The document discusses the concepts of "Red Ocean" and "Blue Ocean" strategies. A Red Ocean involves intense competition where companies fight for market share through lowering prices or adding value. This leads to indistinguishable competitors. A Blue Ocean creates a new market space by targeting non-customers and focusing on value innovation rather than competition. The document provides tips for finding a Blue Ocean, such as focusing on non-customers not served and redefining the cost-value ratio for a product or service. Regular innovation is also needed to avoid a Blue Ocean strategy becoming outdated.

1. Marketing’s Next
Frontier

2. The Background
• Turbulent times have hit both Europe and emerging
country economies.
• The competition for a share of the consumer’s wallet
is becoming more severe.
• In Chan Kim and Renee Mauborgne’s parlance, the
Red Ocean is becoming more and bloodier.
Companies can only further extend or stretch their
markers in many product fields through the creative
application of the Blue Ocean Strategies.

3. What is Red Ocean?
• Any industry or market where multiple suppliers or products
are competing is the Red Ocean.
• Competition is high and there is blood in the water as a result
of the ongoing war between competitors.
• Strategies in the Red Ocean usually consist of lowering price
or adding value to justify increasing price – both with the aim
of increasing market share.
• After a while, all the competitors start to look the same
because all you can see is the churn.

4. An Example of a Red Ocean
• A good example of this is the bombardment of Modern Trade
ads we see on Press. They all offer the same thing: Discounts,
Offers, Packages, Loyalty cards etc
• No differentiation
• The entire category I driven by Competitive pressures
• Therefore the Benchmark is competition and not Consumer
gratification and meeting Consumer expectation

5. What does Blue Ocean look like?
• By contrast, the Blue Ocean is calm and peaceful.
• Nobody is there yet, the waters haven’t been disturbed (look
closely, you may see an Apple bobbing gently in the breeze: Not
much can compare with iTunes for a pure example of the Blue
Ocean success!).
• Sounds like a pretty good place to be, and it is. Of course once the
Blue Ocean exists, others will be drawn to it and try to emulate. But
there is no competing against first place in a new market.

6. How do we find Blue Ocean?
You don’t find it. You create it.
• 1. Start looking for non-customers
• This is the first level of upside-down thinking, In any category
there are people who buy that product or service and then
there are three types of non-customer:
– Buys the product or service very rarely and resentfully
– Has purchased the product or service once and had a bad
experience so will never buy it again
– Has never bought the product or service before and has little
interest

7. So which segment of Non-Customers we should Target?
• Now, before you start thinking up all kinds of strategies to win
over non-customer 1 and non-customer 2 – forget about it!
• If you start with them, you’re already swimming in the Red
Ocean, trying to outsmart what very smart competitors have
already tried to achieve.
• The goal and success of the Blue Ocean comes with attracting
non-customer 3.
• This is largely due to the element of surprise. This type of
customer never expected to like or want your product so when
they do – they feel like they have discovered it themselves.
They become immediate brand advocates.

8. So which segment of Non-Customers we should Target?
And what happens after you have attracted non-customer 3 and
become a hit, is that types 2 and 1 will slowly move over as well
and finally, you will even attract the customer of the old product
or service.

9. Stop Benchmarking against Competition
• Don’t aim to out-perform the competition
• This one can make marketers tear their hair out with anxiety when
they first read it. After all, the job of marketing is to analyze the
competition, find the weaknesses and offer a superior product or
service.
• That can certainly be the result of the Blue Ocean Strategy but it
doesn’t work as a starting place.
• The same goes for pricing. Don’t set your price against the
competition, set your price against substitutes and alternatives.
• There is a great quote on the Blue Ocean Strategy website: Stop
benchmarking the competition. The more you benchmark your
competitors, the more you tend to look like them.

10. Create a brand new cost-value ratio
• Blue Ocean is not a differentiation strategy. Your goal is not to
say to customers: We can give you the same thing at a lower
cost. Nor is it to say: Our product costs more but it is such high
quality, it’s worth it.
• This is an area where you really have to dig around and come up
with something new.
• The product or app market is the perfect testing ground for Blue
Ocean because the value of the product or apps has really not
been set.
• For the most part, you probably don’t know yet what people
will pay or what a new service is worth to your business.

11. Create a brand new cost-value ratio
• Makes planning hard? No, it is not.
• It frees you up entirely to consider a whole new way of looking
at cost-value ratio. Rather than reacting to the market place
(what will the market pay for this?), you get to reconstruct the
market boundaries.
• The Blue Ocean Strategy takes you through six principles that
show you how to do this.
• We need to realign our thinking when it comes to cost to
include the three main propositions of: People, profit and value.

12. A Clue to Success
• And here’s a clue to the success of your Blue Ocean Strategy.
• If people in the Red Ocean scoff at your idea – pay attention,
you’re probably onto something.
• They get so focused on protecting their waters and fighting
competitors they have trouble seeing out to anything new and
innovative.
• If they can’t see what you’re thinking, chances are the market
hasn’t seen it yet either and they will be ready to arrive.

13. Dynamic
• One important advice: If your Blue Ocean Strategy is never
going to become a Red Ocean, it’s probably either a Blue Ocean
in a puddle or you’re a government sanctioned monopoly.
• Any company that makes the mistake of thinking one Blue
Ocean strategic move will provide them with lasting
sustainability will one day be irrelevant as have many
behemoths of the past.

14. Dynamic
• Look at Blackberry for example, who rested too long in the glory
of their original Blue Ocean smartphone.
• Their makers, Research in Motion (RIM) is now struggling to
play catch up to Apple, Google and Samsung.
• Their next release - Blackberry Q10 needs to take place soon (to
ensure it’s not drowned out by an anticipated iphone5) and it
needs to create great leaps in leaps in value or it will be
relegated to the transfer station for irrelevant products.

15. To Summarise
• The Blue Ocean Strategy is not a once-off strategic move but
rather a suite of principles and strategic tools that should be
adopted into the corporate culture of your organisation.
• The release of a Blue Ocean product or service may not happen
regularly but for an organisation to remain at the head of its
game, Blue Ocean strategic thinking must be embedded across
the business from product development, finance, operations
and marketing.