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Red Ocean Traps Section C

This document discusses red ocean traps that can undermine blue ocean strategies. It identifies 6 common traps: 1) Seeing customer-oriented approaches as market creation, 2) Treating strategies as niche, 3) Confusing technology innovation with market creation, 4) Equating creative destruction with market creation, 5) Confusing differentiation with market creation, and 6) Equating low-cost strategies with market creation. The conclusion is that while these approaches can be useful, they are not the path to truly creating new market spaces like blue ocean strategies aim to do.

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Aathira Menon
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144 views

Red Ocean Traps Section C

This document discusses red ocean traps that can undermine blue ocean strategies. It identifies 6 common traps: 1) Seeing customer-oriented approaches as market creation, 2) Treating strategies as niche, 3) Confusing technology innovation with market creation, 4) Equating creative destruction with market creation, 5) Confusing differentiation with market creation, and 6) Equating low-cost strategies with market creation. The conclusion is that while these approaches can be useful, they are not the path to truly creating new market spaces like blue ocean strategies aim to do.

Uploaded by

Aathira Menon
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© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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GROUP 9:

JOY ASHSISH (18020841103)


NAVENDU GAUTAM (18020841200)
AJAY RAWAT (18020841205)
RED OCEAN STRATEGY: A red ocean strategy is a strategy which aims to fight and beat the competition in
an extremely competitive market.

BLUE OCEAN STRATEGY: Blue ocean strategy is where a company creates a completely new market space
(or market category). This new market space is created by launching new offerings, with the aim being to
make the competition irrelevant so that an organization can grow, uncontested, at least in the beginning.
RED OCEAN TRAPS

Mental models are ingrained assumptions and theories about the way the world works.
It dictates how people respond to changes and events. They are grounded in knowledge
acquired in class room and years of business experience.
Mental models often undermine the efforts of managers in executing market-creating
strategies.
These mental models are thought of as red ocean traps, because they effectively
anchors managers in red oceans and prevent them from entering blue oceans.
TRAP 1: SEEING MARKET CREATING STRATEGIES
AS
CUSTOMER-ORIENTED APPROACHES

This mind-set causes companies to stick to their focus on


existing customers and how to make them happier.

But NON-CUSTOMERS, not CONSUMERS, hold the key


to creating new markets. They provide the greatest insights
into the pain points that limit the size of your industry.

E.g. Sony’s Portable Reader System (PRS) launched in 2006


was aimed at opening e-reader market to a wide customer
base by building a thin, lightweight and easier to read
screen.
But……….
It lost out to Amazon Kindle.
TRAP 2: TREATING MARKET CREATING STRATEGIES
AS
NICHE STRATEGIES

E.g. Delta Airlines ‘song’ targeted too narrow a segment of fliers - stylish professional women – and
didn’t last.
It is “DESEGMENTATION” that creates new markets by focusing on commonalities rather than
differences.
E.g. Pret A Manager thrived by “DE segmenting” different customer groups-figuring out what they had
in common – to create a new marketplace.
Trap 3: Confusing Technology Innovation
with
Market-Creating Strategies

• R&D and technology innovation are widely recognized as key drivers of


market development and industry growth. ‘
• But the reality is that market creation is not inevitably about technological
innovation.
• Even when technology is heavily involved, it is not the reason that new
offerings are successful. Such products and services succeed because they are
so simple to use, fun, and productive that people fall in love with them. The
technology that enables them essentially disappears from buyers’ minds.
Trap 4: Equating Creative Destruction
with
Market Creation
• Creative destruction occurs when an invention disrupts a market by displacing
an earlier technology or existing product or service
• For Example- Digital photography

• It also involves nondestructive creation where new demand is created without


displacing existing products or services.

• Viagra, for example, established a new market in lifestyle drugs without


making any earlier technology or existing product/service obsolete.
TRAP 5: Confusing New Market creation
with
Differentiation
Confusing New Market creation with Differentiation

• Managers assume product differentiation as tapping of new markets.


• Product differentiation doesn’t cater the customers other than its consumer base.
• Differentiation is about how to stand apart from its competitors rather than creating a new space for its
products.
• BMW launched a two-wheeled scooter C1 with a price ranged from $7,000-$10,000
• It followed all the safety norms to be an urban transportation.
• It catered to a specific set of customers only.
• Hence production was stopped due to unmet sales expectation.
TRAP 6: Equating Market-Creating Strategies
With
Low-Cost Strategies
• Managers confuse reducing prices of products with attracting new customers.
• Reducing cost prices also leads companies to lower product offerings and value.
• Customers want value products at low prices.
• Companies focus on what to eliminate from current offerings rather than improving
products value.
• Southwest Airlines offers affordable air fares with its friendly, fast, ground-transportation-in-
the-air feel.
• Swatch watches attract its customers with its stylish and fun designs making it a fashion
statement
• Both companies offer differentiation with low cost.
CONCLUSION

The approaches or strategies presented as the red ocean traps are not
wrong or bad. They all serve important purposes. A customer focus, for
example, can improve products and services, and technology innovation
is a key input for market development and economic growth. Likewise,
differentiation or low cost is an effective competitive strategy. What
these approaches are not, however is the path to successful market-
creating strategies.

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