With the advent of digital media, starting a business is less complex and more enticing than ever. Young people out of business schools are leveraging digital technologies to launch their enterprises to their target audience with resounding success.
However, the digital world is getting cluttered, with cutthroat competition in all spheres. So, for aspiring businesses to succeed, they need to have a clear strategy and vision to differentiate. Two essential strategies to start with are the red ocean and the blue ocean. And usually, all businesses fall under either of these two.
Now, let’s dig into both of these business growth strategies.
Red Ocean Strategy
A red ocean strategy means competing in an industry having lots of players. Simply put, one has to fend off a lot of competition to thrive in a red ocean.
A red ocean strategy can often mean several barriers to entry, such as price, the image of existing businesses, and specific rules and patterns. Having said that, once a company breaks into a red ocean market, its chances of growth and sustainability are much higher than in a blue ocean market. But, how does one do that?
One ideal way is through ‘Leaping Ahead of Competition’
Besides pricing strategies, competition is the most significant stumbling block if one pursues a red ocean strategy. The competition serves as both inspiration and demotivation for the future of a business. However, a company can still topple the big fish simply by using effective growth strategies. But what are the vital elements of a growth strategy? Are financial investments enough to grow and expand your business? Or do you have to leverage technology and hire the best people? If you seek to sustain your business in a competitive environment, technology and human resource are vital elements. But you must hire individuals who can critically analyze the industry, monitor competitors, and develop your company. Thus, hire people who possess critical thinking skills, who have an analytics degree online, and can help you gain competitive advantages.
Firms that continuously develop their resources, be it financial or human, can beat competition efficiently. Such firms know how well they can utilize a red ocean strategy to stay ahead of the competition. Therefore, they want to make good use of it to gain a higher market share.
Blue Ocean Strategy
In contrast, a blue ocean strategy creates demand for something unique and not easy to imitate by competitors. It automatically means fewer competitors and more freedom. Such a marketplace has tremendous potential.
However, one must take the above statements with a pinch of salt since an untapped market also presents many risks, especially for a startup. It can either become a success story or an utter disaster.
By using the blue ocean approach, entrepreneurs develop a novel idea and address underlying consumer needs. Being a pioneer, one can set the rules and policies for the market hassle-free. Additionally, it is pertinent to mention that a lot of research goes into it. For instance, market research, pricing schemes, cost-benefit analysis, etc., are necessary also trial and error.
Over here, you will be ‘Venturing into the Unknown.’
One of the earliest examples of a blue ocean strategy is the now popular video-on-demand service, ‘Netflix.’ It originally started as part of the DVD rental bubble. However, Netflix jumped on the bandwagon of the rising internet world. It adopted a subscription model featuring an array of popular movies and TV shows.
Now, Netflix enjoys the largest market share in its industry and has moved on to produce Netflix Originals, i.e., content exclusive to Netflix. So, what are the lessons from Netflix’s adoption of the blue ocean strategy?
Netflix’s idea was to remove physical stores and take everything online. It reduced their costs while providing convenience to the audience. Now, when the competitors are following in their footsteps, Netflix has already launched exclusive content.
Netflix did something else, too. They offered a vast library of content at a price of a trip to the cinema. It is by far the best example of executing the blue ocean strategy effectively.
Comparing the Two
If you plan on competing with established and existing companies, opt for a red ocean strategy. However, if you want to test an uncontested business space, go for a blue ocean strategy. Exploiting the current demand is the main feature of a red ocean strategy. Whereas capturing and creating new demand is more of a blue ocean strategy.
So, what do you prefer for your business? Are you planning to beat your competitors out or avoiding them? In the end, you have to decide, keeping your current business objectives and portfolio in mind. Whichever strategy you plan on choosing, experiment with it and analyze the results before proceeding ahead. Afterward, you will surely know which strategy to implement.