Blue Ocean vs. Red Ocean Strategies

First introduced in a 2004 Harvard Business Review article by C. Chan Kim and Renee Mauborgne, the Blue Ocean and the corresponding Red Ocean strategies are used to described opposing approaches used by businesses to gain market share and achieve growth.

The red ocean is a concept used to identify the known market place where businesses compete head on against the competition striving to increase market share by either differentiating or driving costs down.  The competition is fierce with companies vying for customers with competing products.  As the market gets more crowded, prospects for profits and growth are reduced leaving the competitors “bloodied” from the fight, thus creating the “red oceans”.

On the other hand, the blue ocean strategy operates in the uncontested market place where competition does not exist and therefore is irrelevant.  These calm blue waters, untainted by competition, give birth to those products or services where demand can be created and then exploited.  Blue oceans denote all the industries not in existence today.  There are two ways to create blue oceans.  Companies can either create completely new industries like ebay did with online auctioning, or they can be developed from redefining the boundaries of existing red ocean industries like Apple did with iTunes.

Although the terms are relatively new, blue oceans have been around for at least 100 years.  The Ford Model T, the first Nickelodean theater and even the first Apple Computer were all blue ocean ideas.  They used existing technology in a new way to reach new and different customers.  Looking forward, as existing markets tighten, businesses will need to move from red to blue oceans to maintain success.  Blue oceans will remain the real engines of opportunity and growth for today’s businesses.

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About Susan
I'm a wife, mother and student living in the suburbs of Atlanta. After 20 years in corporate IT, I am currently working for a non-profit as Director of Operations.

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