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Blue Ocean vs. Red Ocean Strategy

Blue Ocean vs. Red Ocean Strategy

Two of the marketing strategies that you will hear about as you start to learn more about digital marketing are the blue ocean strategy and the red ocean strategy. While these terms are incredibly meaningful and different, if you don’t understand the meaning of them, it’s hard to see how your business could take advantage of either. Here’s what you need to know about blue ocean strategy vs. red ocean strategy.

What Are Red Ocean Strategies?

What does the industry that your business operates in look like? If you have numerous competitors and find yourself primarily competing on factors like price, there’s a good chance that you could benefit from red ocean strategies. Red ocean strategies are designed for businesses that need to compete in crowded industries that are already in existence. As a result, they focus on outperforming your competition and harnessing existing demand instead of things like consumer education.

What is an example of an industry that would utilize red ocean strategies? The airline industry is one example. The existing market is very robust, and the major players in the space have established customer bases. In order to succeed, you must stand out and beat the competition while capturing existing demand. Additionally, while the major players are already defined, there are many smaller companies that still do robust business in competing for market share. Other industries that heavily utilize red ocean strategies include the soft drink industry and the fast-food industry.

What Are Blue Ocean Strategies?

In contrast, you can examine blue ocean strategies. Companies that operate in blue ocean industries need to create demand and develop customers. Unlike in red ocean industries, demand and customers are not already in existence. These industries are called blue ocean industries because the potential for the industry is very deep. You will not have a lot of competition, and if you are able to find the right opportunity, you can find extreme success. However, it is not always easy to do things the first time.

One of the most notable examples of a blue ocean company is Apple. Apple has been able to remain at the forefront of innovation through products like the iPod. There was nothing like it on the market, and they were able to sell customers on the convenience of carrying MP3s with them and effectively kickstart an entire industry. Even future Apple products like the iPad were initially met with mocking before becoming widely adopted in the future. Instead of looking at what existing customers wanted, Apple sought to create something that they thought consumers would want even more. Bets like this do not always pay off, but when they do, you can have a permanent name for yourself in your industry.

What Are Examples of Each Strategy?

When determining if your company operates in a red ocean or blue ocean, it’s helpful to look at examples of other companies in the past. One prominent, recent red ocean company is Uber. There has always been a market for on-demand transportation, including both taxi services and black car services. However, the services were not available through an app, and you were not able to get a job doing them on a gig basis. Uber was able to differentiate itself in a red ocean industry, take advantage of an existing market, and work to become a major player in the space.

A historic example of a blue ocean company is Ford. When Ford came onto the market and introduced the Model T, they were one of the first companies to mass produce standardized cars that were financially accessible to many people. When the car came onto the market in the early 1900s, Ford had 9% of the market share and competed against approximately 500 other companies making cars. Within 13 years, Ford had a whopping 61% of the market share thanks to educating consumers and differentiating itself in an early market.

What Questions Should You Ask?

It can sometimes be tough to determine whether you are a red ocean or blue ocean company, but asking yourself some critical questions and reflecting can help guide your determination. Some of the best questions to ask include:

  • What competition does your company have? Is the competition irrelevant?
  • Is there a current market for your product?
  • Is your company different because of differentiation, low cost, or both differentiation and low cost?
  • Is a competitive advantage more important, or is value innovation more important?
  • Are you taking advantage of existing demand or creating new demand?

Some of these questions are complicated to answer, and your marketing team can work with you to determine what strategy would benefit your team the most.

How Does This Impact Marketing?

Now that you fully understand the differences between red ocean and blue ocean industries, it’s apparent that each type of business requires different marketing tools. Operating in a red ocean means marketing towards target audiences that already exist, and using things like the price of your product or what makes you special to attract business. However, working in a blue ocean space requires things like consumer education to form the market that you want to take advantage of.

Regardless of whether you operate in a red ocean or blue ocean industry, working with the right digital marketing company is critical to ensure that you get the most out of your marketing plan. Our team understands how to adapt marketing to suit the needs of a red ocean or blue ocean business and get the most out of your campaigns. We want to be a critical piece of your business and marketing team, and we have experience working with both types of companies. Contact us today to learn more and make the most out of your marketing opportunities.

We Are Here to Help Grow Your Business Online and Through SEO

Working with a professional digital marketing company is the best way to make the most of your website and all that Facebook Pixel, LinkedIn ads, Google Analytics and other digital advertising platforms have to offer. To learn more about the best digital marketing strategies for your company and reach a bigger audience than ever before, work with Gauge Digital Media. For a quote or to schedule a call, contact us at (443) 376-7709.

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