The Blue Ocean Strategy focuses on the three industries that closely touch people’s lives. Areas they looked at were Autos, Computers and Movie and what companies within those fields are doing to managing sustainable profit and growth through the test of time. The creation of a blue ocean strategy places its focus on strategic moves to place their brand in position long past its rise to fame. Rather than focusing on creating a company and battling your competitor’s blue ocean strategy gears to forecasting innovations and products to make oceans of uncontested market space. (W. Kim, 2004) A product strategy that is much a product of managerial action, rather than the creation or invention of new market space but the development and evolution of the products rather than the company.
Primary Strategy & Importance
The blue ocean strategy takes a look at the host of companies in the thirty plus industries and the key players within them. The process of analyzing and studying the leading and successful players and the unsuccessful and failing competition. Looking for distinct and common differences between the groups, as well as the commonalities to discover the common factors that lead to the successful growth of one and failings of the other. The consistent variable common pattern that shows focusing on competition does not provide for long term successful companies. The common practice is the within the market place the competition style strategy has little advantages to it. (W. Kim, 2004) The irrelevant old school theory that out doing your competitors was not the road to take that leads to profit and success. Placing the value in innovation and creation will lend itself to a new demand and achieve a value that has a largely dominate market with high pay offs and leave an ocean that separates you from the completion.
The creation and break out of strategic pricing and targeting the strategy of new demands and thinking of new ideas that competitors are not offering with strategic pricing and low cost you can create a new market that is far beyond the industry and competitors you seek to outdo. Marketing from the point of view of the customer or consumer rather than what planning and research will outdo your competition shows no long term successful models, and the continual innovation and meeting the visionary demands of a new market will leave you as the sole leader of a this variation of new product.
Similar Strategic Move
Blue ocean strategy shows the critical importance of focusing your strategy not on competition or trying to reinvent the wheel, but innovation and creation of demand that in 20 years will be the trend the need and meet the customer needs that competition (established or not) have failed to see. Important factors of use of the company talent and resources such as cost and general broad customer generic products will satisfy the moment but mostly established players succeed and ride the roller coaster of size and market share. The best example that uses the blue ocean strategy is the Fitness industry and the success of Health Clubs. The gym and fitness industry is a mostly new industry in America and since the 1970’s/1980’s has had more than its fair share of failures as the innovations and offerings mixed with demand were not there. The importance of health and taking care of yourself as well as the eternal trend of looking good was a trend that was gaining strength and today has become a way of life (or you will have no life you will be dead).
Gold’s gym which is credited for taking the fitness gym to the level of meeting a way of life in America that has now become a way of life. Insurance companies, doctors, social circles, advertisements, daily activities and stamina, and the demand of your own mother to exercise stay in shape, be healthy is a must. Your insurance companies, your employer, social circles even give discounts, benefits and incentives for those who enroll in gyms and health clubs. Today Gold’s gym has survived the revolving door of new gym clubs that come on the market and leave. Various fitness trends have made things such as cycling, weight lifting, yoga, kick boxing to launch sub-specialty industries who match the services and demand for health and fitness in huge industry. The estimated revenue of health clubs in the US being $25 Billion dollars a year, and an estimated database of over 48 Million members in America (1/8 of the total US Population) the industry started just thirty to forty years ago is huge. (Statista.com, 2013) Innovative ways of bring people in to use their facilities and offering of different amenities and services has been the key to what companies will stand the test of time and which will fold.
Trying to out price the customers has led to the closure of many successful gyms (in their time) however, not using innovation that would separate them from the competition in terms of staying a head of the curve for demand and trends lead to their closure. Companies that have taken risk such as LA Fitness and 24 Hour Fitness may very well be huge money makers and leaders in the market but take on many elements of those that focused on coverage and competition. Their size may make it difficult for creative new products and services as they have hundreds of clubs in several countries that employ thousands of people that need to be trained and adjusted. Strategy today continues to lend to the success and meet demands and needs of the industry customers want such as multiple locations, low cost, and amenities.
Red Ocean Version Pro & Con
An alternative red ocean move for the health club industry is Belly’s Total Fitness. A onetime industry leader and attributed for making the health club business a chain group in the US is now all but dissolved and absorbed by larger and constantly redeveloping competitors such as LA Fitness and 24 Hour Fitness. The signature and staple business model may have been both the success and failure of the business. Offering multiple locations within the same network and multi-amenity locations that put them as an up and coming trend that cast a shadow of industry leader Gold’s Gym. The growing health clubs such as LA Fitness, and 24 Hour Fitness observed the success of Belly’s and began to open up locations with similar features, but at lower cost to members and offering the latest and greatest in programs, equipment and services.
The blue ocean strategy that LA Fitness and 24 Hour fitness use of reading the trends and demands of members and following the strong national focus of fitness and health has allowed them to consume the once leading and fellow competitors growing their network and member base to levels never expected. With the industry being so new it’s hard to see if places such as LA Fitness and 24 Hour fitness will last the test of time is a question only time can answer. What I do know is that if they are executing an effective strategy of innovation versus the research and development and focusing on and competitor intelligence will show no advantage for their market share and long term profits.
The fundamentals of blue ocean strategy rest solely in the creation of value seen by the customer and lower cost while simultaneously differentiating your brand, product or service within industry and rejecting old world style tunnel-vision focus strategy of your competitors. By delivering these important features of blue ocean strategy you create a sustained powerful impact on a distinct market that benefits what would have been your competition and creates blue oceans of new opportunity that spin off into a new existing market that you have all to yourself.
Perreault, W. D. (2011). Basic Marketing: A marketing strategy planning approach (19th ed). New York: McGraw-Hill Irwin. Statista.com. (2013). U.S. Health Club Industry . New York: Ipsos Media, Simmons National Consumer Studies and Consumer Insights from Scarborough Research. W. Kim, R. M. (2004). Blue Ocean Strategy. Harvard Business Review, 10(86), 76-84.