For knowing blue ocean we first need to understand the difference between red and blue ocean.

Red Ocean: Define boundaries of businesses. Companies outperform rivals to grab the bigger share.
Cut throat competition turns the water bloody. The more competition shrink profit.
Blue ocean: uncontested market space where competition is irrelevant. Businesses capture new
demand and leap in value and decrease cost which results in profit, growth and brand equity.

Understanding logic behind blue ocean strategy

It is not about technical innovations
No need to venture into distant water to create blue ocean

Blue ocean strategic moves

Never use competition as a benchmark
Reduce cost while offering customer value

Blue ocean
 Demand is created by two ways rather than flight over.
 Develop a new business like eBay introduced the online auction.
 Or the other way is to create blue ocean from red ocean.
 In most cases it is built from red ocean.
 Blue ocean remains the engine for the growth of business.
 Red ocean strategy is mostly diminishing from the business world.
 With advancement in technology the productivity is improving and products are available
world wide.
 Due to which niche and monopoly is continuously decreasing.
 People now purchase on price base and doesn’t stick to a brand for long.
Paradox of strategy
 Most companies have no problem working In red ocean.
 A study of 108 new launches was conducted according to which 86% were line extension of
red ocean and 14% new businesses in red ocean.
 Blue ocean overall generates more profit.
 While top management still prefers red ocean as the best strategy to adopt.
 In blue ocean there is no competitor. Business enjoys profit for 10-15 years.
 While businesses only focuses on completion there are two major things left out;
To find or Develop market with little or no competition
To exploit and protect blue ocean
Toward blue ocean strategy
 Over the three industries (automobile, Personal computer and theatre)
 The 4 identifications in these were,
Blue ocean isn’t about technical innovations.
Dominants create blue ocean from within the business.
Creating blue ocean build brands
Company and industry are wrong unit of analysis
The defining characteristic
 Creators of blue ocean never use completion as Benchmarks.
 Trade off exists between value and cost. But is rejected by blue ocean.
 Companies can either produce or offer great value or high cost.
For example
 In circus industry every individual used to benchmark each other for more share and profit
which was continuously decreasing.
 They were all doing the traditional things that raises the cost and lowers the revenue.
  In these situations cirque du soleil did not benchmark and adopted new strategies. They re
evaluate the traditional elements.
 Like including jokers and acrobats that were only cost consuming.
 They found out that ,any things included were not needed and was only consuming cost.
 They adopted blue ocean by adding new things that weren’t existing like elements of theatre
and new themes and story line.
 Offered the best of both, circus and theatres.
 These new elements attracted the adult crowd and not only children.
 Introduced new furnish glamoured tents and set up, made them Catchy enough to attract
more crowd.
 This increased the overall revenue by eliminating expensive elements, reduce cost structure
and achieved both differentiation and low cost.
Barriers to imitation:
 Companies like CNN, Du soliel, Fed EX, southwest enjoyed profit by blue ocean for long time.
 It also creates barrier to imitations.
 It attracts new customers immediately. Also creates economies of scale like Walmart.
 It mad business models that become tough for others to imitate because imitating will
require changing whole business model.
 For example while adopting blue ocean Southwest Airlines changed training, routing,
marketing, pricing and culture.
 But as result It gives success that becomes hard for dominant to imitate.
 Also leap of value earns the brand huge buzz and loyalty.
Example, body shop promotes youth while Esteé Lauder and Loréal doesn’t so they can’t imitate
body shop.

Consistent pattern:
 Blue ocean always existed while being aware of it or not.
Example
 In 19th century automobile industry was very unpopular and expensive.
 It was used and bought by only rich people and was said to be as “ picture of arrogance of
wealth”
 So Ford came up with model T in this situation.
 At those times carriages were used to travel because car was expensive.
 Model T made the competition irrelevant.
 Like horse carriage it was also an everyday usage car , easy to learn and fix.
 It dropped prices and converted people to car users.
 Just as Du Soliel converted people from theatre and opera to circus.
 Ford grabbed market share by 61%. As it offered value with low cost.