The document discusses the concepts of red and blue oceans in business strategy. Red oceans represent existing market spaces that are already contested by competitors, while blue oceans represent uncontested market spaces where competition is irrelevant. It provides examples of how companies can explore alternate industries, strategic groups, distribution channels, complementary products/services, and emotional versus functional appeals to help create blue oceans and escape competitive pressures in red oceans.

1. Blue Ocean Strategy

2. Red Oceans
• Compete in existing market space.
• Beat the competition.
• Exploit existing demand.
• Make the value-cost trade-off.
• Align the whole system of a firm’s activities with its strategic
choice of differentiation or low cost.

3. Blue Oceans
• Create uncontested market space.
• Make the competition irrelevant.
• Create and capture new demand.
• Break the value-cost trade-off.
• Align the whole system of a firm’s activities in pursuit of
differentiation and low cost.

4. Restaurant “Campestre”
• Which is its target market?
• What does it offer?

5. Campestre
• Kind waiters
• Cruzcampo beer
• Big dishes
• Meat
• Guard in the parking
• Childs park
Competitors
• Refined waiters
• Amstel beer
• Barbeque
• Meat and fried fish
• Menu for kids
• Clown

6. Our restaurant works in a Red Ocean
• Low differentiacion in products and servicess
• Same target market
• Limited market
• Low margin
• High costs
• Difficult business!

7. Strategic Canvas
Campestre
• Kind waiters
• Cruzcampo beer
• Big dishes
• Meat
• Half dishes
• Security guard in the
parking
• Child park
Competitors
• Refined waiters
• Amstel
• Barbecue
• Meat and fried fish
• Menu for kids
• Clown

8. Competing
inside
Creating
value
through
Industry
Strategic Groups
Buyer Groups
Products & Services
Functional/Emotional
Orientation
Time

9. Reduce
New
value
Create
Raise
Eliminate

10. Principles
• Reach beyond existing demand.
o Soon-to-be non customers.
o Refusing non customers
o Unexplored customers
• Focus on the big picture, not the numbers.

11. Alternate
Industries
New
value
curve
Strategic
Groups
Distribution
Channel
Comple-mentary
scope of
products &
services
Time
Funcional
Emotional
Orientation
6 pathways

12. 1. Exploring alternate industries
• Alternatives include products or services that have different
functions and form but the same purpose.
Restaurants & Cinemas
• Common aim: To enjoy being out at night.

14. • Aviation customers:
o Executives
• Alternatives:
o Commercial Airline. Business Class
o Corporate Jet
• Why should companies choose one of them?
• Netjets: Divides planes ownership.

16. Price Need for
customers to
manage aircraft
Deadhead costs Speed of total
travel time
Ease of travel Flexibility In-flight service
Netjets Private jet Commercial airlines

17. • Flexibility
• Reduction on trip lenght.
• Without a hitch
• Convenience
• Strategic pricing policy

18. 2. Strategic groups
• Most companies focus on improving their competitive position
inside one strategic group:
o Luxury cars: Mercedes Benz, BMW, Jaguar
o Economy cars: Ford, Renault,…
• Key to find a Blue Ocean. To understand the reasons and the key
factors that would make a customer to move from one strategic
group to another.

20. Industry
Traditional Health Clubs
• Full range exercises and
sporting options
Home exercise
• Low cost
• Privacy
• Expensive
• Not easily accessible
• Lack of privacy
• Low Motivation

21. • Why do women choose Health clubs or home exercise?
Eliminate Raise
• Non threatening same sex
environment
Reduce Create
• Price
• Amenities
• Equipment
• Availability of instructors
• Womanly fun atmosphere

23. 3. Analizing distribution channel
• There is a chain of “buyers” who are directly or indirectly involved
in the buying decision:
o Purchasers
o Users
o Influencers

24. Focused in the
influencers: Doctors
Competition is based
on Insulin pureness

25. 4. Complementary scope of Products and
Services
• Think about what happens before, during and after your
product/service is used.

26. Buses industry:
• Buses made from Steel.
• Competition is based on price.
• Characteristics
o Old fashion designs
o Low quality

27. • What happens before, during and after the product is used?
o Maintenance costs.
o High fuel consumption
o Very heavy, so its components have short live.
o No environmental friendliness

28. • Nabi thought about a global solution:
Buses made from fibre glass
o Maintenance costs reduction to do corrosion.
o More quick, cheaper and easier repairs.
o Less fuel.
o Less production costs
o More space.

30. 5. Emotional/Functional
• Japanese barberries:
o Hot towels
o Massage
o Coffee, tea
o Special hair and skin treatments
o Washing and drying hair.
o Shaving
o Queueing up
o $ 27 – 45

31. • What about professionals and executives?
o Air wash
o Time reduction
o No queuing
o Price: $9
o Income/barber increased

33. • Mexico. Self-construction represent 85% total market demand.
• But really, few families invested in enlarging their hose.
• They prefered to spend their money in the village feasts, 15th
birthday celebrations, weddings and so on.

34. Patrimonio Hoy

35. 5. Time

36. • Which alternative do your customer have?
• Why some customers choose them?
Alternate
industries
• Which are the strategic groups in your Industry?
• Why customers choose the upper or the bottom
group?
Strategic groups
• Analize your industry’s customer chain
• Which group is your Industry focused on?
• I you changed your customer targe, how could
you add value?
Distribution
channels

37. • What happens before, during and after using your
product/service?
• Could you identify pains?
• How could you erase those pains offering
complementary products/services?
Complementa
ry scope of
products and
services
• Your industry compete in an functional or emotional
basis?
• If you compete based in emotional appeal, which
elements could be eliminated to have a functional
appeal?
• If you compete based in functional appeal, which
elements could be added to have a emotional
appeal?
Functional /
emotional
Orientation
• Which trends can affect your industry?
• What impact would they have in you Industry?
• Bear this in mind, how could you create
products/servicies new for your customers?
Time