BOS Question of the Week

Question: Companies struggle with trying to find “niche markets” and to capture them through differentiation. How does Blue Ocean Strategy address this issue?
Answer: Companies have tended to concentrate on differences between different groups of customers. They have divided them into ever smaller and neater segments, or “niche markets,” so they can customize their offerings to meet the needs of those segments. Blue Ocean Strategy takes a different approach. Instead of looking at differences between customers, the focus is placed on the basic commonalities across customers. When companies create unprecedented value on those commonalities, the core of the market is pulled toward them as customers are willing to forgo their individual preferences. Blue Ocean Strategy desegments and collapses established market boundaries by challenging accepted and assumed market order. Unlike conventional strategic thinking that takes market conditions as a given, Blue Ocean Strategy takes a reconstructionist view of the market, where its focus is on shaping the market by cognitive reordering in the managers’ strategic thinking.