What is the Blue Ocean Strategy?

Blue Ocean Strategy is the marketing theory that the business universe consists of two kinds of markets: red oceans and blue oceans. The concept was pioneered in a book published in 2005 by W. Chan Kim and Renée Mauborgne, professors at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute.

Red oceans represent existing industry and markets where industry boundaries and the rules of competition are well defined. Companies strive to outperform rivals and grab a bigger share of existing demand. As the space gets crowded, competition among companies turns waters red with blood. Competitive market strategies are about how to occupy, and hopefully succeed in, red oceans and gain a larger share of existing demand.  

Blue oceans represent new or unknown markets where demand is created rather than fought over. This is a market creating strategy. Companies that pursue this strategy have been known to spawn entirely new industries. After studying150 strategic moves spanning more than a hundred years and 30 industries W. Chan Kim and Renée Mauborgne found that companies that create blue oceans usually reap the benefits for 10-15 years because they are hard for rivals to copy.

While blue oceans can be entirely new industries, most blue oceans usually emerge when a company alters the boundaries of an existing industry. By examining their industry and customer behaviors the existing rules of competition can be questioned and blurred creating new areas of demand.

To realize blue ocean potential, companies should chart a strategic course past traditional industry boundaries and create new market space.

Chris Adams
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posted @ Sunday, April 8, 2018 7:43 PM by Chris Adams