Blue Ocean Strategy
The following image captures all the important components of a Blue Ocean Strategy as mentioned in the article by Kim and Mauborgne.
The pay off for developing your own market is much more rewarding than trying to beat down others to get to the top in established markets.I would like to provide my analysis on how following blue ocean strategy helped some companies gain competitive advantage and become industry leaders.
One of my favorite example of a blue ocean strategy is Apple's IPAD. Apple applied blue-ocean thinking to IPAD- instead of further segmenting the PC industry, they worked on creating a new category that is neither PC nor smartphone. IPAD is a new product that provides breakthroughs in value for PC users. Rather than competing head on with a laptop or tablet pc market leader, the iPad defined a new market showing its applications and usability. Instead of seeking to mitigate its weaknesses , it isn’t afraid to harp on its strengths (design and user satisfaction).
Apple also created the Digital Music blue ocean. In the early 2000s more than billion illegal music files are being downloaded each month. The trend towards digital music was clear. Apple decisively capitalized on this trend with a clear trajectory, by launching the iTunes online music store. Until that point, no one had been able to establish such a user-friendly system for online music content curation and distribution.Apple’s strategy was also unique in that the success of iTunes fed into Apple’s other hot product, the iPod. People would go to iTunes and download music onto their iPods. Apple provided the content, the means of acquisition and distribution, and the device. A great Blue Ocean!
Nintendo looked to the gaming industry´s non customers for insight: older non-gamers, parents who wanted their children to play active games, the elderly, and very young children. Once Nintendo understood why these non customer groups shunned video games, they reconstructed elements across market boundaries to create a console based on simplicity, functionality, and interactivity, with games that dramatically raised utility for these non customers. Wii became a huge success among all the age groups. If Nintendo attempted to compete head-to-head against it is Sony and Microsoft rivals they would be further marginalized in the game console industry
Both these companies have given customers something that felt entirely new, that solved their problems in a way no existing product (IPAD, Itunes, Wii) did. Both these companies are incumbents and they have applied already existing technology platform with a new customer focus.