BLUE OCEAN STRATEGY/RED OCEAN STRATEGY

• IBPS SO MAINS MARKETING
  BLUE OCEAN STRATEGY/RED OCEAN STRATEGY LECTURE 8
  MARKETING MANAGEMENT

• BLUE OCEAN STRATEGY: MEANING

1.    GIVEN BY W. CHAN KIM AND RENEE MAUBORGNE

2. AN INNOVATIVE APPROACH TO GENERATE HIGH GROWTH AND PROFITS BY CREATING NEW DEMANDS IN AN UNCONTESTED MARKET INSTEAD OF COMPETING HEAD TO HEAD WITH OTHER SUPPLIERS KNOWN CUSTOMERS IN AN EXISTING INDUSTRY
3. FORMULATION PRINCIPLES:-

1)   RECONSTRUCT MARKET BOUNDARIES

2)   FOCUS ON THE BIG PICTURE

3)   REACH BEYOND EXISTING DEMAND

4)   GET THE STRATEGIC SEQUENCE RIGHT

• EXECUTION PRINCIPLES OF BLUE OCEAN STRATEGY

1. OVER COME KEY ORGANIZATIONAL HURDLES
2. BUILD EXECUTION STRATEGY
3. OTHER FACTORS:-
4. SIZE OF MARKET’
5. PURCHASING POWER OF THE CHIEF ECONOMIC AGENTS
6. STATE OF THE ECONOMY
7. RELATED INDUSTRY

THE FOUR ACTION FRAMEWORK

1. WHICH FACTORS SHOULD BE REDUCED WELL BELOW THE INDUSTRY’S STANDARD ( FIRST TWO FACTORS HELP IN REDUCING THE COST AND COST ADVANTAGE)
2. WHICH FACTORS SHOULD BE RAISED WELL ABOVE THE INDUSTRY’S STANDARD
3. WHICH FACTORS THAT THE INDUSTRY HAS NEVER OFFERED SHOULD BE CREATED( HELPS IN LIFTING BUYER VALUE AND CREATING NEW DEMAND)

4.    CREATION OF VALUE AT NO ADDITIONAL COST

• EXAMPLE IN INDIA

1.    THE INTRODUCTION OF MARUTI 800 IN 1983

2.    THE LOW COST AIRLINE IN INDIA

• RED OCEAN STRATEGY

1. RED OCEAN ARE ALL THE INDUSTRY IN EXISTENCE TODAY THE KNOWN MARKET SPACE
2. INDUSTRY BOUNDARIES ARE DEFINED AND ACCEPTED
3. COMPETITIVE RULES OF THE GAME  ARE KNOWN
4. MARKET SPACE GETS CROWDED AND PROFITS START REDUCING

• COMPARISON
• BLUE OCEAN STRATEGY

1. DENOTES ALL THE INDUSTRIES NOT IN EXISTENCE TODAY
2. THE UNKNOWN MARKET SPACE
3. UNTAINTED BY COMPETITION
4. DEMAND IS CREATED
5. AMPLE GROWTH AND OPPORTUNITY
6. COMPETITION IS IRRELEVANT
7. SIMILAR TO DESCRIBE THE WIDER,DEEPER POTENTIAL OF MARKET SPACE NOT YET EXPLORED

8. RECONSTRUCTION VIEW AS THE MARKET BOUNDARIES AND INDUSTRY STRUCTURE NOT DEFINED
9. ATTENTION FROM SUPPLY TO DEMAND
10. FROM FOCUS ON COMPETING TO A FOCUS ON VALUE INNOVATION BY DIFFERENTIATION AND LOW COST
11. COMPETITION IRRELEVANT
12. NON ZERO SUM GAME

•  
• RED OCEAN STRATEGY

1. INDUSTRIES BOUNDARIES DEFINED
2. KNOWN MARKET SPACE
3. INTENSE  AND CUT THROAT COMPETITION TURNS THE OCEAN BLOODY
4. MARKET IS CROWDED
5. REDUCTION IN PROFIT
6. FOCUSING ON BUILDING ADVANTAGE OVER COMPETITION

7. COMPETITION BASED STRATEGIES
8. STRUCTURAL VIEW OR ENVIRONMENTAL DETERMINISM
9. GRABBING BIG SHARE
10. BUILDING ADVANTAGE OVER THE COMPETITION
11. FOCUS ON DIVIDING THE RED OCEAN WHERE GROWTH IS LIMITED
12. DISTINCTIVE COST OF DIFFERENTIATION STRATEGY