1. You need a
blue ocean
strategy
A’Ohlin Commercial Insights © 2013
How do you compete in overcrowded markets?

2. Blue Ocean Strategies
- creating your own market space
A’Ohlin Commercial Insights
www.aohlininsights.com
authors: Rebecca Chong & Anna Searle
February 2013
A’Ohlin Commercial Insights © 2013

3. A business in the midst of an increasingly competitive industry will
find itself sinking to the bottom:
• Profits shrink
• Growth shrinks
This makes it all the more important to know what is happening in
the market and to have the tools to know what will be there in the
next five years.
Stuck in an overcrowded industry?
A’Ohlin Commercial Insights © 2013

4. A business stuck in an increasingly competitive industry is fighting in
bloodied waters
• also known as RED OCEANS
Red Ocean characteristics include:
• existing industries
• defined boundaries
• highly competitive
• driving competition out of the market
• trying to gain greater market share
• overcrowded market
• products turn into commodities
• shrinking profits
Overcrowded industries are RED OCEANS
A’Ohlin Commercial Insights © 2013

5. Blue oceans are:
 Industries not yet in existence
 Untainted by competition
 Unknown market spaces
 Where demand is created
 Completely new industries OR altering existing boundaries
 Opportunities for growth
The key to pushing out of the red oceans is to adopt a blue ocean
strategy
A’Ohlin Commercial Insights © 2013

6. A’Ohlin Commercial Insights © 2013
Blue ocean strategies make the competition irrelevant and create
new demand
Red Ocean Strategy Blue Ocean Strategy
Compete in an existing market space
Beat the competition
Exploit existing demand
Make the value-cost trade off
Align the whole system of the company’s
activities strategically choosing
differentiation OR low cost
Create uncontested market spaces
Make the competition irrelevant
Create and capture new demand
No need for the value-cost trade off
Align the whole system of the company’s
activities in pursuit of differentiation AND
low costs
source: Kim W and Mauborgne, ‘Blue Ocean Strategy’, Harvard Business Review, October 2004, p. 5

7. Unheard of, or just emerging,
100 years ago
• Automobiles
• Music recording
• Aviation
• Petrochemicals
• Health care
• Management consulting
A’Ohlin Commercial Insights © 2013
Look back 100 years and ask, how many of today's industries were
then unknown? And 30 years ago? Even 10 years ago?
Unheard of, or just emerging,
30 years ago
• Mutual funds
• Mobile phones
• Gas fired electricity plants
• Biotechnology
• Discount retail
• Express package delivery
• Snowboards
• Coffee bars
• Home videos

8. A’Ohlin Commercial Insights © 2013
What can be expected over the next decade?
Circus OR Theatre Circus + Theatre = Cirque
How many industries
that are unknown today
will exist in 2023?
... Many
Companies have a
huge capacity to create
new industries and re-
create existing ones
Gaming: hand held
consoles
Consumers: regular
gamers
Gaming: motion sensing
controls, more user-oriented
Consumers: regular gamers +
non-regular gamers
Mobile OR mp3 player OR
PDA
Smartphones
Shops
Local shops, online shops,
online auctions
Airlines: standard airlines
Airlines: standard, budget,
long-distance, short-distance
THE PAST THE PRESENT WHAT LIES AHEAD?

9. What’s it all about?
• Looking at the existing boundaries of
competition and then ‘reordering and
recombining’ to reconstruct the market
boundaries
• Not necessarily technological increases
– It’s about reordering and reconstructing
market realities and capturing new
demand rather than pre-empting
technological trends
• Looking at your current business model
from a different perspective and
remodelling how it operates
A’Ohlin Commercial Insights © 2013
By breaking the traditional boundaries between circus and
theatre, Cirque du Soleil reinvented the circus and increased revenues by
a factor of 22 over the last 10 years

