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
At the other extreme are five-star hotel bakeries, offering excellent quality products at higher prices (catering to a niche market). Hence, a Blue Ocean was present, i.e., good-quality bakery and related products at affordable prices (note – not the lowest prices). This is the Blue Ocean that this local chain entered.
In true Blue Ocean strategy, they worked hard to eliminate and reduce unnecessary, non-value creating expenditure. They raised the bar on quality of finished products, and created a range of novel products – of which even five-star hotels would have been proud.
The results have been amazing. Over the past five years, sales and profits have been great. Customer volumes are growing. The good news is that no direct competitor has been able to make it, as yet – although many have tried.
Another excellent example of Blue Ocean strategy is Malaysia’s low-cost carrier Air Asia, which operates in the fiercely competitive airline industry. What is the Blue Ocean that they captured? Rather than focusing on existing air travelers, they focused on non-travelers, a much larger segment.
In order to provide lower prices, they reduced all possible non-value creating costs. Simultaneously, they differentiated by creating a good service standard, convenience of travel and speed.
The results are simply astonishing. In an industry where many front-line players are bleeding in Red Oceans, Air Asia is hugely profitable and has been able to sustain their competitive advantage.
Organizations in emerging and developed economies would do well to explore Blue Oceans. To do so, out of the box thinking is required.
Further, rather than focusing only on existing customers, Blue Ocean strategy requires a focus on non-users in a given market. Blue Ocean strategy will be something hard to beat in the years to come.
Prasanna Perera is a marketing and management consultant and chartered marketer with CIM UK Sri Lanka.