Red Ocean

&
Blue Ocean
Red Ocean / Blue Ocean
 Red Ocean Strategy
• Why Red Ocean…?
– A large number of Competitors in the Market are like Sharks in the Ocean. What
will happen if all these sharks fight with each other. The ocean (Market) gets
bloody due to the fierce fight (Stiff Competition) of Sharks (Competitors).
• Characteristics
– Multiple players from existing market compete to achieve competitive
advantages.
– Product Cost and Differentiation both important to beat other companies.
– Must provide better service to buyers to sustain.
– Highly competitive and therefore riskier for a new company especially a start-up. 
– Focus on current customers instead of looking for new clients.
• Examples
– Different automobile companies. All the various companies are competing with
each other to solve the same problem or the demand faced by the consumers.
– Low-cost Airlines Indigo and SpiceJet which have acquired customers but are
always in direct competition with one another.
 Red Ocean Strategy
• Entry into Red Ocean Market
– Must create a disturbance in the market in order to derive benefits through
specific demand for product by creating a new, innovative product or service.
– This disturbance in the market, results in gathering customer’s attention. 
– Consider the case of Jio, which created disturbance by providing free services
that disrupted the whole telecom industry.
– Its important to win over in such a market by providing great value for your
consumers and capture a large share of the market consumer base.
• Advantages of Red Ocean Strategy
– Existent Markets, no need to create a new marketplace.
– Fairly stable, strong demand by the customers. Many customers want the
products; so, the new companies can utilize the existing consumers.
– Availability of skilled employees with deep experience in the sector.
– New companies derive ideas to improve the business from their competitors.
• Disadvantages of Red Ocean Strategy
– Experienced Competitors in this market hence difficult to beat them.
– Need to focus on cost and differentiation, which is difficult for a new business.
 Blue Ocean Strategy
• Why Blue Ocean…?
– It is like one shark in a separate pond. There is no other shark that can fight, so
the water is blue and fresh. Thus blue ocean strategy is where only one company
controls the marketplace. Blue ocean strategy refers to the uncontested
marketing policy that focuses more on the innovation to reinvent the business
than the head-to-head competition.  
• Examples
– iTunes solved the piracy problem of recording industries. Before iTunes,
consumers downloaded a song illegally from the internet platform. ITunes’s blue
ocean strategy created a new way of selling music legally, where consumers and
artists became mutually benefited. They managed to make a new category of
music selling through digital music platforms for listeners. It dominated the
marketplace of music platforms for years.
– Netflix is another most appropriate example of the Blue Ocean strategy. Netflix
changed its business model to create an uncontested new market. It is one of the
most successful companies that accept the blue ocean strategy to achieve
competitive advantages.
 Red Ocean vs Blue Ocean
Red Ocean Strategy
Contest in the same market.
Multiple competitors in existing market.
Beats competitors.
Must pursue both cost & differentiation.
Make the value-cost trade-off.
Capture new demand.
Focus on rivals within its industry.
Must provide better service to buyers.
Focus on current customers.
Market already established.
Spicejet and Indigo Airlines.
Blue Ocean Strategy
Create an uncontested new market.
One Company dominates the new Market.
Competitors are irrelevant.
May choose between cost & differentiation.
Break the value-cost trade-off.
Exploit existing demand.
Focus across the alternative industry.
Redefine the buyer group.
Focus on new customers.
Need to make the new market.
Netflix, Uber, iTunes.