10. A’Ohlin Commercial Insights © 2013

11. A’Ohlin Commercial Insights © 2013
Apple – iPod+ iTunes, iPhone, iPad  what next?
late 2001
2010
Mid 2007

12. Confirmed by HTC’s latest profits
• HTC reported an 80% drop in profits for the September quarter 2012
compared to the year ago quarter (Forbes, 2012)
A’Ohlin Commercial Insights © 2013
The smartphone market is now becoming a bloodbath ...
source: http://www.forbes.com/sites/greatspeculations/2012/10/08/htc-is-the-latest-smartphone-
bloodbath-casualty

13. Weekly cost of the additional 4c a litre reduction
By January 2013, both retailers were offering discounts of at least 8c per litre
A’Ohlin Commercial Insights © 2013
Petrol discounting is another example of red ocean markets
…petrol discounts were a sign that the grocery market was becoming increasingly irrational
as Coles and Woolworths vied for market share…
if the 8¢ a litre discounts are maintained all year they will cost each retailer an estimated
$200 million
$1.8 million $2.3 million
Cost per WEEK
source: Citigroup analyst Craig Woolford , AFR 2 Feb 2013

14. A’Ohlin Commercial Insights © 2013
The 14% of businesses that invested in creating new markets and
industries delivered 38% of total revenues and 61% of total profits
source: Kim W and Mauborgne R, ‘Blue Ocean
Strategy’, Harvard Business Review, October 2004, p.
3
14%
86%
New Ventures
New markets or
industries
Line extensions
38%
62%
Revenues
61%
39%
Profits
86% of (the) new ventures were line extensions, (and) while (they) did account for 62%
of the total revenues, they delivered only 39% of total profits

15. Which phase of the business life cycle is your business in?
‘80% of new
businesses fail in
the first five years;
52% fail due to
management-
related problems’.
Don’t fight it out in
bloody waters and
become another
casualty.
Don’t
rest on
your
laurels – If
your offering
is nothing more than
an imitation or
incremental improvement
over your
competition, you’ll only
be treading water in a red
ocean’
The clear blue ocean
waters are becoming
bloodied. ‘Sadly, most
firms lack a clearly
defined, robust and
well-communicated
innovation strategy.
There is either no focus
or they focus on the
wrong arenas – on
mature markets, old
technologies or tired
product categories that
do not represent the
growth engines of
tomorrow’.8 Wake up
to the strategy – you
don’t want to drown in
bloodied waters.
You’re on a
downhill slide
but it’s not
too late –
‘Every
organization
can break free
of the head-
to-head zero-
sum
competition
and open up
blue oceans’.
A’Ohlin Commercial Insights © 2013

16. A’Ohlin Commercial Insights © 2013
A’Ohlin Commercial Insights can help you design your Blue Ocean
Strategy
If you are competing in red oceans.
If your business needs an adrenalin injection to get going.
If you need to redefine your business focus and priorities.
If you need to re-engage your Board, executives, senior management, staff or
clients.
You need to engage a professional strategy consulting firm such as
A’Ohlin Commercial Insights
The clock is ticking
Take action now
Call A’Ohlin Commercial Insights on 0414 453 913

17. Key sources:
• Kim W and Mauborgne, ‘Blue Ocean Strategy’, Harvard Business Review, October 2004
• Kim W and Mauborgne R, ‘Value innovation: a leap into the blue ocean’, Journal of
Business Strategy
• Misconceptions of blue ocean strategy
• Study by Inc. Magazine and the National Business University of Buffalo Office of
Science, Technology Transfer and Economic Outreach
http://www.professionalpractice.asme.org/Entrepreneurial/Incubators/Join_Incubator
.cfm
• Burt G, ‘Swim Blue Ocean’, Leadership Excellence Volume 24 Issue 5 (May 2007)
• Cooper, R ‘Creating Bold Innovation in Mature Markets’, IESE Insight, Third Quarter
2012 Issue 14, p 31
• http://www.forbes.com/sites/greatspeculations/2012/10/08/htc-is-the-latest-
smartphone-bloodbath-casualty

18. Blue Ocean Strategies
- creating your own market space
A’Ohlin Commercial Insights
www.aohlininsights.com
authors: Rebecca Chong & Anna Searle
February 2013
A’Ohlin Commercial Insights © 2013