How to implement a successful Blue Ocean strategy

The "Blue Ocean" Strategy is the key to the success of many companies. Developed from the business book of the same name, the Blue Ocean has been used by companies around the world to take their businesses to the top. This article provides a comprehensive and detailed guide with commentary from Deep Marketing experts on how to design and implement a successful Blue Ocean Strategy so you can take your company to the next level.

Summary of the article

The blue ocean strategy is a business tool that seeks to create unchallenged market space in which companies can operate without having to compete with other players in their industry or market segment. It is based on discovering opportunities to innovate products or services that are unique and provide value to customers, shifting the focus away from competition and focusing instead on creating new demand within a given market or sector. Developed by W. Chan Kim and Renée Mauborgne, the Blue Ocean Strategy has become an important tool for many companies because it helps them stand out from the competition, be more efficient, and increase their profitability.

The purpose of the Blue Ocean Strategy is to attract new demand, rather than compete in existing markets through differentiation or low-cost supply. It encourages companies to look beyond current competitors and discover entirely new segments, where there are no established boundaries or rules already set by other companies. This opens up opportunities for companies to define their own path and find new sources of value for customers that no one else has thought of yet. By understanding what customers really want and need, companies can develop and execute a strategy that delivers those products and services at an optimized cost structure.

At Deep Marketing we really appreciate Blue Ocean because it is an operational systematization extremely similar to our own approach based on customers' deep needs!

Therefore, to implement a successful Blue Ocean strategy, companies must understand customer needs and identify unmet demands that can, however, be handled with aunique offering. They must also assess the competitive landscape and analyze the strengths and weaknesses of competitors' strategies to understand how to circumvent them. Companies must then use this knowledge to create a differentiated offering that provides a competitive advantage over rivals in terms of cost or quality. The final step is to develop a target market and price point that will allow the company to capitalize on the opportunity.

The market research

Market research is a key step in creating a Blue Ocean strategy. The goal of this process is to obtain information about consumer behavior and trends so that you can better understand your target market and identify latent customer needs and wants. To do this, you need the right data sources and tools to collect data or create surveys. For example, you can use online tools such as Google Analytics to track website engagement metrics, as well as more qualitative methods such as focus groups to learn about customer perceptions and behaviors.

Collecting feedback through surveys or interviews can provide companies with valuable insights into what customers want from their products or services, which can then be used to design an offering that meets their needs more effectively than the competition. In addition, analysis of online customer reviews can provide additional insights into what customers like and dislike about current offerings and how the company could do better to meet their needs.

If you want to learn more about data collection methods, we refer you to our dedicated article:

Analyzing competitors

Understanding the competitive landscape is an essential part of the process. Knowing who your competitors are, how they position themselves in the marketplace and their strategies for reaching customers is critical to creating an effective strategy. It is important to know the strengths, weaknesses, opportunities and threats (SWOT) of your competitors to identify areas where you can differentiate yourself from them. For example, if you know that your competitor is weak in customer service, this could be an opportunity for you to provide superior customer service and differentiate yourself from them.

Also very helpful is the schematic of Porter's 5 forces at work in your market. Again, we refer to our dedicated in-depth study.

An in-depth analysis of competitors' prices will help you position your products or services for maximum success. Using market research data, you can compare your prices with those of your competitors and determine which pricing model would be most attractive to consumers without sacrificing profits. In addition, it can be useful to study how your competitors interact with their customers to get an idea of the techniques they use to build relationships and build loyalty.

Analyzing competitors' marketing strategies can provide insight into what works and what does not work in your particular industry. For example, if one of your competitors takes an aggressive approach to social media advertising, this might be a good indication that this type of approach is successful in your industry. On the other hand, if another competitor has had poor results from a particular type of promotion or campaign, it could be a red flag that this technique would not work for you either. This information can help you identify trends and create promotional campaigns that have a better chance of success than copying existing approaches.

Remember that marketing is based on statistics and probability!

A differentiated offering

Companies must develop a unique offering that is attractive to customers and different from competitors. Creating an offering that attracts target customers and at the same time distinguishes the company from its competitors is essential to designing a quality Blue Ocean strategy. As we have seen, the starting point for being able to build a differentiated offering is to analyze the competition to understand what has already been done in the industry, including the types of products or services offered, pricing models, customer service levels, and unique features. But one cannot stop there.

Creating a comprehensive offering means focusing on tangible and intangible benefits for customers. Tangible benefits are those that can be measured or seen, such as cost savings or increased security, while intangible benefits are more emotional or psychological, such as increased trust or a sense of belonging. Companies should consider all aspects of their product or service and how they might add value in terms of tangible and intangible benefits. A grid should literally be created in which all these benefits are valued and clearly expressed.

