Online Share Trading

Comparison of Blue and Red Ocean Strategies

Businesses face many challenges, from establishing a brand to acquiring new customers to maintaining that brand, to the day they need to retain them. They have two options: to either innovate and survive, or to be phased out and die. More companies are developing strategies to help them gain a substantial market share. You can either grow aggressively in a market already established with a proven proof of concept, or you can create a new market. These are technically known as the Blue and the Red Ocean Strategy. Below is a comparison of the two strategies

Red Ocean Strategy Definition

Professors Renee Mauborgne, W. Chan Kim, and professors of strategy at INSEAD devised the Red and Blue Ocean Strategy using the oceans as an analogy in their book titled "Blue Ocean Strategy". The professors believe that the red oceans are all industries currently in existence. This is the well-known market where companies from the same industry try to outperform one another and take a bigger share of the market. This industry is known for its fierce competition, which makes the ocean bloody and red. The Red Ocean Strategy was born.

Blue Ocean Strategy Definition

Blue oceans are the untapped markets and businesses that exist, unlike the red, bloody oceans. It is a sign of untapped market potential. It is a market that is unexplored and not contaminated by competition. This space, like the blue ocean, is rich and vast in opportunities and lucrative growth.

Comparing Red Ocean Strategy

Let's now compare the Blue Ocean Strategy and Red Ocean Strategy. When comparing the two strategies, there are many things to consider. These are the following:

1. The focus perspective

Red Ocean companies tend to be more focused on their existing customers. They try to improve customer service and retain existing customers who are loyal to them. Blue Ocean companies focus on expanding the industry. Blue Ocean companies aim to attract new customers and create a niche in the industry.

2. The competition perspective

Red Ocean companies are a good example of this. Other companies try to capitalize on the established concept and enter the field. This creates competition with other companies that are using the same tried-and tested formulas. Blue Ocean companies have no competition because they are entering an uncontested marketplace. Someone may win a customer in an uncontested market. However, someone who is already in the red market could lose it. For one company to succeed, the other must lose. In the end, players in uncontested markets are often the winners.

3. Relevance perspective

Red Ocean Strategy companies already face lots of competition because many other companies offer the same products as them. To remain relevant, they must beat the competition. Blue Ocean companies, on the other hand, tend to be irrelevant because there is no way for them to duplicate an inexistent idea. This gives innovative companies an advantage, and often leads to their commercial success.

4. The demand perspective

Red Ocean companies are more likely to take advantage of existing demand. Red Ocean companies try to provide a better shopping experience for customers to encourage them to choose their company over the competition. This is the same space as red ocean companies have. Blue Ocean companies, on the other hand try to create new demand and take over the market. Blue Ocean companies emphasize creating high value in order to attract customers who may not have considered entering the market.

Examples red and blue ocean strategy firms

Red Ocean companies such as Spice Jet and Indigo in India, Ryan Air Europe and Southwest USA in the USA were able to penetrate an already saturated market for short-haul airline business. These low-cost, no-frills airlines have gained customers, but they are constantly in direct competition. Blue Ocean companies like Uber, Apple Inc. iTunes, Ford Motor Co., Cirque de Soleil and Apple Inc. iTunes have provided a new, innovative experience for customers. These companies opened up a new market, but they were able capture the imagination of customers.

Last word:

Companies must decide the strategy they will use to run their business from the beginning. The Red Ocean Strategy may be able to acquire customers but there will always be competition. Blue ocean companies have an edge over the rest. Visit the Angel One website to learn more about Red Ocean Strategy and Blue Ocean Strategy.

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