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Blue Ocean Strategy
How to Create Uncontested Market Space
and Make the Competition Irrelevant
(Zusammengestellt aus Pressematerial)
Since the dawn of the industrial age, companies have engaged in head-to-head
competition. They have fought for competitive advantage, battled over market
share, and struggled for differentiation. Now imagine instead the prospects
for growth if companies could operate with no competitors at all. Kim and Mauborgne
challenge everything you thought you knew about the requirements for strategic
success, and instead argue that the way
to win is to stop competing.
The authors introduce the concept of red and blue oceans to describe the market
universe:
Red oceans are
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 existing demand. As the market space gets crowded, prospects
for profits and growth are reduced. Products become commodities, and cutthroat
competition turns the red ocean bloody. Hence, the term “red” oceans.
Blue oceans, in contrast, denote all the industries not in existence today—the
unknown market space, untainted by competition. In 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. Like
the “blue” ocean, it is vast, deep, powerful, in terms of profitable
growth, and infinite.
By studying 150 strategic moves in over 30 industries spanning more than 100
years, Kim and Mauborgne, set out
to find a systematic pattern for achieving high growth that any company could
replicate. From Ford’s Model T to Apple’s iPod, they identified
150 strategic moves that had one thing in common. All of them made the competition
irrelevant and created an uncontested market space with the limitless potential
of a blue ocean.
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Red Ocean Examples |
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Blue Ocean Examples |
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Airline industry price wars result in bankruptcies and low profit margins
Prime-time television entertainment industry competes with indistinguishable
shows for declining viewership
Golf equipment industry competes to win a greater share of existing
golf customers
The cosmetic industry creates a red ocean with models, expensive advertising,
and promises of youth and beauty.
The wine industry gluts the market with a red ocean of thousands of
brands competing on the finest oaks and tannins and legacy winery names.
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Southwest Airlines creates a new market by offering the speed of air
travel with the low cost & flexibility of driving
HBO produces “Sex and the City” for a new market of television
consumers: single, urban professional women
Callaway Golf creates “Big Bertha,” a golf club with a large
head that attracted new customers to golf that had been frustrated by
the difficulty of hitting the ball
The Body Shop creates a blue ocean that lasts more than a decade by
creating functional cosmetics that defied the industry which sold emotionally
appealing cosmetics.
Casella wines creates [yellow tail], a blue ocean wine that succeeded
by eliminating complexity, elitism and consumer confusion and creating
a fun simple image that non-wine drinkers could enjoy.
Curves, the Texas-based women’s fitness company, entered
the oversaturated fitness market to acquire more than two million members
in more than
six thousand locations with total revenues exceeding the $1 billion mark.
In
less than twenty years, Cirque du Soleil grew to levels of revenue that
took Ringling Bros. and Barnum & Bailey over a hundred years to achieve.
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At present, competing in red oceans dominates the field of strategy
in theory and in practice. Part of the reason traces back to the historical
foundation of business strategy—war—where territory is defined
and limited and opponents compete to protect and enlarge their share of limited
and existing terrain. This focus on beating the competition in existing market
space was exasperated by the meteoric rise of the Japanese in the 1970s and
1980s. Faced with mounting competition in the global marketplace as, for virtually
the first time in corporate history, customers were deserting Western companies
in droves, the center of strategic thinking gravitated further towards the
competition. A slew of competition-based strategies emerged which argued that
competition is at the core of the success and failure of firms, and that competition
determines the appropriateness of a firm’s activities that can contribute
to its performance.
The result has been a fairly good understanding of how to compete skillfully
in red waters, from analyzing the underlying economic structure of an existing
industry, to choosing a strategic position of low cost or differentiation or
focus, to benchmarking the competition. Yet, although some discussions around
blue oceans exist, little practical guidance exists to create and capture them.
In the red ocean, companies limit their own growth by only seeking customers
from the current market. Instead they should look to non-customers outside
of the market so they can create a new market space as vast and limitless as
a blue ocean. That’s what Callaway Golf did to open up a blue ocean of
new demand for golf equipment with “Big Bertha,” a large headed
golf club designed for non-golfers who were intimidated by the challenging
sport.
In the red ocean, companies only question how customers make choices between
competitors in the same industry. But companies that create blue oceans understand
that customers look across industries to make choices. NetJets understood that
corporate customers were faced with choosing between the speed and flexibility
of a corporate jet or the better price of business class on a commercial airline.
With fractional jet ownership, NetJets offered customers the best of two established
industries and created a new industry that now generates billions in revenues.
