Imagine that you want to start a business, and then you are thinking of what you must do. You are thinking too much but not get to the focal point. When one day, you were walking across your home, you find there are two sweet shops and these two shops work very well.
When you go there, there is so much rush that makes you have to wait for a long time. Now you get the preferable idea of doing what. You also decide to open a sweet shop in the vicinity of those two shops. Luckily, you get to find the shop on rent where you wanted to open your sweet shop.
Without wasting an inch of round the clock, you arrange funds from suitable sources to utilise the opportunity. Finally, you get success in opening yourself a sweet shop with all difficulty and hard work. Days after opening your shop, you realise that you have very few customers.
Knowing this, you get attentive and careful for your shop. You bear some loss and let your sweets opened for everyone for free tasting. With this, you want to make them feel for the taste of your sweets. You will also be giving huge discounts on your sweets, and you find this strategy to work for you.
You start receiving customers, but your profit margin reduces with time. Since your shop is new in the area, you begin facing problem on a huge scale. You soon understand that your idea for your business is not working, but the problem was not limited to that.
The other problem is starting when the owners of existing sweet shops see you are receiving their customers. They begin by giving maximum discounts.
The difference is that they are already established. They have significant financial backing, as they have been working for so long. They can give off the discounts for a long time.
Red Ocean Strategy
This reduces your customers. Finally, the profits will go in vain and brings you to that worst level that forces you to shut the doors of your shop. Now you have become failed in the above situation. It is because you have applied the not-so-great, called Red Ocean Strategy.
Under this strategy, different companies compete with each other for getting customers. They try to maximise their customers on their side. They male losses of each other and even sometimes, the conflicts reach to bloodshed. This is why one can call this strategy as the Red Ocean Strategy.
In technical terms, Red ocean strategy holds three characteristics:
- First- this works where there are already established companies.
- Second- this works there where the companies tend to target each other’s and beat each others’ moves.
- Third- this works where the current demands and needs accomplished. They following up the already setups of the industrial boundary and rules.
For example, to sell sweets, there are some rules proclaimed already. You should open a shop in a rush area, offer sweets for the taste for free and free home delivery. There are many other rules set in the existing market. You must follow them because if you do not commit this, you cannot receive customers.
Blue Ocean Strategy
Besides this, you have to do something new to fight the competition. It is to fulfil the demand for sweets in the market called the Red Ocean Strategy. The experts recommend another way or another strategy that you can use, called the Blue Ocean Strategy.
You might have heard that you need to suppress your competitors if you wish to get success. Still, this concept is not workable in the Blue ocean strategy. This strategy is where you will see no competition. You are avoiding the red ocean and enjoy your diving and swimming in clear blue water of the ocean without any conflicts.
And according to much research, this is the best approach to follow in business. If we compare the red ocean characteristics from that of blue ocean characteristics, we would see,
- In the blue ocean strategy, you create a new intact market
- It is where you make the competition irrelevant
- You create new demand and capture them
These are the characteristics of the Blue Ocean that make it superficial. This is why you should also use the blue ocean strategy for the success of your business.
You can make use of loans to pacify the economic need of your business. If you are looking for long-term loans with bad credit, you may seek help from direct lenders.
The next question is how to implement this profitable strategy, and we will discuss it further.
Four action framework
There would be four things to consider under the action framework. It can help your business to enter the field of business.
- Eliminate- finding what you are competing with others, and you need to eliminate that from your product that can end the competition.
- Reduce- finding the aspect that you must reduce from the standards of regular industries to stand out.
- Raise- finding the factors that you can newly create and those that you had never introduced before.
- Create- analysing the factors that you can increase from that of the standards of usual industry standards. You need to find out the factors that no one is implementing.
Concluding with examples
A long time ago, I visited Mac Donald, where I had ordered a burger for the first time. When I had the burger, the first thing that stroked my mind was how cheap this was. My mother would have prepared the delicious burger that is ostensible much better than this I had there and why people have it.
Some people thought of the same side and tried to introduce their new burger outlet. They failed as they were using the red ocean strategy where already there was a big name of McDonald. On the other hand, a company in Berlin, Germany, where a company came into picture known as Burger AMT, successfully targeted its target.
It went unique against the pre-existing burger companies. They introduced homemade burgers. They kept quality and morale; they had low prices and even promoted concerts and bands. To be precise, they were following the blue ocean strategy.