Let’s define what Red Ocean and Blue Ocean are.
Red Ocean reflects the existing market sector, which is defined by 'bloody' competition.
Blue Ocean, which is the untapped market potential, is symbolised by the deep blue water.
Red and blue oceans are not two separate oceans. It’s one vast ocean.
Both blue ocean and red ocean strategies can be useful in the same organisation when applied to different products.
Apple has benefited from both blue ocean and red ocean methods.
It introduced the iPhone into a smartphone market packed with major rivals as Nokia, Sony Ericsson, and Motorola, a red ocean. By experimenting and pushing their limits, they created a product that was ahead of its time and rendered the competitors obsolete.
When Apple released iTunes, though, they used a blue ocean strategy. They disrupted the value-cost trade-off through value innovation, devising a win-win solution that allowed artists to earn royalties and customers to purchase specific songs without purchasing the complete album.
As you consider the blue ocean versus red ocean debate, keep in mind that no matter which ocean you choose to sail in, it's critical to create value for the consumer and always improve your offering.
Red Ocean Strategy | New Market |
|---|---|
Compete in existing market | Create uncontested market |
Beat the competition | Make competition irrelevant |
Capture existing demand | Create new demand |
Make the value-cost trade-off | Break the value-cost trade-off |
Strategic key differentiation | Pursuit of total differentiation |
iPhone - unique but not first | iTunes - never before |
Existing Market | New Market |