Let's look at how well-known companies have created a differentiated offering by working on tangible and intangible benefits:

1. Cirque du Soleil: Cirque du Soleil invented a unique blend of circus and theater, creating a new market and eliminating competition from traditional circuses. By focusing on customer experience rather than merely offering the regular circus acts, it has become one of the world's most successful companies in this segment.
2. Southwest Airlines: Southwest Airlines has created a low-cost model that has enabled it to be highly competitive in the airline industry. The company was able to tap into the untapped market of budget-conscious travelers, enabling it to become the largest domestic airline in the United States. In Europe, Ryanair has followed the same model.
3. Apple Inc: Apple has used its innovative products and design capabilities to create an entirely new product category: the totally touch screen and intuitive smartphone. By offering a superior user experience, Apple was able to dominate the market and capture a huge share of it.

In these examples we see that the "Blue Ocean" offering clearly arose from understanding deep user needs not captured by competitors. And then translating these needs into products with consistent benefits:

• Need to be involved and excited => Offer based on the advantage of firsthand experience in the circus over single show sessions.
• Need to spend less => Offer based on eliminating everything expensive the airlines offered but unrelated to mere flying.
• Need for ease in mobile technology => Offer based on an intuitive device, without keyboard and other trappings.

Develop a market-target and price point

Developing a target market and price point are two important steps in designing and implementing a Blue Ocean strategy.

Players must analyze demographic trends to determine which age group, geographic region, or socioeconomic class to target. Indeed, some markets are immense, and while it is true that a niche strategy is almost always suicidal, not understanding who our preferred stakeholders are gets us nowhere. It certainly does not correlate with a Blue Ocean worthy of the name.

Once the target market has been identified, companies must consider the price point. In deciding this, companies must consider the cost of the product or service relative to its benefits. For while it is particularly agile to identify a price point when we are going to copy our competitors, at the point when a new and differentiated offering must be created, we have no reference points. It is therefore good to have an obsessive and precise view of our potential costs.

Key benefits

As we have seen, the Blue Ocean strategy is a market technique that seeks to create unchallenged market space to maximize profitability and growth potential. It does this through a few axes:

1. Market Research
2. Study of competitors' bid
3. Developing an offering based on customers' latent needs
4. Market-target identification
5. Price-target identification

This approach offers more consistent long-term competitive advantages than traditional approaches such as price wars or marketing campaigns that emphasize trivial product features and benefits. Companies that apply the Blue Ocean strategy have enormous potential to create unprecedented demand for their products or services by tapping into new unchallenged market segments. In this way, they can gain a new customer segment, increase overall market share, and ultimately emerge as a potential industry leader.

They are also able to minimize costs and maximize profit margins by focusing their resources on creating value instead of competing in a saturated market. Instead of wasting valuable capital in price wars with competitors, companies can use the same resources more efficiently to develop unique solutions tailored to customers' needs. In addition, customers benefit from higher quality products and services based on their preferences rather than those of competitors. As a result, customer satisfaction levels tend to increase with a Blue Ocean strategy compared to traditional approaches.

Therefore:

1. Increased efficiency and profitability
2. Entry into new markets with untapped potential
3. Increased market share
4. Better returns on investment
5. Higher Client Satisfaction

However, these strategies requirecareful planning and research to be implemented effectively and produce tangible results, otherwise they risk collapsing on the excessive costs generally associated with differentiation.

Blue Ocean's difficulties

Of course, not all that glitters is gold, and there are no free lunches. The Blue Ocean strategy has risks, difficulties, and potential drawbacks. Among them:

1. Difficulties in implementation: It can be difficult for a company to implement the Blue Ocean Strategy, as it requires new processes and a complete rethinking of products and markets. This can be a challenge for companies that have remained anchored to their strategies and markets for many years.
2. Risk of failure: The Blue Ocean Strategy can be risky, as it requires taking calculated risks in untested markets and sectors. Companies may find themselves investing significant resources to create a blue ocean and then be unable to monetize it.
3. Competitive risk: It is possible that competitors will later enter a blue ocean, making it difficult for the company to dominate the market and achieve a significant return on its investment.
4. Difficulty sustaining growth: Once a company has created a blue ocean, it is important to continue to innovate and find ways to stay ahead of the competition. This can be difficult and can require significant resources and effort.

Internal implementation of the strategy

Implementation of a Blue Ocean Strategy is essential to ensure that it produces the desired results, even in the face of the risks just seen.

There are several important steps to consider in implementing a Blue Ocean strategy, which by its very nature must be tailored to each company's individual goals and resources. The first step is to develop an implementation plan that outlines in detail all the necessary steps and assigns specific tasks and responsibilities to different team members. The plan should include deadlines, checkpoints and measurable goals that allow the team to monitor progress and make necessary changes.

