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Blue Ocean Strategy. Paul C. Godfrey Mark H. Hansen Brigham Young University. What is a Blue Ocean?. Red Ocean Strategy. Blue Ocean Strategy. Create uncontested market space Competition irrelevant Create new demand Deny the Value-Cost tradeoff

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blue ocean strategy

Blue Ocean Strategy

Paul C. Godfrey

Mark H. Hansen

Brigham Young University

what is a blue ocean
What is a Blue Ocean?

Red Ocean Strategy

Blue Ocean Strategy

Create uncontested market space

Competition irrelevant

Create new demand

Deny the Value-Cost tradeoff

Align around differentiation and low cost

  • Compete in existing markets
  • Beat the competition
  • Exploit existing demand
  • Live the Value-Cost tradeoff
  • Align around differentiation or low cost
how do you get there
How do you get there?

Reconstruct market space


Traditional airlines are true substitutes

  • Fractional jet ownership an alternative industry
  • Reduces executive costs of travel
    • Hotels
    • Dead time
  • 70% market share in new industry, 2010*
  • 8% growth in 2010, 2% decline in 2009 for commercial carriers



What do women want?

    • Gyms vs. Home Exercise?
  • The two M’s they don’t want:
    • Men
    • Mirrors
  • Circular arrangement facilitates socialization
  • Low membership fees
  • Low capital investment
    • $25,000 vs. $500,000
  • Crossed strategic groups to create customer value

NN changed the buyer group for diabetes

    • Doctors and pure product
    • Patients and easy administration
  • NovoPen—a pen with measured doses of insulin
  • Innovo—using technology to better manage delivery times
  • From insulin provider to diabetes care company

Busses typically sell on low cost of vehicle

  • NABI created lifetime low cost product
  • Fiberglass busses
    • Cut preventative maintenance
    • Body repairs cheaper, faster
    • Light weight cuts fuel consumption
    • Environmentally friendly
    • Lower powered engines and axles
  • Blue oceans come through rescoping products/markets

Took a product known for its emotional appeal and made it purely functional, no-nonsense

  • Took a product known for its functionality and added emotional appeal

Blue ocean strategies rethink the relationship between the company and customer


The trend in music was web-based delivery

    • Napster, Kazaa, Limewire as pirates
  • Apple teams with Sony, Universal, MBG, EMI, and Warner Brothers
    • Legal downloads- $0.99
    • Better sound quality
    • Ease of browsing, downloading
  • Blue Ocean means spotting a trend and getting there first