Blue Ocean strategy: exploring less crowded markets

Blue Ocean strategy: exploring less crowded markets

In the last post I wrote for this blog I talked about Reverse Innovation, in which innovation occurs in less developed countries` markets, where many of the basic needs of people in this places are not satisfied and a lot of solutions are not developed in contradistinction to what happens in the crowded markets of developed countries. This post made me remember another subject that has been a trend since 2005, with the publication of the book of W. Chan Kim and Renee Mauborgne “Blue Ocean Strategy”.

In this book, the authors state that businesses can compete either on red oceans where companies are fighting for the same market and the same clients and the game rules are already defined or on blue oceans where markets don’t have rivalry, because there is no competence. The book authors advice businessmen to develop their business in these blue oceans because in this way they will walk away from their competitors while they create new demand.

To develop a blue ocean strategy, Kim and Mauborgne present the next formulation principles:

  1. Create new consume spaces: according to the authors, a structured space must be established that broadens the market limits.
  2. Focus on the overall picture, not the numbers: according to what the authors state, more than numbers that talk about the tactic a real global strategy must be proposed.
  3. Go beyond the existing demand: this principle attempts to achieve new markets. In this way businesses must correct practices that makes them center only in the needs of regular today clients and an excessive market segmentation.
  4. Establish a strategic sequence in a correct way: Finally with this principle the risk of adoption of a new business model is reduced. Thereby it must be validated according to the buyer logic the aspects of utility, price, cost and product adoption. In other words the strategy must be validated in order to know if it is commercially viable.

In the same way that with Reverse Innovation, the concept that was described in this article attempts us to move from existing markets to markets with less competition and where we can find new opportunities. This according to my point of view is what we should try to bet on as entrepreneurs. It is true that in red oceans we can also be successful but in blue oceans we can find a competitive advantage, either exploiting reverse innovation in countries that need solutions for their problems or in markets where we can bet on new costumers.

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