Team 8: Monica Rojas
October 11, 2010
Blue Ocean Strategy
The two key concepts introduced in the article “Blue Ocean Strategy” are the Red Ocean and Blue Ocean Strategies. Red Oceans are all industries know to exist today. Companies applying Red Ocean strategy within a given industry are trying to outperform their competition to increase their market share of an already existing demand. As competition gets more and more fierce, products become commodities with little differentiation between competitors and consumers make purchase decisions based on price. This behavior ultimately reduces the profits of all the industry’s participants and growth potential is eliminated. Blue Oceans in contrast are industries not yet in existence therefore the new markets are uncontested and new demand is created. These new markets render ample opportunity for growth that is ...view middle of the document...
After a Blue Ocean is created it must also be protected resulting in sustainable brand equity.
Procter and Gamble has been competing in the Red Ocean of the toothpaste industry for over 60 years with its signature Crest brand of toothpaste. P&G applies the Red Ocean strategy by making incremental improvements to its Crest toothpaste; examples include Crest Pro-Health, Crest with Scope, and Crest Clinical. P&G and the other toothpaste manufactures such as Colgate-Palmolive are trying to increase their market share of the already existing demand through these incremental improvements in toothpaste. In 2001, P&G created a Blue Ocean within the Red Ocean of the oral care industry through the introduction of its over the counter at home teeth whitening system Crest Whitestrips. Though the technology of teeth whitening systems had been available in professional dentist offices prior to 2001, P&G was the first to create demand for an over the counter at home system. P&G did not try to create a Blue Ocean outside the boundaries of their current industry rather they created a new Blue Ocean within the oral care Red Ocean. They gave consumers a leap in value over the professional treatments as Crest Whitestrips offered comparable results for a lower price and the added convenience of at home use. Crest Whitestrips continues to be the market leader in over the counter whitening systems and has boosted the brand equity of the overall Crest brand.
Potential Improvements and Concept Enhancement
Current barriers to Blue Ocean strategic thinking are that companies are too caught up in short term operations and executions which include Red Ocean reactions to competition. Blue Ocean creation takes more risk, creativity, and strategic thinking which is why it is less prevalent in everyday business culture. To shift this mentality there must be a separation of teams and budget for today’s current business Red Ocean strategy versus the future opportunities of Blue Oceans. Companies must also reward Blue Ocean creation as a measure of superiority versus competitive reactions as Blue Ocean creation is proven to be more profitable and sustainable.