+1 (888) 880-1898
Return to all articles
Business Discussions | 11 October, 2023

Blue Ocean Vs. Red Ocean Strategy

In the world of business and strategy, two distinct mindsets have emerged that can make or break a company’s success: the Red Ocean Thinker and the Blue Ocean Strategist


These two approaches represent contrasting paradigms when it comes to competition, innovation, and growth. 


In this blog, we will explore the difference between blue ocean and red ocean strategy, their implications for businesses, and how you can shift your thinking from a red ocean mindset to a blue ocean one.


What is Red Ocean Strategy

Imagine a vast ocean teeming with bloodthirsty sharks, all competing for the same prey in a small, confined space. This vivid imagery represents the essence of a red ocean strategy. 


In a red ocean, companies find themselves immersed in overcrowded markets, where they contend for the same customer base and frequently engage in price wars as a means of gaining a competitive edge. A key example of this is entrepreneurs opening restaurants.


This highly competitive landscape is marked by intense rivalry, limited avenues for growth, and the persistent need to outperform rivals.


Examples of red ocean companies that have traditionally adopted a red ocean strategy include telecommunications, airlines, and the conventional cola beverage sector. In these sectors, companies engage in aggressive competition, often vying for market dominance through price wars and incremental product enhancements.


Key Characteristics of a Red Ocean Thinker

  • Competition-Centric: Red ocean thinkers focus primarily on beating their competitors. They tend to benchmark against rivals and are obsessed with gaining market share.


  • Incremental Improvements: Companies following a red ocean strategy prioritize small, gradual enhancements to existing products or services rather than pursuing radical innovations.


  • Price Wars: Price becomes a central battlefield, leading to a downward spiral that can erode profitability for all players involved.


  • Customer Acquisition: Efforts are concentrated on stealing customers from competitors, resulting in high customer churn rates and lower customer loyalty.


  • Short-Term Orientation: The red ocean mindset often leads to a short-term focus, as companies react to immediate competitive pressures rather than thinking about long-term sustainability.


What is Blue Ocean Strategy

In contrast to the competitive, often turbulent “red ocean”, a blue ocean strategy differs from a low-cost strategy. The primary goal of a firm pursuing a blue ocean strategy should be to create a new and revolutionary business model.


Rather than engaging in relentless cost-cutting measures and price wars, as seen in low-cost strategies, a blue ocean business strategy envisions uncharted blue oceans where competition is virtually non-existent. 


What is the Goal of a Blue Ocean Strategy

A blue ocean business strategy ventures into new territories, creating uncontested market spaces and shifting their focus from beating competitors to making the competition entirely irrelevant.


Through the blue ocean strategy principles, your business breaks free from the limitations of red oceans, unlocking new pathways for growth.


Key Characteristics of a Blue Ocean Strategy

  • Value Innovation: A core aspect of the blue ocean strategy is value innovation, emphasizing the creation of unique and innovative products or services that differentiate a company and offer substantial value to both customers and the organization.


  • Market Creation: Instead of engaging in fierce competition within existing markets, a blue ocean strategy concentrates on creating entirely new markets or reshaping existing ones by redefining industry boundaries and introducing disruptive concepts.


  • Customer-Centric: At the heart of a blue ocean business strategy lies a deep commitment to understanding and exceeding customer expectations. Companies adopting this approach prioritize customer needs and preferences in their decision-making processes.


  • Long-Term Vision: By embracing blue ocean ideas in the business strategy, focusing on long-term success rather than quick wins. The approach revolves around creating lasting value and adjusting our strategies to excel in changing markets. Instead of pursuing short-term gains, investing and ensuring innovations keep us unique and generate new growth opportunities as markets evolve.


  • Risk-Taking: A blue ocean strategy framework involves taking calculated risks and challenging conventional industry norms. It acknowledges that innovation often requires stepping outside the comfort zone to achieve breakthrough results.



Shifting from Red to Blue

Blue Ocean vs Red Ocean Strategy is a fundamental concept in business, illustrating the distinction between competitive markets (red ocean) and untapped market spaces (blue ocean). 


Here are some examples of blue ocean strategy to help you make the shift:


Value Innovation: Identify areas where you can break away from industry norms and create value for customers. An excellent example of value innovation is Apple, which revolutionized the smartphone market with the iPhone.

Apple’s iPhone wasn’t just another phone; it was a disruptive product that combined multiple functionalities into one device. By understanding that customers wanted more than just calls and texts, Apple created a new market for smartphones, challenging traditional cell phone manufacturers.


Let's Get Started!


Customer-Centric Approach: Airbnb disrupted the hotel industry by putting the focus on travelers and hosts, creating a new sharing economy market that didn’t exist before.

Airbnb’s platform allowed travelers to find unique and affordable accommodations while hosts could monetize their spare space. This customer-centric approach reshaped the travel industry, offering personalized experiences and a sense of community.


Market Creation: Nintendo’s introduction of the Wii gaming console attracted a new demographic of casual gamers, expanding the gaming market beyond traditional gamers.

Nintendo recognized that there was untapped potential among non-gamers who felt intimidated by complex controllers. The Wii’s motion-sensing technology made gaming accessible to a broader audience, creating a new market and reinvigorating the gaming industry.


Long-Term Vision: Amazon started as an online bookseller but had a long-term vision of becoming the world’s largest online retailer, continually expanding its offerings and services.

Amazon’s founder, Jeff Bezos, understood that e-commerce could extend far beyond books. With a long-term vision focused on customer convenience, selection, and fast delivery, Amazon transformed itself into an e-commerce giant, offering everything from electronics to groceries.


Risk-Taking: Tesla took a massive risk by entering the electric vehicle market when it was still in its infancy, eventually becoming a leader in the industry.

Tesla challenged the status quo of the automotive industry by betting on electric vehicles when many considered them impractical. Their risk-taking approach pushed innovation in the electric vehicle sector, redefining the future of transportation.


Transitioning from a red ocean market to a blue ocean business can be a transformative move. These real-world examples underscore that this shift is not purely theoretical; it can lead to profound business transformation and success. 


Each of these companies challenged industry norms, emphasizing innovation, customer needs, and long-term goals. By adopting similar strategies and thought processes, your business can also explore the blue ocean, where unexplored opportunities abound.



As you reflect on your own business or career, ask yourself: Are you trapped in the red ocean, or are you willing to venture into the blue ocean? 


Shifting your mindset and strategy may be challenging, but the rewards—unprecedented growth and success—are well worth the effort. 


In a world where change is constant, becoming a blue ocean strategist is the key to staying ahead of the curve and making a lasting impact.


Have Questions? Looking To Get Started?