Chan Kim and Renée Mauborgne introduced the notion of Red and Blue Oceans in their book in 2005. Since then, the debate on the blue ocean strategy vs. red ocean strategy has become extremely popular. Entering a new fresh market instead of fighting in existing ones became an alluring dream of many businesses.
Arounda, being a full-cycle product design agency, builds and transforms digital products that use various strategies. We aid startups, technology SMEs, and Fortune 500 companies. This article will provide examples of blue and red ocean strategy to differentiate these approaches.
Table of Contents
Blue Ocean vs Red Ocean: Main Differences
We gathered the fundamental features in the blue and red ocean strategy examples for you to answer the most crucial question: “What is difference between blue ocean and red ocean strategy?”
This “Blue ocean strategy vs. red ocean strategy with organizational examples”-table proves both approaches have their pros and cons. To see more examples of successful blue ocean strategy implementation, read our article on the top 10 blue ocean strategy examples.
What Is a Blue Ocean Strategy?
The blue ocean strategy is a transition of business goals into differentiation and low cost while generating new values and demand. The final goal is establishing a new market space and eliminating competition.
The Benefits and Drawbacks of a Blue Ocean Strategy
The advantages of implementing the blue ocean strategy include the following:
It enables businesses to transit to untapped markets.
It assists businesses in overcoming the challenge of ongoing competition and eschewing conventional business models to increase demand and profitability.
It aids businesses in developing their growth potential by adding value, innovations, and new values for customers.
It may seem that a blue ocean strategy is universal and winning. However, like any other business strategy analysis, blue ocean vs red ocean strategy comparison shows that each one has some drawbacks and restrictions:
Efforts taken might not lead to a blue ocean. Though, the resources and talent influence how well this strategy works.
Cost reduction and customer value, two strategic imperatives, are challenging for organizations to balance.
Organizational challenges like a lack of strategic alignment can affect the blue ocean strategy results.
Businesses must draw enough customers quickly to boost long-term revenue growth.
As competition emerges, any blue ocean market will eventually turn red.
A blue ocean emerges when there is the potential for higher profits. Since a blue ocean strategy is not a cure-all, let's consider the cases when a red ocean strategy might be a better option.
What Is a Red Ocean Strategy?
Companies that use the red ocean strategy attempt to outperform their rivals by capturing a larger market portion. The more crowded market, the more complicated growth. The products turn into commodities; the winner is the company that manages to give sufficient value cost-efficiently.
However, there are cases when a red ocean strategy wins more.
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When You Should Opt for the Red Ocean Strategy
The blue and red ocean strategy examples show no perfect strategy. There are excellent choices and timing. Opt for a red ocean strategy if:
A business has skills, knowledge, or experience to apply to the existing market.
A company possesses scarce resources. It can't afford to invest a sizable sum in the transition to a blue ocean.
An organization is either in a stabilizing phase or has a low-risk tolerance.
A business is well-positioned and profitable in its current market.
The examples of the blue ocean vs red ocean strategy show that if a company has stable growth and a significant market share, there is no need to look into blue oceans—at least, not yet.
Otherwise, a blue ocean strategy is preferable.
Which Ocean To Navigate?
No matter which side of the blue ocean vs red ocean strategy dispute you choose, create value for the customer and continuously improve your offering.
Market turbulence can occur at any time. For instance, a protracted price war with an unexpected new competitor may force you to switch from the red ocean to the blue ocean.
However, blue oceans are not ideal. Finding and informing customers of the product's benefits may take time and effort. Even if you successfully created a blue ocean once, competition will soon emerge. Eventually, your blue ocean will turn into a red one.
Both blue ocean and red ocean strategies can be successfullyused for different products within the same organization. Many companies, like Apple, McDonald's, Amazon, and so on, successfully implement the red ocean strategy.
Book a session with our product strategists if you seek a new strategy for your business or doubt which one is better for you. Arounda will take your business to a new level.
FAQs
Red Ocean Strategies and Examples
The fast-food market is highly competitive, with high-profile ads, aggressive pricing, and new product varieties. McDonald's is a prime example of a company that has successfully used the red ocean approach.
