How a red ocean turns blue; blue ocean strategy
In this 5 minute blog, I’ll tell you what the difference is between a red ocean vs blue ocean and how you can survive a red ocean and swim into a more profitable and audible blue one; blue ocean strategy.
Entering a red ocean
A red ocean is a metaphor for a market full of competitors. Competition turns the ocean bloody. Are you a business owner? Then chances are that you are already operating in a market turning red, trying to figure out how you can make the competition irrelevant.
So, the question is: where would you like to be? Do you like to operate in the busy and highly competitive red ocean, or do you prefer the spacious yet very pioneering blue ocean?
However, once you become successful copycats will arise and take advantage of your idea, strategy, and the mistakes you made. They are forcing you in a red ocean, after all.
Especially in this Internet episode, more people try and see the opportunity. But, the process is not new in itself. What to do when you are in a blue uncontested market space, and it is – slowly or not – turning into a red ocean?
Red ocean vs blue ocean
W. Chan Kim and Renee Mauborgne introduced the term red ocean and blue ocean a few years ago with their book ‘Blue Ocean Strategy.’ This book is a must-read for any small business owner or wannabe entrepreneur.
Do you have the support of a business coach? Let him guide you with this insightful knowledge. There is a ‘step-by-step’ guide inside their book. A business coach can you help grow to a more profitable business. However, it all starts with how entrepreneurial you are. Check it now for free.
The professors claim that competition can be rendered irrelevant because the rules of the game are waiting to be set. The image below explains, as a blue ocean strategy summary, the difference between the red and blue ocean.
Image: red ocean vs blue ocean strategy. Source: Book ‘Blue Ocean Strategy’
How to survive in a red ocean?
In red oceans, business leaders and entrepreneurs are in a cage of creating competitive strategies as dominant business thinking. They are rivaling head to head with their competition over the same consumer segments. They all are doing exactly the same things, only better and cheaper to outperform their rivals — an attempt to grab a greater share.
As the market becomes busier, the hopes for profit and growth become smaller. Products turn into commodities, and the increasing competition turns the water bloody. Many companies face difficulties as they try to sway away from the competition.
How to avoid a red ocean strategy?
Defeating the competition by working harder will not work. You will have to move to leave the competition behind.
It always reminds me of Alice talking with the red queen of the chessboard, in the movie and the book of Lewis Caroll ‘Alice through the looking glass’. Suddenly she starts running, but no matter how hard Alice runs, she stays in the same place. The queen explains that in their country, you have to run at least twice as fast to get somewhere else. This story is an excellent metaphor for what happens in red oceans.
Blue ocean strategy
Denote all the industries not in existence today, the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.
There are two ways to create blue oceans.
The first way, as happened in a few cases, is when a company gives rise to an entirely new industry. A good example of a blue ocean strategy is eBay who did it with the online auction industry or Cirque du Soleil with the circus industry.
The second more common way to create a blue ocean is within a red ocean. This happens when a company alters the boundaries of an existing industry, as Curves did within the saturated fitness industry.
So, what can you do, besides hiring a business coach? How to stay blue or become blue again? A few tips and tricks for a blue ocean strategy:
- Offer benefits that competitors consider irrelevant or over-unique. Think for example of shape; a unique style not typical for the product category; or a unique purpose, for instance, a contribution to the environment and implement this purpose throughout your whole organization, be authentic.
- Make a combination of benefits for your customer of different product categories or lines of business. The key is to define the total solution buyers seek when they choose a product or service. A simple way to do so is to think about what happens before, during, and after your product is used.
- Search for other buyer groups or other segments for your product.
- Find a new appeal.
- The process of discovering and creating blue oceans is very structured, and entrepreneurs are engaged in the process of reordering market realities in a fundamentally new way. It is not about predicting or preempting industry trends. You can approach your business from a different perspective in time.
- Focus on powerful commonalities in what buyers value instead of focusing on customer differences.
Business coaching industry
Coaching is still a relatively young industry. Nowadays, the coaching industry is a $2 billion industry and the second-fastest growing industry in the US. Before coaching became so popular and mainstream, it was a domain run by psychologists. Although the market is huge, coaches still experience it as a blue ocean that turns red.
There are a lot of different types of coaches. Research shows that coaches, in general, have a hard time finding enough clients. The business coach, as a specific type of coach, is faced with the following biggest three challenges:
- Lead generation
- Conversion of leads
- Consistency of income
They are no different from any business owner in that respect. Just like many self-employed business people, business coaches are good at what they do. They are specialists. Probably a lot like you. Though, the red line in these three challenges is more about bringing in customers than there are too few customers.
Getting clients is a struggle for most entrepreneurs in any industry. Especially when they are practicing their profession, they aren’t able to attract new clients. Most coaches, whatever the type of coach, often admit that they have no idea where their next client will come from. They just have to find a structured way to get a constant stream of clients.
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