You're competing in a crowded market. Ten competitors offer similar features at similar prices. Prospects compare you on spec sheets and choose based on minor differences or relationships. Margins compress. Customer acquisition costs climb. Growth requires constant battle for every deal.
You're swimming in a red ocean—a bloody, competitive market where everyone fights for the same customers using the same playbook.
Blue Ocean Strategy, developed by W. Chan Kim and Renée Mauborgne, offers a different approach: instead of competing in existing markets, create new market space where competition is irrelevant. Make the competition irrelevant by redefining what customers value.
Red Ocean vs. Blue Ocean
Red Oceans are existing markets with defined boundaries, known customers, and established rules of competition. Companies fight for market share in zero-sum games. Success means beating competitors. As more companies compete, profits and growth diminish—the ocean turns red with blood.
Most strategic thinking focuses on red oceans: how to position against competitors, how to win market share, how to defend territory. This breeds incremental thinking that accepts market boundaries as fixed.
Blue Oceans are untapped market spaces where demand is created rather than fought over. Competition is irrelevant because you're creating and capturing new demand. There's space for growth and profits.
Blue ocean strategy doesn't mean inventing entirely new industries. It means reconstructing market boundaries to create new value-cost combinations that render existing competition irrelevant.
Classic examples:
- Cirque du Soleil redefined circus by eliminating animals and star performers while adding theater and artistic music, creating adult entertainment that wasn't traditional circus or theater
- Southwest Airlines eliminated meals, seat assignments, and hub-and-spoke routing while adding frequent departures and friendly service, creating affordable air travel
- Netflix eliminated late fees and physical stores while adding unlimited rentals and recommendation algorithms, creating convenient home entertainment
Each created new market space by changing what the industry competed on.
The Strategy Canvas
The Strategy Canvas is Blue Ocean Strategy's central analytical tool. It captures the current competitive landscape and reveals how to break from it.
The horizontal axis lists key factors industries compete on—the features, services, and dimensions that define offerings.
The vertical axis shows the offering level for each factor, from low to high.
Plot your offering and major competitors on this canvas. If everyone's lines overlap with minor variations, you're in a red ocean. Everyone competes on the same factors at similar levels.
Blue Ocean Strategy uses four actions to break this pattern:
Eliminate: Which factors that the industry takes for granted should be eliminated? These are things customers don't really value but everyone provides because that's how it's always been done.
Reduce: Which factors should be reduced well below the industry standard? These are things customers value but you may be over-delivering on relative to price.
Raise: Which factors should be raised well above industry standard? These are things that matter deeply to customers but the industry under-delivers.
Create: Which factors should be created that the industry has never offered? These are new sources of value that could unlock latent demand.
These four actions create a new value curve—a different strategic profile that breaks from industry conventions.
Applying the Four Actions Framework
Let's apply this to a hypothetical project management software competing in a crowded market.
Traditional industry competes on:
- Feature breadth (Gantt charts, resource management, time tracking, etc.)
- Customization capability
- Enterprise scalability
- Integration options
- Reporting and analytics
- Price
- Implementation services
Everyone offers similar feature sets at similar price points. It's a red ocean.
Blue Ocean reconstruction:
Eliminate:
- Complex enterprise features most teams never use
- Extensive customization that requires training
- Professional services and implementation costs
Reduce:
- Advanced reporting (provide basic analytics, not BI tool)
- Integration breadth (support top 10 tools, not 100)
Raise:
- Ease of use (no training required, instant productivity)
- Speed (everything loads instantly, no lag)
- Mobile experience (full functionality on phone)
Create:
- Automatic project creation from conversations
- AI-powered progress tracking
- Built-in team communication (no separate chat tool needed)
This creates a new value curve: a project management tool competing on simplicity, speed, and intelligence rather than features and customization. You're not better at traditional factors—you're competing on different factors entirely.
The Three Characteristics of Good Blue Ocean Strategy
Kim and Mauborgne identify three criteria for successful blue ocean strategies:
Focus: Your strategy profile should show clear focus on a few factors, not moderate investment across many. The value curve should have peaks and valleys, not a flat line matching competitors.
Divergence: Your value curve should diverge from competitors'. If your line overlaps with the industry average, you're still in the red ocean regardless of messaging.
Compelling tagline: Your strategy should be capturable in a clear, compelling tagline that communicates unique value. "Project management that finally works the way you think" tells a different story than "Comprehensive project management platform."
If your strategy lacks these characteristics, keep iterating on the four actions until you achieve them.
How Product Marketers Apply Blue Ocean Strategy
Category creation: Blue Ocean Strategy often results in category creation. You're not "better CRM"—you're creating "revenue intelligence platform" or "customer success operating system."
