June 20, 2017 Raz Chorev

Blue Ocean Vs. Swamp

Photocredit  - www.blueoceanstrategy.com

To compete or not to compete. That’s the question…

 

Competition is good. In fact – it’s so good, having no competition should raise alarm bells! When there’s a market and demand, there’s competition. In many cases, when there’s no demand, there’s no market and no competition.

It’s a lot easier to compete in a known market – where demand is steady or increasing – than to create a product or an offering where demand is unknown, or non-existent. When you have data and knowledge about consumer behaviour and preferences, it’s easy to make decisions about your go-to-market strategy, pricing, distribution channels, messaging and communication channels.

However, competing in a known swamp is tiring and can be difficult to make a buck. “Anything easy isn’t worth doing”, as the old adage goes. There’s no point in making a new soap which is like any other soap, just because we know that people need soap, use soap, and will likely to use soap for the foreseeable future.  Even if we give it a new fragrance, cool new shape, and make it a couple of cents cheaper than other products in the category.

It’s a boring way to live, don’t you think?

Differentiation in a saturated market

In a saturated market, companies compete by grabbing a greater share of limited demand. As the market space gets more crowded, prospects for profits and growth decline. Products turn into commodities, and increasing competition turns the water bloody.

We see it time and time again in the FMCG (fast-moving consumable goods) space, insurance, banking, other financial services, retail and many other industries.

“We have always done it this way”

The most expensive words in any business

There are many ways to create a differentiated proposition, which will make you, your product and /or your services stand out in your current market. By conducting thorough market research, understanding your competitive landscape and customer preferences, you can add elements to your proposition that help you stand apart.

Communication strategy – let’s take Nando’s and CompareTheMarket.com.au as examples.

Since 1987, Nando’s has adopted a quirky communication strategy. I say quirky to be polite! They’ve rubbed many people the wrong way with their advertising. Just look up their YouTube channel for ample examples. Here’s one of their ads from 2008 –

 

 

Compare-the-market.com.au is competing in a tough space. They’ve created a market-place for both service providers and consumers to get the best deals in multiple categories. iSelect, and many other comparison sites have popped up in recent years, but not too many can stand out like Compare-the-market with their ridiculous Meerkat mascot.

Customer service

The airline industry is notorious for examples of horrific customer service across the globe. This was an opportunity for newcomers, small operators to compete with literally “the giants of industry”. Southwest Airlines (US), and Virgin (Global), have taken the opportunity to offer new and refreshing customer experience while still maintaining a competitive pricing structure. Take a look at more in-depth analysis of Southwest Competitive Strategy.

Pricing structure

Youi is a new entrant into the over-saturated car insurance market. Youi – according to their marketing messages – ‘gets’ us! They understand that we all use our car differently, which does, in fact, change our risk profile (how insurance companies assess customers).  Changing the pricing structure based on individual usage (or, more accurately, grouped usage), was an innovative approach to competing on price in an established market.

Distribution, and go-to-market strategy

Charles Tyrwhitt  is a UK-based men’s fashion retailer. The brand has retail shops in London, New York, Paris, Washington DC and Chicago. But to really have a global reach, the company has perfected the online experience. By cutting out the middle-men in the industry, Charles Tyrwhitt sells their own products in their online and offline stores.

The owner, Nick Wheeler*, prides himself on exemplary customer service in-person, an experience that is extended to buying from the website (which I can personally attest to).

There are, of course, many other ways to differentiate yourself in a saturated market. Alternatively, you can just think completely outside the square, and come up with a Blue Ocean Strategy – and create your own market or industry!

Blue Ocean Strategy

Blue ocean strategy doesn’t aim to out-perform the competition. It aims to make the competition irrelevant by reconstructing industry boundaries.

In the past decade, technology has enabled us to imagine new ways to do business, re-imagine existing industries, and create new ones. Think of the industries and professions created by Google, and you’ll understand what I mean.

For example, the search engine optimisation (SEO) and search engine marketing (SEM) industries represent multi-billion dollar markets today, that owe their existence to Google’s rise. The SEO industry alone is estimated to be worth USbillion this year, according to Search Engine Land. Given the massive amounts invested by Google Ventures in recent years in home automation, autonomous cars, biotechnology, fiber infrastructure, geo-mapping, artificial intelligence, and other fields, Google has not only provided companies with the legitimacy but provided a market for other companies to play in.

Three of the most celebrated Blue Ocean Strategy examples[1] include Yellow Tail wines, Cirque Du Soleil and Nintendo Wii.

  • Yellow Tail abandoned the traditional focus on prestigious vineyards and aging. In addition, the company ditched the complex terminology normally found on wine bottles which can prove intimidating for potential customers. Instead, Yellow Tail created a drink which was sweet enough to appeal to the masses and therefore capture demand from beer and spirit drinkers rather than just wine buffs. And they made it easy to buy by only introducing two varieties: one red and one white.
  • The Nintendo Wii launched in 2006 with the concept of value innovation at its heart. This is a key principle of blue ocean strategy which sees low cost and differentiation being pursued simultaneously. By pursuing value innovation, Nintendo could go beyond competing against the likes of PlayStation and X-Box in a crowded and fiercely competitive red ocean. Instead, it was able to open up a new market entirely. The Nintendo Wii, with its innovative, new features and affordable price point, appealed to an entirely new and expansive market – a blue ocean – spanning non-gamers, the elderly and parents with young children.
  • Cirque Du Soleil, rather than competing within the confines of the existing circus industry or trying to steal customers from rivals, Cirque developed uncontested market space that made the competition irrelevant. Eliminating the fading live animal acts enabled the company to reduce its cost base, whilst the introduction of theatrical live music and a storyline, and an emphasis on human physical skill helped Cirque du Soleil to create new elements that had never before been seen in the world of the circus. The result? Cirque du Soleil created a new market space. Their new audience of adults and corporate clients (rather than the traditional audience of families) is also willing to pay higher prices to watch this extraordinary spectacle.

One little less known example of a Blue Ocean Strategy is, of course, Orange Sky. Orange Sky has reimagined everything from its corporate structure to unique service offering and engagement model with its’ clients.

Competing in the marketing consulting space is tough. Differentiation is difficult, even taking into account all of the above-mentioned options. The Executive Placement industry is even more saturated, and old-school thinking that is currently dominating that world will bring about its demise sooner or later. Combining the two industries into one, unique proposition – Executive-as-a-service – opens up a new conversation, new market, and brings a refreshed approach to thirsty clients.

Granted, a Blue Ocean strategy isn’t easy to bring to life. Re-thinking and reimagining industries and boundaries, fighting our natural attraction to the known, comfortable and convenient is by far the easier route. However, to make a real splash (pun naturally intended here), consider Blue Ocean Strategy in your next company strategy session.

 

 

 

[1] These are just a handful of examples. Many more examples of successful implementation of the Blue Ocean Strategy, as well as the books and other materials, available on their website https://www.blueoceanstrategy.com/bos-moves/ .

*His full name is Nicholas Charles Tyrwhitt Wheeler

 

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