Increased competition, saturated markets, and convergence of markets, consumer volatility … companies operate in a real “red ocean”, red symbolizing the bloody struggle that the market players are engaged in. These are hyper-competitive markets where price war often supplants innovation.
To circumvent and overcome this situation, the
A bit of economic history …
Contemporary in the Great Depression of 1929, Joseph Schumpeter, a German economist, highlighted the driving force behind innovation in driving the economy and growth. The creation of new products, the creation of new services, the adoption of innovative processes and techniques, or the search for new outlets, generate a technological shock that is at the origin of a growth cycle.
Surprising as it may seem to some, marketing is an area related primarily to economics. Supply, Demand, Market, Competition, Individuals, Income, Growth … these terms belong to the fields of microeconomics and industrial economics and are also found in the marketing language. The economy has made small and the marketing is part of this descent. It is therefore natural that the two disciplines intermingle and that the progeny borrows the ideas of its parent.
Innovation and disruption to isolate themselves from these competitors.
Thus, innovation is at the center of a marketing strategy called ” Blue Ocean Strategy “. Described by W.Chan KIM – Renée Mauborgne, this strategy as opposed to the “Strategy Red Ocean”. The red ocean is characteristic of the current global situation: increased global competition, saturated markets, and convergence of markets, consumer volatility … In this context, companies focus on competition, differentiation more efforts, cost control, the exploitation of the known and expressed request. All this contributes to an erosion of market share and corporate income.
Like Schumpeter’s theory of technological shocks, the “Blue Ocean” strategy breaks with these corporate behaviors by putting innovation at the center of reflection. Indeed, history shows that the success of companies that have really succeeded originates in a precursor positioning, beyond the universe of direct competition, with simple solutions, which responded to a real need, that the company n had not necessarily expressed. The objective is to seek and create a new strategic space where competition is zero or weak.
The whole point of this strategy is to grow away from direct competitors by creating its own market.
The important thing is to focus efforts on a disruption – with what exists on the market to circumvent the competition.
How to create a disruption?
Create a new experience
Whether it is a product or a service, the consumer experience is at the heart of innovation. The Wii, for example, or iPhone, have been able to offer an unprecedented user experience in the worlds of video games and mobile telephony. Technological innovation is certainly present, but it is not fundamental, whereas experience is unprecedented.
Establish new codes
Benchmarking is set aside, competition should not serve as a basis for reflection. On the other hand, studying other sectors and industries to draw best practices and apply them to one’s own offer may be one way to explore. For example, My Marketing Manager was inspired by a very widespread business model in the business services sector – outsourcing – but not yet widely used in marketing. We also use innovative tools and methods to support our customers, thus meeting our customers’ expectations, connected, innovative and disruptive.
Focus on customers
But not necessarily on the most important customers. The idea is precisely to look for a new “playground” by potentially serving a new customer segment. For example, by launching the first skis designed specifically for women – both technically and in terms of design – Many businesses have benefited from an important growth relay. The simple fact of adapting its offer to the identified women has made it possible to satisfy a need hitherto not expressed.
Putting perceived value at the heart of its offer
This principle applies mainly to services. The objective will be to offer a service perceived as innovation because with a high perceived value. This can be an economy in terms of time or money realized through this offer. Generally, all services aimed at reducing an expectation or saving a chore are valued. Where there is a queue, there is a business to do!
Concretely, what does it give? A few examples to illustrate.
Cirque du Soleil has completely redefined the very offer of the circus, concentrating on the expectations of the spectators. This circus is positioned as an entertainment with a highly innovative image.
Starbucks is an excellent example of a company that has successfully implemented the Blue Ocean Strategy. Many cafes were already established when Starbucks was launched. Instead of focusing on their coffee, they have developed the Starbucks brand as different, a strategy still unexplored in this sector. Starbucks has chosen to develop a wide variety of beverages: coffee, but also teas, smoothies and “Frappuccino”. By providing newspapers and a free wifi network, Starbucks encourages coffee lovers to stay and chat. This has allowed Starbucks to become a social venue.
Tesla Motors has designed the world’s first Electric car with performance and design comparable to traditional high-end sports cars. Today there is very little competition for Tesla in this market and the company enjoys great success.
The Nintendo Wii has chosen innovation as the core of its strategy. This is a key principle of the blue ocean strategy that reduces costs and differentiates simultaneously. To reduce costs, Nintendo has eliminated the hard drive and DVD functionality found in most game consoles and reduces quality and processing graphics. At the same time, Nintendo introduced wireless motion control to differentiate itself from the market offer. This allowed the company to offer a range of new features and benefits that had not been seen in the game world before, such as the ability to use a game console to get in shape or play in a larger social group.
Is this reserved for large companies? Not at all.
The examples below are directly chosen from some of my analysis.
KeeSystem, Fintech based in Switzerland and Monaco, offers software for wealth managers. The company has chosen to innovate further by integrating into its offer an e-banking platform allowing the managers to communicate essential information to their customers. KeeSystem has therefore concentrated on the value it brings to its customers through innovation so that they themselves can value this innovation with their own customers. A virtuous circle of value.
Speaker has chosen to rethink English courses by enabling you to practice English with a native English speaking coach everywhere and all the time. The company identified needs not met by traditional English courses – insufficient oral language skills – and the need to take an interest in learning. She proposes to discuss with a coach according to common interests.
Terre de Monaco, launched in 2016, specializes in urban culture. The company designs and maintains vegetable gardens and orchards in urban areas and on the roofs of buildings. Innovative offerings, proven expertise and a concept adapted to the urban environment allow this young company to experience very good growth.
And even we, EmailDatabase.marketing, have chosen this strategy from the start. We identified an unmet need among small business executives and entrepreneurs: to be able to rely on marketing professionals to advise them, to enlighten them, but also to accompany them in the operational implementation of the actions. Inspired by the business model of outsourcing already widespread in other sectors, we have developed a new offer: marketing outsourcing.
What blue ocean strategy for your business?
While the basic principles of the Blue Ocean Strategy are accessible to all, its implementation generally requires the intervention of experienced men and women, mostly from the worlds of marketing and the economy. However, the involvement of the management team is essential to give an impulse and a vision.
In the same way that Schumpeter’s technological shocks create a virtuous circle of growth, the Blue Ocean Strategy, by departing from the competition, allows the company to initiate growth by capitalizing on a situation offering it comfortable incomes and therefore “to reap”.
However, as Schumpeter has described, the technological shock has a limited duration over time, which varies according to the importance of innovation. There is a time when technology is widely adopted and no longer provides a source of growth. In this case, a new innovation has to come to create a new technological shock to bring about a new cycle of growth.
The Blue Ocean strategy follows a similar path. The cycle of growth initiated by the creation of a new strategic space will vary according to the importance of innovation, real or perceived. If the cycles described by Schumpeter vary from 10 to 50 years, the Blue Ocean has a much shorter lifespan due to an open and globalized economy. Thus, although iPhone has dominated the smartphone market since 2007, it is now largely overtaken by Android which offers an inbound user experience in direct competition with Apple’s innovation.
Creating his Blue Ocean is therefore only a first step. It will then have to be maintained and ensured that it is maintained, forcing companies to constantly renew themselves.