Chan Kim and Renée Mauborgne introduced the notion of Red and Blue Oceans in their book in 2005. Since then, the debate on the blue ocean strategy vs. red ocean strategy has become extremely popular. Entering a new fresh market instead of fighting in existing ones became an alluring dream of many businesses.
Arounda, being a full-cycle product design agency, builds and transforms digital products that use various strategies. We aid startups, technology SMEs, and Fortune 500 companies. This article will provide examples of blue and red ocean strategy to differentiate these approaches.
We gathered the fundamental features in the blue and red ocean strategy examples for you to answer the most crucial question: “What is difference between blue ocean and red ocean strategy?”
This “Blue ocean strategy vs. red ocean strategy with organizational examples”-table proves both approaches have their pros and cons. To see more examples of successful blue ocean strategy implementation, read our article on the top 10 blue ocean strategy examples.
The blue ocean strategy is a transition of business goals into differentiation and low cost while generating new values and demand. The final goal is establishing a new market space and eliminating competition.
The advantages of implementing the blue ocean strategy include the following:
It enables businesses to transit to untapped markets.
It assists businesses in overcoming the challenge of ongoing competition and eschewing conventional business models to increase demand and profitability.
It aids businesses in developing their growth potential by adding value, innovations, and new values for customers.
It may seem that a blue ocean strategy is universal and winning. However, like any other business strategy analysis, blue ocean vs red ocean strategy comparison shows that each one has some drawbacks and restrictions:
Efforts taken might not lead to a blue ocean. Though, the resources and talent influence how well this strategy works.
Cost reduction and customer value, two strategic imperatives, are challenging for organizations to balance.
Organizational challenges like a lack of strategic alignment can affect the blue ocean strategy results.
Businesses must draw enough customers quickly to boost long-term revenue growth.
As competition emerges, any blue ocean market will eventually turn red.
A blue ocean emerges when there is the potential for higher profits. Since a blue ocean strategy is not a cure-all, let's consider the cases when a red ocean strategy might be a better option.
Companies that use the red ocean strategy attempt to outperform their rivals by capturing a larger market portion. The more crowded market, the more complicated growth. The products turn into commodities; the winner is the company that manages to give sufficient value cost-efficiently.
However, there are cases when a red ocean strategy wins more.
The blue and red ocean strategy examples show no perfect strategy. There are excellent choices and timing. Opt for a red ocean strategy if:
A business has skills, knowledge, or experience to apply to the existing market.
A company possesses scarce resources. It can't afford to invest a sizable sum in the transition to a blue ocean.
An organization is either in a stabilizing phase or has a low-risk tolerance.
A business is well-positioned and profitable in its current market.
The examples of the blue ocean vs red ocean strategy show that if a company has stable growth and a significant market share, there is no need to look into blue oceans—at least, not yet.
Otherwise, a blue ocean strategy is preferable.
No matter which side of the blue ocean vs red ocean strategy dispute you choose, create value for the customer and continuously improve your offering.
Market turbulence can occur at any time. For instance, a protracted price war with an unexpected new competitor may force you to switch from the red ocean to the blue ocean.
However, blue oceans are not ideal. Finding and informing customers of the product's benefits may take time and effort. Even if you successfully created a blue ocean once, competition will soon emerge. Eventually, your blue ocean will turn into a red one.
Both blue ocean and red ocean strategies can be successfullyused for different products within the same organization. Many companies, like Apple, McDonald's, Amazon, and so on, successfully implement the red ocean strategy.
Book a session with our product strategists if you seek a new strategy for your business or doubt which one is better for you. Arounda will take your business to a new level.
The blue and red ocean strategy examples diverge most in the target market. Blue oceans imply new markets created by introducing new demand and customer experience. In contrast, the red ocean strategy competes in a market that already exists with its limitations and competitors.
Competition is usually fierce in a red ocean strategy. Established businesses compete to succeed in their respective industries through differentiation. Red ocean companies include, for example, car companies. Every business competes to find a solution to the same issue or provide for the same consumer need.
According to the blue ocean strategy, businesses should focus on untapped new markets rather than fighting for a piece of the fiercely competitive markets. Since there are no set boundaries for the blue ocean market, it is open to new suggestions.Ford and Apple are two blue ocean strategy examples. They both developed their blue oceans by offering highly differentiating products at reasonably low prices. Low pricing additionally increased barriers to entry for rival companies.
Sign up to our newsletter to get weekly updates on the trends, case studies and tools