Blue Ocean Strategy

Hop over shark infested waters!

Image courtesy: https://leaderonomics.com/business/blue-red-ocean-relevant

Humans have a compulsive need to attain more; as soon as they get what they set out to achieve, a new desire arises. In a market where the ‘consumer is king’, industrialists strive to meet these demands by investing all the expertise and resources available at their disposal. Agreed that this is the basic economics of development, but what does it mean for someone trying to enter the market?

Competing with Great Whites (who come bearing their teeth of market presence and economies of scale), is enough to scare any Small Fry off. If, despite the peril, an adventurous fish decides to test the waters, it might well find itself in the midst of a bloodbath!

Where, then, should these fish go?

To answer precisely this question, Professors W. Chan Kim and Renee Mauborgne came up with the concept of ‘Blue Ocean Strategy’.

This strategy can be defined in a nutshell as,

“The best way to beat the competition is to make the competition irrelevant.”

Let us now try to understand how to do this.

Imagine that the market universe is comprised of two sorts of oceans: red oceans and blue oceans.

Typically, when businesses are setting corporate strategy, they evaluate their competitors and then do what the competitor is doing- with a few tweaks. They enter crowded, shark-ridden red oceans. Red oceans are characterized by existing market space.

Meanwhile, blue oceans are characterized by untapped market space, demand creation, and the opportunity for highly profitable growth.

Seems simple enough, how is this profitable?

Image courtesy: Blue Ocean Strategy by Renée Mauborgne and W. Chan Kim

The simplicity of this strategy lies in the fact that it has got an innate advantage in the two parameters that govern the success or failure of a product- cost and buyer value. Tapping an untapped market means that the producer does not have to combat with the competition for raw material or labour, thereby giving it a cost advantage. Also, the seller is the first to address the previously unaddressed needs of the buyer, leading the buyers to value the product being offered.

The intersection of these two qualities gives rise to ‘value innovation’, which only increases with the economies of scale.

Well, how do we go about this?

With a change in the market scenario comes a need to adapt.

Sellers entering the Blue Ocean must ask themselves four critical questions:

1. Which factors should be created that the industry has never offered?
2. Which factors should be eliminated that the industry takes for granted?
3. Which factors should be reduced below industry standards?
4. Which factors should be raised above industry standards?

Effectively answering these questions can help companies discover the golden blend of cost reduction and quality improvement.

To understand this better, let us take the example of Atom- a startup that recognized the requirement of applications based on behavioural psychology in the market and capitalized on their dearth.

Try it out here!- Atom

Their objective is to build positive habits through scientifically proven methods that are personalized for every user, giving an efficient and holistically satisfactory experience. They aim to provide a one stop app for building a healthy lifestyle- incorporating meditation, diet control, an exercise regime and much more. Users of this application have access to systematic routines, which are reinforced by unique motivational techniques.

They have answered the aforementioned questions, keeping in mind the requirements of the consumers, to pave a path to market leadership

Buyers’ Utility and Growth- The Path to Market Leadership

The king of the market (the consumer) has his pick of the sharks in the red ocean. Having said that, he might not venture out into the blue ocean if the fish there aren’t enticing. To reel in the consumers, sellers in the blue ocean must make the consumer experience smooth and fruitful. To do this, they must evaluate the ‘6 Stages of the Buyer Experience Cycle’ which dictate the utility derived by them; the stages are,

1. Purchase
2. Delivery
3. Use
4. Supplements
5. Maintenance
6. Disposal

These factors are then linked to the six parameters against which they are measured, and the following analysis is considered:

Courtesy: Blue Ocean Strategy by Renée Mauborgne and W. Chan Kim

Visiting and revisiting the areas with the blocks will help the seller narrow down on the problem and tackle it systematically, enabling him/her to provide a thorough and enriching experience.

Atom has been able to take advantage of this format and pinpoint areas wherein they expect to face the given blocks. This approach will help them reduce risk and minimize futile operations, thereby diminishing the cost and pushing their process forward in a speedy and hassle-free manner.

The End?

This write-up may be ending here, but for budding industrialists awaits an ocean of opportunities. With our rapidly changing lifestyles, accelerated change in terms of product creation is the need of the hour. Focus should be shifted to innovation, rather than cost differentiation; in such a situation, the first few fish to take action will get their fill.

We @Atom think that self-regulation is the biggest problem of our modern times. Technology should support us instead of distracting us away from our true path. At Atom, we are attempting to solve exactly this by using principles of behavior psychology, game design and AI to help people achieve their goals.

It is a popular belief that physical ability is of utmost priority to build a habit. Agreed, its importance cannot be overlooked; however, two more factors go into building these habits efficiently- motivation and trigger. Atom has been able to recognize this concept and implement it to make habit building into a ‘game’, making the process seem much less like work.

Click here to download the Atom app and take a dive in our blue ocean initiative.

Or click here to visit the website to know more about behavioural psychology.