In the red ocean, companies create small markets for their products and services
by segmenting customers. But companies that create blue oceans seek out commonalities
among all customers that can create mass demand and huge profits. The Joint
Strike Fighter Program designed the superior fighter plane for the common use
of the Navy, Marines, and the Air Force—three different customer segments
which previously purchased their aircraft separately—by thinking in terms
of what unites customer segments, not what divides them.
While all blue oceans eventually inspire imitators, the unconventional logic
of true blue oceans renders competitors obsolete for decades. For example,
The Body Shop’s blue ocean of functional cosmetics left competitors paralyzed
for over a decade since they were unwilling to give up their models, expensive
advertising, and promises of eternal youth.
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Red Ocean Strategy |
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Blue Ocean Strategy |
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Compete in existing market space
Beat the competition
Focus on existing customers
Exploit existing demand
Make the value-cost tradeoff
(create greater value to customers at a higher cost or create reasonable
value at a lower cost)
Align the whole system of a firm’s activities with its strategic
choice of differentiation or low cost |
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Create uncontested market space
Make the competition irrelevant
Focus on non-customers
Create and capture new demand
Break the value-cost tradeoff
(Seek greater value to customers and low cost simultaneously)
Align the whole system of a firm’s activities in pursuit
of differentiation and low cost
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Blue ocean strategy applies across all types of industries from the typical
suspects of consumer product goods to b2b, industrial, pharmaceutical, financial
services, entertainment, IT, and even defense. The authors experience further
suggests two interesting findings with respect to businesses several steps
removed from
the final consumer. First, companies in these industries tend to view their
businesses as commodity businesses with little room to offer innovative value.
This has effectively created a self-fulfilling prophecy in that the more these
companies view their businesses as commodities, the more they treat their businesses
as such. Secondly, they observed that the more removed companies are from the
final customer, the more levers there are to unlock innovative value as every
company in that chain can be viewed as a customer. If a company can’t
see an opportunity to unlock innovative value for the next direct customer
in that chain, there are still opportunities to unlock innovative value for
that customer’s customers, and so forth.
Whereas blue ocean strategies create new market space and change industry
dynamics, they are not necessarily initiated by new entrants to an industry.
Kim and Mauborgne found that blue oceans were created
by both industry incumbents and new entrants, challenging the lore that start-ups
have natural advantages over established companies in creating new market space.
In the auto industry, think of GM which created the blue ocean of emotional,
stylized cars in the 1920s, or the Japanese which created the blue ocean of
small, gas efficient autos in the 70s, or Chrysler which created the blue ocean
of minivans in the 80s—all were incumbents. Moreover, the blue oceans
made by incumbents were usually within their core businesses. In fact, most
blue oceans are created from within, not beyond, red oceans of existing industries.
This challenges the view that new markets are in distant waters. Blue oceans
are right next to you in every industry. Issues of perceived cannibalization
or creative destruction for established companies also proved to be exaggerated.
Blue oceans created profitable growth for every company launching them, start-ups
and incumbents alike.
The authors findings are encouraging for executives at the large, established
corporations that are traditionally seen as the victims of new market space
creation. For
what they reveal is that large R&D budgets are not the key to creating
new market space. The key is making the right strategic moves. What's more,
companies that understand what drives good strategic moves—incumbents
or start-ups—will be well placed to create multiple blue oceans over
time, thereby continuing to deliver high growth and profits over a sustained
period. The creation of blue oceans, in other words, is a product of strategy
and as such is very much a product of managerial action, not the size or age
of the firm.
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Create a Blue Ocean Strategy
in Four Steps
Australian Casella wines created a blue ocean strategy that, in just
two years, caused its [yellow tail] wine to become the fastest growing
brand in the histories of both the Australian and the U.S. wine industries
and the number one imported wine into the United States, surpassing
the wines of France and Italy. Below are the steps they took to create
a blue ocean strategy—steps that any company can take to get
out of the red ocean of competition:
1) Eliminate factors that the industry takes for granted
but adds no perceived value to customers.
Casella Wines recognized that most wineries touted
aging and tannin qualities, two factors that intimidated customers.
Casella decided to focus their efforts on different qualities.
2) Reduce factors well below the industry’s standard
to avoid the mistake of over delivering in order to beat the competition.
To avoid customer confusion, Casella Wines limited their offerings
to just one white wine and one red wine.
3) Raise factors well above the industry’s standard
so your customer won’t have to make compromises.
Casella Wines raised the involvement of retailers with [yellow tail]’s
success by giving retail employees Australian outback clothing that
made [yellow tail} seem friendly instead of intimidating like other
wines.
4) Create new sources of value that the industry has never
offered.
Casella wines created new customer experiences for wine drinking:
easy drinking, ease of selection, and a sense of fun and adventure.
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