Red Ocean

 Red oceans are all the industries in existence today – the known market
space.
 Cut-throat competition in existing industries turns the ocean bloody red. Hence the term
'red ocean'.
 Red ocean strategy is all about competition. As the market space gets more crowded,
companies compete fiercely for a greater share of limited demand.
 Competing in red oceans is a zero-sum game. A market-competing strategy divides
existing wealth between rival companies. As competition increases, prospects for profit
and growth decline.
Example:
McDonald’s is a classic example of successful implementation of the red ocean strategy in
the fiercely competitive fast-food industry characterized by aggressive discounts, new
product variations and high-profile commercials. All McDonald’s did was
offer superior-quality burgers with fresh ingredients in a traditionally styled
restaurant and maintain a low profile.

Blue Ocean
 Blue oceans are all the industries not in existence today – the unknown
market space.
 Unexplored and untainted by competition, 'blue oceans' are vast, deep, and powerful in
terms of opportunity and growth.
 Blue ocean strategy creates new demand. Companies develop uncontested market space
rather than fight over a shrinking profit pool.
 Competing in red oceans is a zero-sum game. A market-competing strategy divides
existing wealth between rival companies. As competition increases, prospects for profit
and growth decline.
 Creating blue oceans is non-zero-sum. There is ample opportunity for growth that is both
profitable and rapid.
Example
When Apple invented the iPod in 2001, they didn’t just create a successful product, they
created a new category of product. They came out with a new kind of digital music player
that, in Steve Jobs’ words, “Lets you put your entire music collection in your pocket and
listen to it wherever you go.” This made the competition irrelevant.

Difference
 Existing Market Vs. New Market Creation
 Beat Competition Vs. Make Competition Irrelevant
 Capture Existing Demand Vs. Create New Demand