Profit Model of Blue Ocean Strategy The profit model of blue ocean strategy shows how value innovation typically maximizes profit by using the three levers of strategic price, target cost, and pricing innovation. The Strategic Price The Target Profit The Target Cost Streamlining and Cost Innovations Partnering Pricing Innovation 29.
Full Answer
What is blue ocean strategy model?
BLUE OCEAN STRATEGY is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.
Is blue ocean strategy a business model?
Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption. This allows them to build a viable business model and ensure that a company profits from the blue ocean it is creating.
What is blue ocean strategy simple explanation?
Definition: 'Blue Ocean Strategy is referred to a market for a product where there is no competition or very less competition. This strategy revolves around searching for a business in which very few firms operate and where there is no pricing pressure.
What is the main goal of the blue ocean strategy?
The goal of a Blue Ocean Strategy is for organizations to find and develop “blue oceans” (uncontested, growing markets) and avoid “red oceans” (overdeveloped, saturated markets). A company will have more success, fewer risks, and increased profits in a blue ocean market.
Is Amazon a blue ocean strategy?
Amazon. Amazon is another good example of a blue ocean strategy. Its founder, Jeff Bezos, set out to create the world's largest online bookstore — and succeeded. Part of the success was the convenient and well thought-out online customer experience.
Which companies use blue ocean strategy?
Blue Ocean Strategy ExamplesBlue Ocean Strategy Examples:iTunes. With the launch of iTunes, Apple unlocked a blue ocean of new market space in digital music that it has now dominated for more than a decade. ... Bloomberg. ... Canon. ... The Ford Model T. ... Philips. ... Quicken. ... Ralph Lauren.More items...•
What is an example of a blue ocean company?
Examples of Blue Ocean Companies Ford and Apple are two examples of leading companies that created their blue oceans by pursuing high product differentiation at a relatively low cost, which also raised the barriers for competition.
What are the elements of blue ocean strategy?
To build humanness into the blue ocean shift process and help people develop the confidence to act, Chan Kim and Renée Mauborgne have identified three elements that address different aspects of our humanness: atomization, first-hand discovery, and the exercise of fair process.
Which are the advantages of using blue ocean?
Benefits of incorporating the Blue Ocean StrategyThe strategy helps companies find uncontested markets while avoiding matured, saturated markets.It helps companies overcome the impediment of constant competition and break free from traditional business models to expand their demand and profitability.More items...
What are the four guiding principles for a successful blue ocean formulation?
The Four Principles To Of Blue Ocean Strategy Formulation It suggests using the eliminate, reduce, raise, create framework outlined below to develop a strategy that will create uncontested market space.
Is Netflix a blue ocean strategy?
Netflix is a fantastic example of Blue Ocean Strategy. It created a new market space for on-demand streaming of films and TV series and successfully transformed the way that we consume media.
What is the goal of a blue ocean strategy quizlet?
What is the goal of a blue-ocean strategy? By focusing on the needs of small- and medium-sized businesses, often overlooked by larger players, ByGeorge Marketing & PR has achieved a small, but highly profitable market share in its region.
Is Netflix a blue ocean strategy?
Netflix is a fantastic example of Blue Ocean Strategy. It created a new market space for on-demand streaming of films and TV series and successfully transformed the way that we consume media.
What is blue ocean strategy in entrepreneurship?
What is Blue Ocean Strategy. Definition: 'Blue Ocean Strategy is referred to a market for a product where there is no competition or very less competition. This strategy revolves around searching for a business in which very few firms operate and where there is no pricing pressure.
Is Uber a blue ocean strategy?
2:023:58How Uber dominated the Car rental industry || Blue-Ocean StrategyYouTubeStart of suggested clipEnd of suggested clipNow we will analyze the four action blue ocean strategy framework of uber.MoreNow we will analyze the four action blue ocean strategy framework of uber.
Is Apple a blue ocean strategy?
Apple use blue ocean strategy to remove competition and create a new market for new products. Blue ocean strategy helps to the Apple company to develop their own market rather than trying to beat competitors to reach top in the market. Apple iTunes is a good example of Apple blue ocean strategy.
What is the goal of a blue ocean strategy?
The goal of a Blue Ocean Strategy is for organizations to find and develop “blue oceans” (uncontested, growing markets) and avoid “red oceans” (overdeveloped, saturated markets). A company will have more success, fewer risks, and increased profits in a blue ocean market.
What is the Blue Ocean approach?
The competition is irrelevant. Taking a Blue Ocean approach means your goal isn’t to outperform the competition or be the best in the industry. Instead, your aim is to redraw industry boundaries and operate within that new space, making the competition immaterial.
What is the Blue Ocean Idea Index?
You have a framework to test ideas. The Blue Ocean Idea Index is part of the overarching strategy and lets companies test the commercial viability of ideas. This process helps refine ideas and identify opportunities with the most potential, minimizing risk.
Can differentiation and low cost coexist?
Differentiation and low cost can coexist. The Blue Ocean Strategy argues that consumers don’t have to choose between value and affordability. If a company can identify what consumers currently value and then rethink how to provide that value, differentiation and low cost can both be achieved. This is termed “value innovation.”
Is the Blue Ocean Strategy a pacifist?
Of the many strategic planning models that exist, the Blue Ocean Strategy could be considered the pacifist of the group.
What is the Blue Ocean strategy?
Blue Ocean Strategy states that most businesses survive in a limited space, basically in a competitive war among its peers. In this environment, their typical behavior is to search for products, customer segments or sector in/of which they may capture bigger market shares.
