There is no sure fire way of keeping competitors at bay in the real world market. Every day organizations put in more resources to ensure their brands remain at the top of the game, and that their efforts reflect on the profits. Evaluating the season of the market as well as current trends within the market, plays great role in ensuring a company is not thrown off to the kerb. That lesson is one that has been learnt by one of the pre-dominant companies in the mobile phone industry, Motorola, in the 1990’s. As poised by Barwise and Meehan (2012), Motorola’s failure to foresee the heralded change from analogue to digital telephony, cost it a major loss of its market share to Nokia, and since then, the company has never regained it position.
The Blue Ocean Strategy is one of most recent, as well as greatly debated marketing schemes in the world today. BOS proposes that companies should aim at creating revolutionary new products which form unrivalled market space and hence render the competition irrelevant (Barwise and Meehan, 2012). The greatest challenge lies with figuring what works as the directorate makes tough choices on preferences and plans in slow yet competitive markets. In order for a business to generate massive growth and profits, the way to go is the Blue Ocean strategy.
BOS incorporates use of the Value Innovation strategy which is put across as one of the major keys to achieving a blue area in the marketing ocean. Value Innovation is defined as the hand in hand quest of differentiation and low cost. It also includes vital analytical implements and frameworks like the strategy canvas, the four actions structure and the EERC (eliminate –reduce- raise-create) network (Flevy, 2012). As a result, the BOS proceeds to stipulate the principles that constitute the BOS concept. These are; creation of uncontested market space by rebuilding market borders, staying focused on the big picture, extending past existing demand, as well as, getting the strategic chain right. For a successful BOS the company must cut across the usual limits of competition using the four principles mentioned afore.
Creation of blue oceans is achieved through triggering new demand by unbolting the three- classes of non-customers, minimizing planning risks by employing the visualizing approach and set-up of a potent blue ocean idea by straightening unforeseen utility of an offering by decisive pricing, target costing and overcoming adoption hurdles (Kim and Mauborgne, 2005).
How does the company ensure that all factors are working towards the blue ocean strategy move? The company should apply the “tipping point leadership” and “fair process” by organizing the people participating in the implementation in order for them to understand the importance of differentiating and moving out of the status quo (Kim and Mauborgne, 2005). The blue ocean is a representation of all the non-existent industries at present also called the unknown market space. A unique characteristic of the blue ocean is that it is no marred by competition –demand is generated rather than fought for. A good example of Blue Ocean is the Apple’s success of acquiring an unrivalled market share after unveiling the iPhone and iPad-products that were not in the market before. Thus, for the period that no other company had produced matching gadgets, Apple can be said to have enjoyed the safety of the blue ocean market, with no competition at all (Barwise and Meehan, 2012). Therefore, based on such a case, blue oceans do exist but only for a while. Research has shown that the benefits of BOS are not sustainable. For example, The National (2013), has featured an article on how Apple’s gross margin, or the amount of money it makes in profit from its devices, shrank to 37.5 percent from 47.5 percent (The National, 2013). The company’s chief executive, Tim Cook proceeded to acknowledge that the company’s growth has slowed and that market share is vital as well as other factors in marketing. This is likely to be the result of Samsung’s roll-out of the Galaxy Smartphone that provides improved features and benefits, surpassing what are in the market, and at a considerably lower price than Apple’s.
In contrast, red oceans can be described as the known areas within the market space that symbolizes the aggregate of the industries in the market existing at present. Red oceans are characterized by already defined and accepted horizons, as well as defined rules of competition. Here, businesses aim at outdoing their rivals to obtain bigger portion of product demand. Hopes for profits and expansion dim as the market gets saturated, and hence the cut-throat competition begins among the players.
Analyzing the Value Innovation pillar
Samsung’s global success story is thought to be as a result of the company applying the value innovation pillar of the BOS. This is partly true as Samsung has continued to produce great quality products, with added features that are affordable to the low –end consumers. In fact, the company at the moment has products for high-end markets too (Mundy, 2013). Samsung has established itself as the leading Smartphone maker by unit sales with a product range that stretches from premium to low-end devices, unlike Apple, which focuses on the top end of the market. This move confirms the idea of Value Innovation that differentiation and reduced costs are both attainable, concurrently.
Red –Purple Ocean concept
As much as blue oceans are desirable, they are not fully attainable. In fact, BOS seems to take for granted the brand and communication as the keys to success and insisting on value innovation as the only way to achieving marketing success, which is exaggerated (Pollard, 2005). and when attained, they are not sustainable in the long-term. Therefore, many experts have suggested that the best way is to trade off between the high risk involved in being the pioneer of a completely different product (whose demand can back-fire badly), and the ever war-like competitive market space that encourages cut-throat competition- with the price as the only differentiator. This brings about the concept of the Red-Purple ocean approach. This idea suggests that the business should operate in a style that avoids the red oceans, as it works its way towards the blue oceans, hence the concept of a resulting purple region (Barwise and Meehan, 2012).
Research has shown that for long term successful organic growth and profit generation, a firm must get the basics right, always. These include brand promise, reliable delivery on the promise, continuous improvement, innovating “beyond the familiar”, all fused together by openness in organization (Barwise and Meehan, 2012). Failure to get this right can lead to major losses. For example, the failure of Dell company to respond to the growing demands of iPads and tablets and start producing similar gadgets, has led to a major decline in its profits from which it still suffers (Shue, 2013).
It can be conclusively shown that, the Innovation value plays a great role in taking a company to the top. But, in the purple ocean, a business will benefit more on incremental innovations instead of creating a completely new-to –the –world product. This is because human beings seem to appreciate these small yet significant improvements in the products. The aim is not to pioneer a new market space but to break fresh ground through improved features and price performance (Barwise and Meehan, 2012).
(Barwise and Meehan, 2012) assert that we have no quarrel with the value innovation framework in blue ocean strategy. Our quarrel is with the heady claims about blue oceans, uncontested markets, and making the competition irrelevant” Have they got this expression wrong and is blue ocean strategy the only way to innovate in the 21st century? From the discussion above of the Value Innovation pillar analysis and of the Red –Purple Ocean concept it can be seen that the claim by Barwise and Meehan (2012) is right. The Reality and Sustainability of a Blue Ocean Strategy Initiative puts it that, the Blue Ocean Strategy proposes that a fruitful BOS will attract competitors, hence turning it in to the red ocean that the strategy is against. It proceeds to say that the only solution to such a situation is for the invaded firm to leave the newly created contest and find ways to create a new blue ocean for itself. This statement shows that blue oceans are not a sustainable ideology. Also, since a new blue ocean will attract competitors, it cannot be said that completion can be made irrelevant, after invasion.
It has also been seen that value innovation which is the proposed way of innovation in BOS, cannot be the only way innovate in the 21st century, as innovation is more effective when done in a more balanced and inclusive way with the aim being to consistently keep on improving a product (innovation beyond familiar) rather than to make a completely new product in the market. Research has already shown that consistent step by step innovation is more effective in terms of keeping the red oceans at bay and maintaining the necessary differentiation to optimize profits (Maneuver Marketing Communique, 2005).
When Apple produced the Smartphone, Samsung never rushed to the next big gadget that technology can bring, instead, it improved on some features and delivered a product affordable to the lower-end market. The company has grown in leaps and bounds since then and definitely the future seems still bright (Jung, 2013). It is also important to note that Samsung is always keen with the basics- it has a clear and consistent brand promise; it always delivers on the promise reliably; keeps on improving on the promise and innovates past the familiar. These factors, supported by open discussion and positive response to customer feedback, have proven to be the Samsung’s and similar market leaders’ pivots.