Blue Ocean Strategy

Team 8: Monica Rojas

Jami Seibert

Karlie Winnett

Management 600

October 11, 2010

Blue Ocean Strategy

Executive Overview

The two key concepts introduced in the article “Blue Ocean Strategy” are the Red Ocean and Blue Ocean Strategies. Red Oceans are all industries know to exist today. Companies applying Red Ocean strategy within a given industry are trying to outperform their competition to increase their market share of an already existing demand. As competition gets more and more fierce, products become commodities with little differentiation between competitors and consumers make purchase decisions based on price. This behavior ultimately reduces the profits of all the industry’s participants and growth potential is eliminated. Blue Oceans in contrast are industries not yet in existence therefore the new markets are uncontested and new demand is created. These new markets render ample opportunity for growth that is more profitable and rapid than in Red Oceans. Important elements of Blue Oceans strategies presented in the article are: Blue Oceans are most often created without technological innovation, they are often created within their own core business or the Red Ocean of their own existing industry, they never use their competitors as a benchmark, and they give consumers a leap in value. Most importantly, the Blue Ocean strategy rejects the conventional strategy of a trade off between value and cost, rather pursues differentiation and low cost simultaneously. The alignment of the product mixes of utility, price and cost are therefore critical. After a Blue Ocean is created it must also be protected resulting in sustainable brand equity.

Current Application

Procter and Gamble has been competing in the Red Ocean of the toothpaste industry for over 60 years with its signature Crest brand of toothpaste. P&G applies the Red Ocean strategy by making incremental improvements to its Crest toothpaste; examples include Crest Pro-Health,...