The Blue Ocean Strategy for Indian MSME

Explain the Blue Ocean Strategy

Blue Ocean Strategy is a strategic business approach developed by W. Chan Kim and Renée Mauborgne in their 2005 book “Blue Ocean Strategy: How to Create Monopoly in Market Space and Make Competition Irrelevant.” It is a methodology designed to help organisations break free from the competitive “red ocean” of existing markets and create new, uncontested market spaces, or “blue oceans,” where they can thrive and grow without direct competition.

Here are the key concepts and principles of the Blue Ocean Strategy:

  1. Red Ocean vs. Blue Ocean: In the traditional marketplace, businesses operate in a “red ocean,” where they compete fiercely with one another for existing customers and market share. This results in a crowded, saturated, and often cutthroat environment. Blue Ocean, on the other hand, represents untapped market opportunities where businesses can create new demand and uncontested space by offering innovative and unique value.
  2. Value Innovation: Blue Ocean Strategy encourages organisations to focus on “value innovation.” This means simultaneously pursuing differentiation (creating a unique offering) and low cost (achieving cost efficiencies). By doing so, a company can offer something new and appealing to customers while reducing costs and maintaining profitability.
  3. The Four Actions Framework: To commence a Blue Ocean, companies can use the Four Actions Framework to outsmart conventional wisdom and break out of existing market boundaries. The framework involves four key questions:
    • Eliminate: What factors or features of the industry can be eliminated because customers do not highly value them?
    • Reduce: What factors can be reduced well below the industry standard to save costs?
    • Raise: What factors can be raised significantly above the industry standard to provide unique value?
    • Create: What entirely new factors or elements can be created to offer a breakthrough in value to customers?
  4. The Strategy Canvas: The strategy canvas is a visual representation that compares the key factors of competition in an industry. It helps organisations see where they stand compared to competitors and identify areas where they can create differentiation and value.
  5. Non-customers: Blue Ocean Strategy also emphasises the importance of reaching out to non-customers, which includes potential customers who are not currently using the product or service or even people who are using a competing product. Companies can design strategies to attract them to the blue ocean by understanding the reasons for their non-consumption.
  6. Market-Creating vs. Market-Copying: Blue Ocean Strategy focuses on creating new markets rather than imitating or competing directly with existing markets and competitors. This approach reduces the pressure of intense price competition and fosters innovation.
  7. W. Chan Kim and Renée Mauborgne recommend a systematic and structured process for implementing the Blue Ocean Strategy, including the development of the strategy canvas, the elimination-reduction-raise-create (ERRC) grid, and the pursuit of innovation in value, cost, and pricing.

Many companies across industries have used the Blue Ocean Strategy to reinvigorate their growth and achieve long-term success. By focusing on innovation, value creation, and market-creating strategies, organisations can find new opportunities and make competition less relevant, leading to sustainable business growth and higher profitability.

The Blue Ocean Strategy for India involves identifying untapped market opportunities and creating uncontested market space in the diverse and evolving Indian market. Several real-life examples showcase how businesses have applied Blue Ocean Strategy principles to succeed in India:

  1. Patanjali Ayurved: Patanjali disrupted the Indian FMCG (Fast-Moving Consumer Goods) market by offering natural and Ayurvedic products at competitive prices. Patanjali created a blue ocean within the FMCG sector by targeting health-conscious consumers seeking natural alternatives and competing with established multinational companies like Unilever and Nestle. Its strategy offered a unique blend of traditional Ayurvedic remedies, pricing strategies, and an emphasis on indigenous and natural ingredients.
  2. Jio by Reliance Industries: Reliance Jio revolutionised India’s telecommunications industry by offering affordable data and voice plans, disrupting the existing market dominated by established players. Jio’s aggressive pricing strategy and its focus on high-speed internet and digital services created a blue ocean by attracting millions of new customers, many of whom were previously underserved or non-users of data services due to high costs.
  3. Zomato and Swiggy: These food delivery platforms identified an emerging need in urban India for convenient and diverse food delivery services. By leveraging technology, offering extensive restaurant choices, and streamlining delivery logistics, they created a blue ocean within the food delivery market. Both platforms expanded rapidly by catering to consumers seeking convenience, variety, and quick meal options.
  4. Byju’s: Byju’s disrupted the traditional education sector by offering online learning and personalised tutoring services. It transformed how students in India prepare for exams by providing interactive and engaging content through a mobile app. Byju carved out a blue ocean in the education technology by catering to the need for quality education beyond traditional classrooms.
  5. Ola Cabs: Ola recognised the opportunity in India’s transportation sector by introducing a technology-driven cab-hailing service. It tapped into the need for convenient and affordable transportation options, especially in cities with inadequate public transport systems. By offering various vehicle choices, transparent pricing, and ease of booking through a mobile app, Ola created a blue ocean within the transportation industry.

These examples illustrate how companies in India have successfully implemented Blue Ocean Strategy principles by identifying unexplored market segments, catering to underserved needs, leveraging technology, and offering unique value propositions. They created or redefined new markets, leading to substantial growth and market leadership in their respective industries.

What is the Blue Ocean Strategy for India? Give real examples for MSME.

The Blue Ocean Strategy for India’s Micro, Small, and Medium Enterprises (MSMEs) involves leveraging innovative approaches to find uncontested market space and create value in sectors often characterised by intense competition. Here are a few real examples of how MSMEs in India have applied Blue Ocean Strategy principles:

  1. Chai Point: Chai Point, a Bangalore-based startup, identified a blue ocean within the traditional tea-selling market. It introduced a chain of stores and vending machines offering freshly brewed, hygienic, and affordable tea. Chai Point attracted customers seeking a convenient and consistent tea experience by focusing on technology-enabled quick service and quality, creating a new market space within the tea retail industry.
  2. Paperboat: Hector Beverages, the company behind the brand Paperboat, tapped into the nostalgia market for traditional Indian beverages. Recognising the need for natural and authentic beverages, they launched a range of ethnic drinks like Aam Panna, Jaljeera, and Kokum, packaged in traditional designs. Paperboat created a blue ocean by offering a unique blend of taste, cultural heritage, and storytelling, catering to consumers’ desire for authentic and regional flavours.
  3. Sugar Cosmetics: Sugar Cosmetics differentiated itself in the highly competitive cosmetics industry by targeting millennials and Gen Z with trendy and affordable makeup products. By focusing on online marketing, quality products, and quirky packaging, Sugar Cosmetics appealed to a segment of consumers seeking high-quality yet reasonably priced makeup. This strategy helped them carve a niche and create a blue ocean in the crowded cosmetics market.
  4. Licious: Licious disrupted the meat and seafood industry by offering hygienically packed, high-quality fresh meat products delivered to customers’ doorsteps. Licious created a blue ocean in the online meat delivery sector by addressing concerns about quality, freshness, and convenience. They leveraged technology and a robust supply chain to establish themselves as a trusted brand in a market where such offerings were limited.
  5. Ecozen Solutions: Ecozen Solutions developed innovative technology solutions for farmers, focusing on post-harvest management and solar-powered cold storage. By addressing the challenge of post-harvest losses and offering sustainable solutions, they tapped into an underserved market, creating a blue ocean in agricultural technology for small and marginal farmers.

These examples showcase how Indian MSMEs have implemented the Blue Ocean Strategy by identifying unmet needs, leveraging technology, creating unique value propositions, and catering to specific customer segments. By doing so, they have managed to carve out new market spaces and differentiate themselves from the competition, leading to growth and success in their respective industries.

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