Make your business rivals irrelevant. Achieve hyper-growth. Prasanna Perera of CIM UK Sri Lanka tells us all we need are big blue oceans.
July 19, 2010 3:16 by Prasanna Perera
How to create a Blue Ocean strategy?
Value Innovation is the cornerstone of Blue Ocean strategy, where equal emphasis must be given to value and innovation.
Value without innovation only creates value on an incremental scale. This does not make brands stand out from the competition.
Innovation with value creates technological marvels that go beyond what buyers are ready to pay for. Therefore, value innovation can occur only when organizations align innovation with price, utility and cost positions.
These are characterized by the following :
- Shrinking demand for products and services.
- Aggressive price discounting to stimulate demand.
- Unethical trading practices to gain unfair advantages over competitors.
- A large proliferation of products and services.
- Shrinking profit margins due to price discounting and declining market demand.
Declining markets, in most instances, create hostile markets. However, hostile markets can also occur in a growth contexts, if there is overcapacity caused by too many competitors.
With the global economic crisis, hostile and declining markets were created even in developed countries. Needless to say, this created a ripple effect in developing and under-developed countries.
Marketing in Blue Oceans for hostile markets
How can Blue Ocean thinking work in hostile/declining markets? In order to illustrate the practicality of the Blue Ocean strategy in such markets, here are some examples.
In my native country, Sri Lanka, the economy had many reversals, due to internal and external factors. Hence the market had all the characteristics of hostility and decline.
Enter a local bakery-cum-food outlet chain. In Sri Lanka, bread and related products are made and sold in traditional bakeries, using fairly primitive methods. Prices are kept low, quality is a variable.