade-long study of 150 strategic moves on more than 30 industries over 100 year. The term blue ocean means industries not yet in existence while a red ocean is already established and is heavily contested. The rise of blue ocean industries relies heavily on innovation in creating new products and services not yet in existence. By creating a blue ocean, you are uncontested. As long as we know the strategy called “Bloody or Red Ocean Strategy” is a competitive strategy for a region the same effort. According to W. Chan Kim and Renee Mauborgne claim that Red Ocean Strategy is no more powerful way to create growth and profits in the future. They propose a new strategy called Blue Ocean Strategy. Differences between Red Ocean Strategy and Blue Ocean Strategy, among others, in addressing the market, competition, demand, value, and strategy.Red Ocean Strategy considers that competition is to compete in existing market space, while the Blue Ocean Strategy considers that the competitive market is to create a space that is not in competition. It is therefore called the Blue Ocean Strategy as their business fields like a vast blue ocean. Because of the vast business market, companies can choose the market in accordance with the character of the company.

Red Ocean Strategy uses the concept in order to grow and gain advantage by beating the competitors in the competition. Blue Ocean Strategy uses the concept that eliminates competition. Since there is no competition then the company just competing with itself. The company is definitely going to win the competition without an opponent. Red Ocean Strategy exploit existing demand excessively, while the Blue Ocean Strategy to create and capture new demand. Red Ocean Strategy achieves excellence by creating value, then the Blue Ocean Strategy achieve excellence without having to create value. Red Ocean Strategy together with the overall system and activities of the company by choosing a differentiation strategy or a strategy of overall cost leadership (low cost strategy), while the Blue Ocean Strategy together with the overall system of activities of enterprises in implementing differentiation strategies and the overall cost leadership strategy simultaneously the same. In Blue Ocean Strategy includes two aspects:

First, how to find and develop a blue ocean (business market). To find and develop a blue ocean industry launched a complete new.

Second, how to exploit and protect blue ocean.If you’re an internet marketer, attraction marketer, direct sales/ mlm / Network marketer you are fishing in a Red Ocean.  The Red Ocean has tons of other fishermen all fishing for the same fish. Enter the Blue Ocean – you are the only fisherman in an ocean full of fish.A Blue Ocean is an uncontested market place. A Blue Ocean offers new opportunity for profitable and rapid growth to an entirely new market. In a Red Ocean market, everyone is just talking a different version of the same thing to the same group of people VS a Blue Ocean where you guide new people over to your primary program.

Advertising in a new market – like all those high quality professional friends and acquaintances who you’d love to share this sort of business model with but haven’t due to the stigma of unprofessionalism and distaste by the majority of people who don’t truly understand the concept.

Here are the differences between the Blue and Red Oceans.

So just what does this mean? Let’s take the differences one at a timeout.

Focus on current customers vs. focus on noncustomers. In most industries there is little effort to attract new buyers to the industry, thus the focus on the customers currently purchasing in that industry. In the Blue Ocean, there is a focus on trying to increase the size of the industry by attracting people who have never purchased in that industry.

Compete in existing markets vs. Create uncontested markets to serve. Sounds good, right? But how do you do that? Existing markets are all the customers doing business in the industry right now, whether they are doing business with you or your competitors. If someone wins a customer, then it is assumed, someone will lose a customer. For someone to win, someone must lose.

In uncontested markets, there is only a winner, you. No one else is fighting for the business because either they don’t know about it, or they don’t know how. They will try, of course, but if you have done things the Blue Ocean Strategy way, they will not be successful for a very long time. Take Cirque du Soleil, for example. I read where there have been about 150 companies trying to compete with them, everyone went out of business. And after [yellowtail] wine came out, many wineries tried putting an animal on their label. None of them had the same success.

Beat the competition vs. Make the competition irrelevant. The competition becomes irrelevant because they cannot duplicate the ideas in a way that is a commercial success. Remember, the whole idea of Blue Ocean Strategy is to have high value at low cost. If you are doing that, how can anyone compete with you? All the would-be competitors fall by the wayside.

Exploit existing demand vs. create and capture new demand. You will be creating value so high that you will be attracting customers that never before would have considered entering the market. Nintendo’s Wii appeals to families and seniors. [yellowtail] attracted beer drinkers, Southwest Airlines appealed to auto travelers.

Make the value-cost tradeoff vs. break the value cost tradeoff. If you cut your strategy teeth on Michael Porter’s Competitive Strategy concepts, as I did, you understand that there were only two strategies to chose from, value or low cost. It was understood that you could not have both value and low cost. Kim and Mauborgne have broken that concept and said that you can have high value and low cost and developed the tools to do it. In fact, if you don’t break the value cost tradeoff, competitors will easily duplicate what you are doing and the ocean will once again be very red.

Align the organization with differentiation OR low cost vs. aligning the organization with differentiation AND low cost. You can’t just say you are going to have differentiation and low cost. You must search every nook and cranny of your processes and organization to strip away unnecessary cost. The entire organization must be aligned this way...anything that doesn’t create or contribute to value, gets eliminated or reduced. It is just the most efficient way to run an organization whether in a blue or red ocean.