To ensure that the strategy is successfully implemented, it is also important to create a clear internal communication plan. This must specify how each team member will communicate within the work team and how information will be shared within the organization. The communication strategy should include channels such as e-mail, intranet posts, team meetings, press releases, and outward publicity. It is also critical to ensure that everyone has access to materials such as market research reports and data sets to better understand what needs to be done and how it can be accomplished. If this sounds like a reasonable practice, know that it is complicated and rare in business.

In essence, creating an effective implementation plan and communication strategy is the basis for implementing an Ocean strategy

Measuring the success of the Blue Ocean

Measuring the success of a Blue Ocean strategy is essential to determine whether it is effective and achieving the desired results. Companies should use several metrics (KPIs) to get a complete picture, such as:

1. Customer satisfaction
2. The increase in profitability and marginality
3. The retention rate
4. Reducing costs over the long term
5. The increase in market share
6. The increase in the share of voice

To learn more about the Share of Voice:

The first step in measuring the success of a Blue Ocean strategy is to assess customer satisfaction levels. Companies can measure this by collecting feedback through surveys and questionnaires. This feedback provides valuable insights into how customers perceive the company's products and services and whether they are satisfied with them. Market share is another metric that players can use to measure their success. Companies can calculate their market share by comparing their total sales with those of their competitors. Profitability is another high-value indicator: Companies should compare current income statement figures with those of previous periods to determine whether they have achieved growth in profit margins.

Obviously, companies should identify key performance indicators that are specific to their business goals. For example, if the goal of a Blue Ocean strategy is to increase sales, companies should monitor metrics such as lead generation rate or the number of new customers acquired. If the goal is to reduce costs, metrics such as headcount reduction or cost per unit produced can be measured. Monitoring these KPIs provides a better understanding of which aspects of their strategy are yielding results and which need to be improved.

Ultimately, measuring the success of a Blue Ocean strategy requires understanding both general metrics and KPIs specific to the company's goals. Using these KPIs in combination with each other, companies can monitor and adjust their strategies to ensure that they are achieving the desired Blue Ocean results.

The Blue Ocean and Brand Positioning

The Blue Ocean Strategy is a revolutionary concept that brings fresh air compared to the well-known Brand Positioning popularized by American consultant Al Ries in the late 20th century. A comparison between the two becomes necessary because they ostensibly serve the same purpose, namely, to create a new market segment. In truth they are on virtually opposite sides of marketing. One is on the side of evidence and a common working method among professional marketers, the second is based on opinion and clamorously configures with best practices.

Let's look at a summary of the two approaches.

Blue Ocean emphasizes the importance of market research, understanding consumer needs, and creating alternatives to existing offerings. This strategy relies on scientific research and data analysis rather than traditional marketing methods. Instead of focusing on competing with existing competitors, the Blue Ocean Strategy requires companies to think outside the box and not be influenced by competitors or industry trends. For Blue Ocean, companies must look to the broader market and aim to fill a need that their competitors have not filled or that has yet to be discovered. This may include developing products or services that are more efficient, cheaper, higher quality, faster or easier to use. Companies should strive to create products and services that are very different from previous offerings in order to stand out in the marketplace.

On the other hand, Brand Positioning issupply-oriented, not demand-oriented. In this sense, it is not interested in the deep needs of customers but rather in creating an offering that is more specific than an existing one (in fact, it leads to locking oneself into niches), and that is differentiated not on the basis of the advantage brought to the customer but rather on greater specialization than other competitors. It is expressly obsessed with filling "holes" in supply. It does not provide clear guidance on point-price, and its advocates often insist onassociating greater specialization with higher price, which is technically a mistake when entering a new market because it conflicts with the rules-basics of penetration. It does not provide guidelines for market research, for measurement, for schematizing customer benefits on which to base proposals for a new product or service.

In essence, Blue Ocean is perfectly consistent with most scientific evidence in marketing and the working method of professionals in the discipline, while Brand Positioning is rather naive, does not provide a clear working method, and makes gross errors in the concept of specialization and often in pricing design. .

Choosing an agency capable of working with Blue Ocean

When creating a Blue Ocean Strategy, it is essential to choose the right marketing and communications agency that understands and can effectively implement the strategy. When choosing a partner, companies should consider its experience in this area and its knowledge of Blue Ocean Strategies and related matters. An experienced marketing firm can help set the course and develop implementation tactics, as well as provide guidance on how to measure success. In addition, it should know the principles of differentiation and have a strong understanding of how to create a unique offering that stands out from the competition.

It is important to spend time researching potential agencies. Ask for examples of their past work and evaluate their case studies and how they present themselves. With the right team behind you, you can develop a truly differentiated offering, define a target market, price it appropriately, and measure the success of the strategy once implemented.