Positioning: Your positioning emphasizes the new factors you compete on, not comparisons on traditional factors. Don't lead with "we have better Gantt charts." Lead with "the first project management that requires zero training."
Messaging: Messaging should reframe buyer criteria. Instead of helping prospects compare you on traditional factors, help them see why those factors don't matter and why new factors do.
Competitive landscape: Change the comparison set. Don't compare yourself to direct competitors in the red ocean. Show how you're an alternative to different types of solutions or to doing nothing.
Sales enablement: Train sales to reframe conversations away from traditional evaluation criteria toward the new value dimensions you compete on.
Product roadmap: Resist pressure to match competitors feature-for-feature. This pulls you back into the red ocean. Invest in factors you're raising and creating.
The Buyer Utility Map
Blue Ocean Strategy includes another tool: the Buyer Utility Map, which identifies opportunities to unlock new demand.
The map has two dimensions:
Buyer Experience Cycle: Purchase → Delivery → Use → Supplements → Maintenance → Disposal
Utility Levers: Productivity → Simplicity → Convenience → Risk → Fun and Image → Environmental Friendliness
Plot where your industry creates value. Most industries cluster in a few boxes (often productivity during use). Blue oceans often open by creating value in underserved boxes.
Example: Traditional gyms create value in "productivity during use"—they help people work out effectively. Planet Fitness created blue ocean by emphasizing "simplicity during purchase" (no long-term contracts), "risk reduction during use" (judgment-free zone), and "convenience across the cycle" (24/7 access, locations everywhere).
This tool reveals non-customers—people the industry doesn't serve because it doesn't create value in dimensions they care about.
Three Tiers of Non-Customers
Blue Ocean Strategy focuses on converting non-customers, not stealing competitors' customers.
First tier—"Soon to be" non-customers: People who barely use current solutions and are ready to leave. They're minimally satisfied. A better alternative would convert them to heavy users.
Second tier—"Refusing" non-customers: People who actively reject current solutions because they don't meet needs. They've evaluated options and said "no thanks."
Third tier—"Unexplored" non-customers: People the industry has never targeted because they seem too different from current customers.
Most strategies target current customers of competitors (red ocean competition). Blue Ocean targets non-customers who represent untapped demand.
Common Mistakes with Blue Ocean Strategy
Eliminating too much: You must eliminate factors that truly don't create value. Eliminating things customers care about isn't strategy—it's just being worse.
Creating without eliminating: True blue ocean requires both elimination and creation. If you only add new factors without removing others, you increase cost without creating a fundamentally different value proposition.
Niche vs. blue ocean confusion: Serving a small niche with specialized features is red ocean competition in a smaller pond. Blue ocean creates new demand, not narrower targeting.
Ignoring execution: Strategy alone doesn't create blue oceans. You must deliver on the new value proposition. Cirque du Soleil only works if the shows are actually spectacular.
One-time thinking: Blue oceans eventually attract competitors and turn red. The strategy must evolve. Once competitors copy your innovation, you need the next blue ocean move.
When to Use Blue Ocean Strategy
Use this framework when:
- Your market is commoditized with thin margins
- Customer acquisition costs are high due to competition
- You have resources to make bold strategic moves
- You're entering crowded markets where red ocean competition would be brutal
- You need to unlock new demand, not fight for existing customers
Don't use it when:
- You have dominant market position in fast-growing space
- Your product has strong network effects creating natural moats
- You lack resources to execute a differentiated strategy
- You're in early-stage markets with ample untapped demand
Blue Ocean Strategy requires commitment. You can't eliminate industry factors while hedging by keeping them "just in case." The strategy demands conviction.
Getting Started with Blue Ocean Strategy
Start with the Strategy Canvas. List all factors your industry competes on. Plot yourself and top competitors.
If the lines overlap significantly, you're in a red ocean. Apply the four actions:
Ask: What factors can we eliminate that the industry takes for granted but don't create value?
Ask: What factors can we reduce because the industry over-delivers relative to what customers value?
Ask: What factors can we raise because the industry under-delivers?
Ask: What factors can we create that have never been offered?
Test whether your new value curve has focus (concentrated investment in few factors), divergence (different from industry), and compelling tagline (communicates unique value clearly).
Validate with potential customers, especially non-customers who rejected existing solutions. Does your reconstructed value proposition appeal to them?
Blue Ocean Strategy isn't about being better. It's about making competition irrelevant by changing the game. When you succeed, you create and capture new demand rather than fighting over existing demand.
That's the difference between bloody competition and profitable growth.