1. Red Ocean represents all of the existing industries in a market place.

On the same note and in the past decades, the growth of the communication sector and the number of players in a market arena limited profit and at the same time facilitated the emergence of new industries that created new demand rather than served an existing one. Hence Blue Ocean describes all of the markets that do not exist, whereby the strategizing to create demand and rotate about competition for large and fast profit margins is termed Blue Ocean Strategy, according to Kim and Mauborgne. Blue Ocean Strategies are usually more risky than those developed for well known and definite markets. This is the major reason why despite the profitability margins of blue strategies, most of the world prefers to strive in a competitive yet known return to investment markets, hence contributing to the formation of a larger Red Ocean.

Though the Red and Blue Ocean Strategies seem offer two different disciplines of strategizing, they are very interrelated and would constantly feed one another. That is, most of the times, it is the Red Ocean bloody competitiveness is what favors or drive entrepreneurs to foresee and create new and profitable markets. At the same time, new markets, which directly contribute to the Blue Ocean, would draw the attention of investors that want to benefit from the tested and uncovered assumptions and hence would soon turn the blue into red. The table below (adopted from the Blue Ocean Strategy paper; refer to the reference section for more details) summarizes the main difference between Red and Blue Strategies.

2. Out of the Red and into the Blue ManagementTaking the above mentioned description of the world existing and emerging markets. And taking into consideration that the red was blue and the blue mostly emerges from the red. Change management practitioners and managerial units staff must develop management strategies that would preserve an existing/red market niche (decrease cost while maximizing value) and develop new ones that would pave the way for new profitable demand. That is, management strategies should be able to analyze moves or possible change rather than analyzing the industry or the product alone. As noticed, the blue color refers to innovation. Actually, it refers to this specific innovation that would create a new demand and/or provide alternatives for an already existing market audience. And since innovation brings along change, and change shakes an already existing equilibrium within a highly networked and connected market; it would be essential that innovation realizes several factors that it should be tested upon for it to be successful. In this regard, this research issue rotates about a four framework pillar model. The four pillars of the framework model are:

1. Reason Back from a Target Endgame: envisage and formulate scenarios about future market equilibrium as affected by the intervention of all of the market players as well as potential trends that might arise from the evolution of those markets. This is the major step that would lead to the creation of a successful innovation.

2. Complement Power players: Position your innovation as a complementary product to the most essential products of powerful producers in the a networked market. In this way, you can easily buy power players and hence would assist infuse your innovation rather than resisting it.

3. Offer Coordinated Switching: establish partnerships with market players that would add value to the product and assist in its dissemination and promotion. That is, distribute potential profit.

4. Preserve Flexibility: Design your product and marketing plans to be flexible. That is being able to cope with market changes and evolutions.

The four pillar framework model can be also viewed as a cycle; whereby the first two stages of the cycle are roam in the blue ocean and the two in the red one. it is important to note that blue oceans soon become red, and to maintain innovative thinking, new endgames should be always given room to for the emergence of new blue ones.

Creating a blue ocean means creating an industry that hasn’t existed yet. By combining new and old technology, you can create new innovating products that can define a new industry. Also, by

combining new and old methods of services, you can create an industry that hasn’t existed yet.

Creating new industries for unlimited potential and profit is the core of the blue ocean strategy.

Creating Blue Ocean Value Innovation

• Company’s cost act favorably for both innovators and buyers• Cost savings occur by eliminating and reducing factors an industry competes

• Buyer value is provided by never before offered products

• Cost is reduced further as scale of economy kicks in

Creating Blue Ocean Tools

Strategy Canvas

diagnostic and action framework for building a compelling strategy X-Y Axis, where X represents factors and Y represents company position

E.g Yellow Tail Wine

Four Action Framework

– Eliminate, Reduce,Raise and Create

For a good strategy

• Focus - on the important areas and not on every single factor• Divergence - away from the competitors offerings

• Tagline - has a simple easy to communicate

Red ocean is where competitions exists and are heavily contested. Profits and growths are thin in a red ocean. It is basically a zero sum game were only the strongest survives. However, it is easier to enter because the industries are defined already so you can just copy others; however, surviving is a different story. Let’s just say Red Ocean is easy to enter, hard to survive.

Each ocean has it own advantages and disadvantages. Red ocean is easier to enter since the industry is already defined but it is much harder to survive. Blue ocean are hard to do because it means creating a whole new industry that can be risky if there is no demands for it, but if there is a market you have vast and almost limitless growth. Of the two oceans, which one are you? I want to say that “human ad space” is sort of a blue ocean!

The question arises, if it’s so good, if the money is so good, then why aren’t more people doing it?

Lack of professionalism Avoiding warm markets

No duplication

No mass attraction

Lack of understanding where to start

Fear of being scammed

Lack of safety and trust and

Wasting valuable time and money.