Blue Ocean Strategy
Paul C. Godfrey
Mark H. Hansen
Brigham Young University
What is a Blue Ocean?
Red Ocean Strategy
• Compete in existing
markets
Blue Ocean Strategy
• Create uncontested
market space
• Beat the competition
• Competition irrelevant
• Exploit existing demand
• Create new demand
• Live the Value-Cost
tradeoff
• Deny the Value-Cost
tradeoff
• Align around
differentiation or low cost
• Align around differentiation
and low cost
How do you get there?
Reconstruct market space
• Traditional airlines are true
substitutes
• Fractional jet ownership an
alternative industry
• Reduces executive costs of
travel
– Hotels
– Dead time
• 70% market share in new
industry, 2010*
• 8% growth in 2010, 2% decline
in 2009 for commercial carriers
* http://www.netjets.com/Learn_More/Press_Releases/2010/pr2010_08_16.asp
• What do women want?
– Gyms vs. Home Exercise?
• The two M’s they don’t want:
– Men
– Mirrors
• Circular arrangement
facilitates socialization
• Low membership fees
• Low capital investment
– $25,000 vs. $500,000
• Crossed strategic groups to
create customer value
• NN changed the buyer group
for diabetes
– Doctors and pure product
– Patients and easy administration
• NovoPen—a pen with
measured doses of insulin
• Innovo—using technology to
better manage delivery times
• From insulin provider to
diabetes care company
• Busses typically sell on low
cost of vehicle
• NABI created lifetime low
cost product
• Fiberglass busses
–
–
–
–
–
Cut preventative maintenance
Body repairs cheaper, faster
Light weight cuts fuel consumption
Environmentally friendly
Lower powered engines and axles
• Blue oceans come through
rescoping products/markets
• Took a product known for its
emotional appeal and made it
purely functional, no-nonsense
• Took a product known for its
functionality and added
emotional appeal
Blue ocean strategies rethink the relationship between the company and customer
• The trend in music was webbased delivery
– Napster, Kazaa, Limewire as
pirates
• Apple teams with Sony,
Universal, MBG, EMI, and
Warner Brothers
– Legal downloads- $0.99
– Better sound quality
– Ease of browsing, downloading
• Blue Ocean means spotting a
trend and getting there first