Mkt/421 - Blue Ocean Strategy

Blue Ocean Strategy

Trisha Sartino

MKT/421

9/21/15

Gary Crum

Blue Ocean Strategy

Is it possible to grow a business without tough competition from within the same industry? Blue Ocean strategy strives for just that by suggesting that a company needs to seek out “uncontested market space” (Arline, 2015). By doing this instead of engaging in traditional competition, companies can create an open ocean of market share that is free from competitors.

What is Blue Ocean?

The creators of Blue Ocean Strategy have compiled information based on a “study of 150 strategic moves spanning more than 100 years and 30 industries” (Arline, 2015). The conclusion that the authors came to is that the top companies will not fight for the same markets. They will discover ways to grow into new markets and dominate that space in the absence of competition. By differentiating themselves, the competition that is doing business based on traditional strategies becomes irrelevant. This changes the face of competitive strategies by forcing companies to think outside of the marketing box and embrace a uniqueness.

Companies that thrive in blue water

There are many companies that have created a blue ocean for themselves. These companies have changed the standards in their industry and raised the bar for customer expectations. One of the best examples of this is Southwest Airlines. The founders created the airline to be different from the start. According to “Southwest” (2015), they began with a principle that stated, “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline”. Southwest has absolutely succeeded in this. They are well known for their customer service and staff that make travel fun. Their unique approach includes planes with more leg room because there is no first class seating and flight attendants who command attention during the safety speech by infusing comedy into it. People who work at Southwest give the company high praise as well. Southwest received a second place rating on a list of best travel companies to work for by Forbes (Smith, 2013). Employees have stated that Southwest provides them with flexible scheduling, managers and executives who care about what employees think, and opportunities for growth. More than that, employees feel like the company is more of a family and the company culture exemplifies that feeling. These qualities have set Southwest apart from their competitors in a major way.

Red Water strategies

Southwest could alter their marketing strategy to compete in a red ocean. By changing their seating configuration on their aircraft, Southwest would be able to compete in the first class airfare market with airlines such as Delta and American Airlines. They could then undercut the competitions price on first class airfares. The benefit to this strategy would be the ability for Southwest to gain a new segment of customers who will only fly first class. Unfortunately, there would be a tremendous cost to doing this. First, there is the obvious monetary cost of refitting the aircraft. Second, there is the cost of compromising passenger comfort in the new coach sections. The cabin comfort is a major draw to Southwest for many customers. Third, competing in luxury would change the way that Southwest conducts much of their customer interaction. They might create a more formal atmosphere in order to compete with airlines that offer luxuries such as fine wines and premium dining. Creating a more formal interaction would cause Southwest to lose much of the laid back, fun reputation that they currently have. For a company like Southwest the benefits would not be worth what would have to change in order to compete in a traditional marketing strategy situation.