Blue Ocean Strategy

Examples That Left the

Competition Behind
These business strategy examples will inspire you to rethink
your business

Written by The Blue Ocean Team

The Blue Ocean Team shares case studies, stories and practical insights related
to the blue ocean tools and principles developed by Chan Kim and Renée
Mauborgne.
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Why are some companies able to create ‘blue oceans’ of uncontested market
space while others struggle in ‘red oceans’ of intense competition?
To answer this question, we need to look at some examples from a range of
industries and identify the specific strategic actions blue ocean companies took
to achieve profitable growth.
We’ll examine blue ocean strategy examples from the tech, healthcare, fintech,
and retail industries and a classic blue ocean example from the entertainment
industry.
We’ll also take an in-depth look at how one company made the spectacular
transformation from the red ocean to the blue ocean.
History reveals that there are no perpetually excellent companies. The same
company can be brilliant at one moment and wrongheaded at another. It would
appear, therefore, that the company per se is not the appropriate unit of analysis
when exploring the roots of high performance.
In their bestselling book, Blue Ocean Strategy, Professors Chan Kim and Renée
Mauborgne write:
The strategic move, and not the company or the industry, is the right unit of
analysis for explaining the creation of blue oceans and sustained high
performance.
A strategic move is the set of managerial actions and decisions involved in
making a major market-creating business offering.
The following blue ocean strategy examples all highlight strategic moves that
delivered products and services in a way that opened and captured new market
space, with a significant leap in demand.
1. Marvel – a super-powerful blue ocean strategy example

Marvel – a super-powerful example of

moving from a red ocean to the blue
ocean
Unless you’ve been living under a rock for the last 50 years, you have certainly
heard of Marvel, or at least, you’ll be familiar with Marvel characters such as
Spiderman, The Hulk, and many others. What you may not know is that Marvel is
an example of one of the great red ocean to blue ocean transformations in
modern business history.
Consider the big movies of the last decade. Year after year, Marvel movies have
smashed their way to the top of the earnings charts. The Avengers, Age of Ultron,
Infinity War, Endgame, and Black Panther are the five highest-grossing superhero
films of all time, accounting for half of the lifetime top-ten grossing films of any
genre. In fact, Endgame is the highest-grossing movie ever. All were produced by
Marvel.
Things were not always so bright for Marvel, however. Just over two decades ago,
the firm emerged from bankruptcy saddled with USD $250 million of high-
interest debt, a decimated sales channel, disgruntled customers, and a skeleton
staff of employees. Cash flow was so tight they struggled to make payroll.

The early years of Marvel

Founded in 1939 as a comic book company, Marvel plodded along in its first few
years at a time when superheroes had fallen out of fashion. Their only well-
known character was Captain America, invented specifically to encourage
Americans to support WWII. By the 1960s, Marvel’s unoriginal, ‘me-too’ comic
book division was almost closed down. It was at this point that three middle-aged
men – Stan Lee, Jack Kirby, and Steve Ditko – decided to build a new type of
superhero, one that was human first and superhero second.
Rather than aim for the existing comic buyers, who were children, Marvel created
new, more complex characters that appealed to college students
– noncustomers of the comic book industry up to this point. From 1960 to 1964,
the company introduced Spider-Man, Iron Man, The Hulk, The X-Men, and many
other characters – about 8,000 in all. Marvel saw its comics business thrive.
All this was to change in the 1980s when Marvel’s new owners took a red ocean
approach that sucked all the value out of the brand. During this time,
management pocketed hundreds of millions of dollars while decimating Marvel’s
staff and retail channels, leaving customers alienated and confused. Eventually,
the business went bankrupt.
 Marvel took a blue ocean turn by focusing on noncustomer college students.
Marvel invented characters that were people first and superheroes second:
Spider-Man, The Hulk, Iron Man, the X-Men.

Marvel’s blue ocean strategic move

In 1999, Peter Cuneo, a world-renowned turnaround expert, was appointed CEO
of Marvel. He is credited with taking Marvel from bankruptcy to being acquired
by Disney for over $4 billion in just over a decade.
Cuneo and Marvel’s most vital blue ocean strategic move was entering the
motion picture industry, a blue ocean strategic pivot that saw the company roar
back to success in the 21st century in the form of Marvel Studios.
Not only that but Marvel and Cuneo transformed the whole movie production
model; that is, it fundamentally changed how a movie is made. Marvel’s strategic
move saw it not only enter a new field but reconstruct that field to open a blue
ocean.

How Marvel broke the value-cost trade-off

Many in the business world hold to the conventional belief that companies can
either create greater value to customers at a higher cost or create reasonable
value at a lower cost. Viewed this way, strategy is seen as making a choice
between differentiation and low cost, a value-cost trade-off. It’s the mindset of a
red ocean strategist.
Marvel, on the other hand, took a blue ocean approach, pursuing differentiation
and low cost simultaneously. To get a better understanding of how this works,
let’s review Chan Kim and Renee Mauborgne’s Four Actions Framework.
To break the trade-off between differentiation and low cost, the framework
poses four key questions to challenge an industry’s strategic logic:
 Which factors that the industry takes for granted should be eliminated?

 Which factors should be reduced well below the industry’s standard?

 Which factors should be raised well above the industry’s standard?

 Which factors that the industry has never offered should be created?

Marvel’s ERRC Grid

The Eliminate-Reduce-Raise-Create (ERRC) Grid above shows how Marvel was
able to break the value-cost trade-off, i.e., strategic actions that created
unprecedented value at low cost.
The Marvel blue ocean example illustrates how a company used differentiation
and low cost to restore its blue ocean business. By entering the motion picture
industry and value innovating the motion picture production model, Marvel
restored its blue ocean to become the most profitable movie franchise in history.
To learn more about how Marvel created a blue ocean, check out The Marvel
Way: Restoring a Blue Ocean, a case that has won the 2020 Case Centre Award
for Strategy and General Management.

Q.1 Why Blue Ocean strategy is also called as innovative strategy can you justify from the
example of Marvel.
Q.2.As per Red Ocean strategy what was the impact on the Marvel
Q.3.How they Overcome Issues and bankruptcy through Blue ocean strategy.