Blue Ocean vs Red Ocean Strategy

• Business/Product Life-Cycle relates to growth options during exploit and explore phases.
• A graph maps sales and profits over time in relation to product development, introduction, growth, maturity, and decline.

Blue Ocean Strategy

• It is a framework to uncover Exploit Growth options
• Blue ocean transformation is needed to build a sustained competitive advantage.
• Creating uncontested market space is a characteristic
• Allows for unlocking new demand
• Breaks the value-cost trade-off.

Red Ocean Strategy

• Competing in an existing market
• Maximizing existing demand
• Operating within current value cost tradeoffs.

Blue Ocean Creation

• Value innovation involves a significant leap in value to buyers
• Attracts a new customer segment, expanding the pie instead of taking a larger percentage of the existing one
• Solves unmet needs in ways existing solutions cannot
• Changes Market boundaries.

Blue Ocean Uncontestedness

• Makes existing competitors irrelevant because the product/service exists in a distinct value space.
• Breaking the value-cost tradeoff involves higher customer value via differentiation and lower operational cost simultaneously.
• Firm activities must align to achieve innovation.
• In a red ocean, pursuit is either differentiation or low cost.
• In a blue ocean, pursuit combines both differentiation and low cost.

Finding Blue Ocean Opportunities

• The 4 Actions ERRC Framework helps to find blue ocean opportunities within the industry:
  • Identify relevant key trends and apply the ERRC Framework.
  • Eliminate factors the industry has long competed on
  • Reduce factors that should be reduced well below the industry standard
  • Raise factors that should be raised well above the industry standard
  • Create factors that should be created that the industry has never offered
• Industry assumptions that add cost or waste without adding value should be eliminated.
  • Food retailers assuming unsold food must be thrown away is an unnecessary waste.
  • Eliminating the practice of throwing away unsold food should be a focus.
• Factors that can be reduced well below the industry standard to cut cost or simplify the process:
  • Retailers expending a lot of effort and money to deal with unsold inventory
  • Reduce the operational burden of managing surplus food and cost/effort to market surplus food
• Factors that can be raised to provide more value to customers:
  • Customers are increasingly conscious about sustainability and looking for affordable meal options.
  • Raise awareness of food waste and its environmental impact, and the value of offering affordable surplus meals to customers.
• New factors that can be created that the industry has never offered before:
  • No convenient platform connecting businesses with unsold food to customers who would buy it at a discount
  • Create a digital platform that facilitates real-time connections between businesses with surplus food and environmentally conscious customers looking for deals

Researching for Key Trends

• Utilise the 6 Paths Framework to discover new opportunities.
  • Alternative industries serve the same fundamental need but delivers it differently
  • Looking across strategic groups within the industry involves understanding different segments separated by price and quality
  • Each group targets different customers based on what they value most, like affordability or luxury.
  • Consider the chain of buyers: buyer, user, and influencer
• Often, a group may be overlooked/neglected, creating new opportunities if served
  • For example, Novo Nordisk realized that the end user, the diabetic patients, were overlooked
• Look across complementary product & service offerings
• Complementary products or services are things that customers use before, during, or after your offering.
• By addressing pain points in this sequence, you can create added value.
• For example, when people buy cars, they also think about financing, insurance, and maintenance. Solving problems in these areas can enhance the core product.
• Blend solving a practical (functional) problem with creating an emotional experience together to create greater services
• External trends can reshape the industry (eg regulations on environment on cars).
• Keep a look out for external trends AND be ahead of it by aligning strategy with demand for it in the future