What is the Blue Ocean?
First of all, according to the theory, there is a blue ocean because there is also its antagonist, the red ocean. And both of them will be used to explain the marketing universe:
What is the opposite of the red ocean?
Blue Ocean: it’s the opposite of the red ocean. In this ocean, the market in unknown. There is no competition, there is no war. Because the companies don’t exist in this environment yet. The demand will be created by the new business, with no competitors, in an abundant space, plenty of growth and profit.
Why is changing the company's mindset important?
Changing the company’s mindset is the only way to broaden mental horizons, in order to put down the imaginary market borders and maximize possible opportunities. This is also imperative, when you realize that the Blue Ocean Strategy is not temporary.
Creating a new market
Most of the organizational management believes and works on two basic assumptions: Number one, they have to work according to the given market boundaries and industry conditions without changing them. They should create a business strategy based on these. The second one is the belief of the value-cost trade-off strategy.
What is the blue ocean strategy
Blue ocean strategy is a novel business plan which believes that optimum growth happens when the organizations reject the idea of competition. It is about challenging the existing rules and taking the untraveled path for a greater outcome. To put it simply, the Blue Ocean strategy divided the market into two oceans- red and blue.
Three key components of a successful blue ocean shift
1. Adopt Blue Ocean perspective- Adopting the blue ocean perspective is not as easy as it seems. You will have to study the existing market and its trends thoroughly. Then, you should make a flawless strategy to address the issues which the old system failed to address.
Why blue ocean shift is necessary
Most of the new industries need a shift. As the market keeps on changing and new companies sprout up, you should create your own space to thrive. It is required to flourish in a market where everyone competes with each other. A new strategy can help if your organization faces a decline in the sale.
Blue Ocean Strategy Definition
A Blue Ocean Strategy is used to describe a market with no competition or merely little competition. This approach entails looking for a business with only a few competitors and no price pressure. In blue oceans, demand is generated rather than fought over.
What Does the Blue Ocean Strategy Mean in Marketing?
A blue ocean strategy is a market-creating business approach that seeks to create and capture blue oceans – untapped emerging markets ripe for growth. The term was coined by W Chan Kim & Renée Mauborgne in their groundbreaking book Blue Ocean Strategy.
Blue Ocean Strategy Five Steps
Blue Ocean Strategy identifies five steps for companies to follow when creating blue oceans:
Who is Blue Ocean Strategy for?
BlueOceanStrategy.com was created to help entrepreneurs, intrapreneurs, and innovators around the world learn more about blue ocean strategy – who it’s for, where you can find blue oceans in your industry and how do they work.
Examples of Blue Ocean Companies
Nike, Apple, and IKEA redefined their industries by creating blue oceans of new demand. Let’s look at each one to see how they did it.
Conclusion
What is the Blue Ocean Strategy? In essence, it’s a way of rethinking the conventional marketing approach. It offers an alternative to the traditional “Red Ocean” strategy, which sees competitive companies vying for the same customers in a given industry space.
What is blue ocean strategy?
Definition and examples. Blue Ocean Strategy is a marketing theory in which a business enters a market that has little or no competition. The strategy focuses on moving away from an existing market and seaching for new markets.
Who introduced the Blue Ocean strategy?
Professors W. Chan Kim and Renee Mauborgne introduced the strategy in their book ‘Blue Ocean Strategy: How to Create Uncontested Market Space and the Make Competition Irrelevant.”
How long does a blue ocean strategy last?
A Blue Ocean Strategy, if you carry it out successfully, can create brand equity that lasts for decades.
How many ways can we create a blue ocean strategy?
There are two ways we can create a Blue Ocean Strategy.
What is the second way to expand an industry?
The second way is for a company to transition or try to expand out of an existing industry. In other words, it tries to expand from a red ocean to a blue one.
What is competitive advantage?
When a company has a ‘ competitive advantage ,’ it has an edge over its rivals. It has something that consumers like, but its rivals do not have.
Is the red ocean the blue ocean?
A ‘red ocean,’ therefore, is the opposite of a ‘blue ocean.’. A read ocean has reached saturation point, i.e., there are too many competitors fighting for market share. A blue ocean, on the other hand, is ‘virgin territory.’.
How to describe Blue Ocean strategy?
When asked, people describe blue ocean strategy as: 1. How companies reconstruct market boundaries and offer a leap in value to buyers 2. Unlocking business model innovation through strategic pricing, target costing, and the like so a company can seize new customers profitably 3. Releasing the creativity, knowledge sharing, and voluntary cooperation of people through the proper approach to employees and partners. While these are correct, they are only partial answers...
What are the three propositions of a strategy?
At the highest level, there are three propositions essential to the success of a strategy: 1. The Value Proposition 2. The Profit Proposition 3. The People Proposition They must develop an offering that attracts buyers ❏ Create a business model that allows them to make money out of its offering ❏ Motivate the people working for or with the company to execute the strategy
What is the people proposition of comic relief?
Comic Relief’s people proposition focuses on inspiring volunteer fundraisers, corporate sponsors and celebrities who buy-in to make the value and profit proposition sustainable 1. Creates a legitimate platform - Red Nose Day 2. Makes participating easy - offer fun examples to get involved, get respect from friends/family/colleagues, feel a sense of pride being a part of a larger cause 3. Conserves time - participating does not take as much time as other charitable obligations (one day every two years) Creates a compelling, low-cost people proposition that inspires people compared with traditional charities that may feel like a drag. Even corporations and celebrities want to participate for the free publicity that Comic Relief triggers.