Wednesday, April 13, 2011

Cirque du Soleil: Blue Ocean Strategy?

This article cites Cirque du Soleil as a prime example of a company that created a new market space for itself by redefining an existing market for circuses. It describes strategic decisions the company made, such as creating an elevated, high-priced, theatrical experience for the circus instead of the county fair-like atmosphere of traditional circuses like the Barnum Brothers. However, when reading this example, I wondered what truly defines a blue ocean strategy and whether or not Cirque du Soleil successfully employed this strategy. Some, like Jim Ninivaggi (http://www.vsente.com/comblu03.html), have argued that Cirque du Soleil does not in fact use blue ocean strategy because it did not create a new market space for itself. By creating a theatrical experience with a circus theme, Cirque du Soleil did not enter into an uncontested market space of “cultured theater,” but dove into the red ocean of theater and cultural events. He argues that Cirque du Soleil became a successful not by creating a new market demand, but by offering a novel experience to meet an existing market demand. He emphasizes that Cirque du Soleil does not provide an alternative to patrons of traditional circuses, but rather fulfills demand of sophisticated adults who attend theater, cabaret, and similar kinds of shows.

The authors define blue ocean strategy as a way to “invent and capture new demand” in an uncontested market place. In light of the argument above and the fact that market space is defined by the company or individual assessing the market (and thus does not have a stable definition), it appears that blue ocean strategy may be more mutable and difficult to define and develop than initially represented by Kim and Mauborgne.

I also found myself wondering whether or not companies like Cirque du Soleil have enough self-awareness, foresight, and understanding of existing markets to consciously develop their blue market strategy. It seems from the start that they sought to “reinvent the circus,” but I wonder if it was a premeditated strategy or more trial and error, seeing how to best meet audience demands to compete with other stage entertainment.

In contrast, Nintendo explicitly announced its “blue market strategy” before it release of the Wii. It utilized Blue Ocean Strategy practitioner's tool in order to differentiate its product in a number of ways including eliminating movie playing from the system, prioritizing “fun” in the customer experience, and including the Wii handheld remote. Wii created a new market space by targeting a younger audience (ages 7-16) as opposed to the 18-34 year old segment targeted by other products in the traditional gaming market (i.e. X-box). This strategy seems more fitting of “blue market strategy” as it more clearly created a new demand and market space for younger videogame users.

http://www.palermo.edu/economicas/cbrs/pdf/wii.pdf

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