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Imagine a market universe composed of two sorts of oceans: red oceans and blue oceans. In the red oceans, companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Blue oceans, in contrast, are defined by untapped market space, demand creation, and the opportunity for highly profitable growth. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set.
“A focus on the competition often anchors companies in the red ocean, and puts the competitors, rather than the customer, at the core of strategy.”
To form the basis of a blue ocean strategy,
By being both “free” and “premium,” companies are striving to be strategically priced to capture the target mass while earning profit for the premium features those users, having used the product or service, will feel compelled to buy and upgrade to.
“Blue ocean strategy is not about finding a better or lower-cost solution to the existing problem of an industry. Instead, it is about redefining the problem itself.”
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