What is an example of a blue ocean strategy? ›
Arguably most well-known example of blue ocean strategy is Cirque du Soleil, a Canadian entertainment company that created uncontested market space and made the competition irrelevant.
What is the difference between blue ocean strategy and red ocean strategy? ›
Blue ocean is a business strategy focusing on creating new market spaces rather than competing in existing ones. A red ocean is an existing market with many competitors, while a blue ocean is a market yet to be discovered with no competitors.
Is Netflix a blue or red ocean strategy? ›
By using the Blue Ocean Strategy, Netflix has been able to constantly move to new, uncontested spaces to capture demand.
Is Starbucks a red ocean or blue ocean strategy? ›
Starbuck did what other companies did not and it was to introduce a blue ocean curve strategy that made them one of the most successful companies in the world. Think outside the box- Think of new ways you can improve your business. The best strategy for this is the Blue Ocean Strategy.
Is Uber a red ocean strategy? ›
Lyft and Uber correctly saw the nascent ridesharing market as a red ocean. Despite dreams of a future where spend would shift from personal car purchases to ridesharing, they could not afford to wait for demand to arrive. In the near-term, supply would outpace demand, making the market much more competitive.
Is Tesla an example of Blue Ocean Strategy? ›
Tesla can definitely be considered a significant Blue Ocean Strategy in today's world due to certain unparalleled factors. The passion for technology and engineering aligned with the abundance of money possessed by Elon Musk permitted him to make a vision of a new landscape in the automobile industry.
Is Amazon an example of Blue Ocean Strategy? ›
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.
Is Uber an example of Blue Ocean Strategy? ›
By combining technology, transparency, and a focus on user experience, Uber created a blue ocean in the transportation sector. The company identified and addressed pain points in the existing taxi industry, attracting a large user base and transforming the way people think about and use transportation services.
Which companies use the red ocean strategy? ›
An example of a red ocean strategy would be the fast-food industry, where well-known brands such as McDonald's, Burger King, and KFC compete in a crowded market for the same customers. They all offer similar products such as burgers, fries, and sodas, and the competition is primarily based on price and convenience.
CONCLUSION: A backbone factor which contributes towards the factors of the Blue Ocean Strategy at AirBnB EXCEPTIONAL VARIETY OF SERVICES Based upon the conduced analysis, the Blue Ocean Strategy implemented at AirBnB has aimed to keep out other Hotel providers KEEPING COMPETITION OUT OF THE GAME It is vital AirBnB ...
What is the Peloton Blue Ocean Strategy? ›
The Blue Ocean Strategy is a business framework developed by W. Chan Kim and Renée Mauborgne that focuses on creating new markets or industries with little to no competition. This approach differs from the traditional Red Ocean Strategy, which focuses on competing in existing markets with established players.
What is an example of a red ocean? ›
In a red ocean strategy, competition is typically fierce, and existing businesses compete to succeed in their respective industries. Vehicle firms are an example of a red ocean company. All companies are fighting to solve the same problem or meet the same need as the consumers.
Is Apple a blue ocean strategy? ›
Apple reshaped market boundaries by providing extraordinary breakthroughs in buyer value, something that can be done systematically when applying blue ocean strategy's Six Paths Framework.
What are blue ocean strategy examples? ›
The first example of blue ocean strategy comes from computer games giant, Nintendo, in the form of the Nintendo Wii. The Nintendo Wii launched in 2006 and at its heart is the concept of value innovation. This is a key principle of blue ocean strategy which sees low cost and differentiation being pursued simultaneously.
What companies use the red ocean strategy? ›
Both blue ocean and red ocean strategies can be successfullyused for different products within the same organization. Many companies, like Apple, McDonald's, Amazon, and so on, successfully implement the red ocean strategy.
What is the red ocean strategy McDonald's? ›
McDonald's is a classic example of the successful implementation of the Red Ocean Strategy in the highly competitive fast-food sector, characterized by aggressive discounts, new product variants, and high-profile advertising.
Is Microsoft a red ocean strategy? ›
Microsoft is a red ocean competitor. Apple, on the other hand, pioneers new markets.
Is Amazon a red ocean or 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.
