When it comes to the business environment, there are two places you need to be aware of as theorised by W. Chan Kim, the red ocean and the blue ocean. but we theorise there’s a third area you need to consider! The dry land! Red oceans are the known market space including all industries, businesses, products and services currently in existence today whilst blue oceans are the unknown market space containing all the industries, businesses, products and services that are not yet in existence. Blue ocean marketing is marketing specifically towards the blue ocean, where you’re free from competition and as a result, sustain a competitive advantage over your competition in similar industries operating in the red ocean.

By developing your own blue ocean, you will benefit from a competition-free environment with massive opportunities for development and profitability.

Visualisation of the Red Ocean / Blue Ocean strategy including dry land for when searching for the blue ocean goes wrong

Red Ocean

Overpopulated, highly competitive markets featuring broad niches often solving multiple needs. The closer to the centre of the red ocean you go, the more competitive and densely populated the market becomes whilst moving away from the centre increases the opportunities of discovering a blue ocean. Red oceans are fraught with competition and there’s very little room for differentiation.

Companies operating in red oceans compete fiercely with one another, the threat of new entrants and substitutions is high and the likelihood of start-up success is significantly lower as a result of the high degree of competition, often with established businesses.

Operating in a red ocean relies on market-competing strategies that divide the customer’s attention (and money) between already existing competitors. The increased dilution of the market results in falling profits over time as markets become densely populated. This hinders growth significantly for startups with no unique value proposition, these organisations can only compete on price and the race to the bottom isn’t always a good indicator of quality, in fact, studies show lower prices increase the customer perception that the product or service will be of poorer quality compared to the same product offered by a competitor at a higher price.

Blue Ocean

Less populated markets with less competition focusing on specialist niches solving individual needs. Blue oceans encapsulate red oceans as specialist products and services provided by businesses operating primarily in red oceans. Blue oceans offer significant opportunities for growth and development.

Blue ocean strategies create new demand in an uncontested market space where, depending on whether the organisation sustains a competitive advantage, the opportunities to grow and develop are frequent. Growth in blue oceans is rapid and profitable.

Dry Land

This is where organisations find themselves without proper market research and planning. There’s no market for the offering and the product/service is destined to fail. Marketers find themselves on dry land when they go looking for the blue ocean and completely miss it.

Organisations can operate in a blue ocean without operating in a red ocean if they only offer products and services that suit the specialised niches identified. A specialised niche could be a unique offering unrelated to any other product or service on the market or it could be a sub-niche of an already established market.

Further Reading

If you’d like to explore Blue Ocean marketing further, there’s no better recommendation than W. Chan Kim’s ‘Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant‘, the book is available in multiple formats, including hardback, paperback, Kindle (and other eBooks) and audiobook (by Audible). You can purchase the book by clicking the button below:

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