Red Ocean vs. Blue Ocean Strategy
|Red Ocean Strategy||Blue Ocean Strategy|
|Compete in existing market space.||Create uncontested market space.|
|Beat the competition.||Make the competition irrelevant.|
|Exploit existing demand.||Create and capture new demand.|
|Make the value-cost trade-off.||Break the value-cost trade-off.|
|Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost.||Align the whole system of a firm’s activities in pursuit of differentiation and low cost.|
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W. Chan Kim & Renée Mauborgne coined the terms red and blue oceans to denote the market universe. Red oceans are all the industries in existence today – the known market space, where industry boundaries are defined and companies try to outperform their rivals to grab a greater share of the existing market. Cutthroat competition turns the ocean bloody red. Hence, the term ‘red’ oceans.
Blue oceans denote all the industries not in existence today – the unknown market space, unexplored and untainted by competition. Like the ‘blue’ ocean, it is vast, deep and powerful –in terms of opportunity and profitable growth.
The chart above summarizes the distinct characteristics of competing in red oceans (Red Ocean Strategy) versus creating a blue ocean (Blue Ocean Strategy).
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