Blue Ocean Strategy – Case Study

free essayThe success of either a one-roomed business or a Fortune 500 company depends on an array of factors. Marketing strategy is a major determinant of the formation of a solid foundation upon which the consistent growth and expansion of any business are based. The marketing strategy chosen should enable the business to expand by providing more value to target consumers whereas reducing the associated costs.

1. Systematic Thinking and Strategic Marketing

Systematic thinking relates to the understanding that there are different system parts that have an ability to influence one another to form a whole (Brown, 2012). Today’s information age has created a new dilemma. Tools such as the Internet have made information and knowledge accessible to almost all people. The rate and levels of interaction in the modern society have not only boosted communication but also influenced how business is done. The downside, however, is that such systems have progressed to become increasingly multifaceted. Therefore, there is a need for business owners and managers to appreciate the systematic thinking to remain competitive. Thus, systematic thinking focuses on understanding a system by examining the linkages and connections between the components that encompass the entireness of a particular system (Haines, 2016).

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In the future, systematic thinking should relate in different ways to strategic marketing. The two should explore the design and edifice of the organization as an incorporated, multifarious composition of many intersected systems that have to work together for the whole organization to function successfully. Systematic thinking will help inform sensible strategic marketing decisions. For instance, by indicating how components such as human and non-human factors, policies, technology advancement, and informal structures among others affect and relate to one another in a system, a business management will establish the best marketing strategies that will effectually propel it past the competition (Haines, 2016). The two should relate in creating an extensive understanding of the organization, analyzing copious interdependencies, and finding capacities that will influence the system and help identify and record possible future changes that establish a basis for a preemptive and malleable procedure in the operations of the organizations. This will assist organizations in identifying how to venture appropriate strategy dynamics to implement marketing strategies for the future.

2. Blue Ocean Strategy

The blue ocean strategy discourages competition within the confines of an industry that already exists (Kim & Mauborgne, 2015). In the case study, Cirque du Soleil demonstrates the effectiveness of embracing blue ocean strategies to build a reputable brand. The subsections below are the reaction to the blue ocean strategies employed by Cirque du Soleil.

Creating an Uncontested Market Space

In their study, Kim and Mauborgne (2015) argue that aiming at competing in markets that are already overcrowded does not warrant the sustenance of high performance. Cirque du Soleil effectively demonstrates the need to invest in uncontested spaces. The circuit industry was not only saturated but it was also slowly declining. However, Cirque du Soleil took a different approach and pushed past the boundaries of the existing red oceans. By venturing into new spaces, businesses take advantage of growth opportunities and profitable ventures. When companies venture into red oceans, the market spaces become overcrowded, and the profit ratios reduce, making the red ocean bloody. Therefore, the strategy of creating and investing in previously uncontested market spaces increases the chances of creating a brand that will last a lifetime.

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Making the Competition Irrelevant

Today, businesses limit their chances of expansion and growth by venturing into red oceans. However, Kim and Mauborgne (2015) show that by making the competition irrelevant, the unique strength of the business world is exploited. Cirque du Soleil could have ventured into the red ocean and competed against companies such as Barnum and Bailey and Ringling Bros among others. However, by making competitors irrelevant and venturing into previously untapped areas of the circus, it not only made a name for itself but also created a new pool of consumers for itself. Making competitors irrelevant means that competition is not the businesses’ benchmark. This strategy is undeniably crucial for various companies as it sets them at an incomparable level. Further, it ensures that one does not have to scramble for the already small number of customers because it creates a new pool in the blue oceans.

Creating and Capturing New Demand

Red oceans are usually saturated as the businesses have to outdo one another in attracting and maintaining customers. Therefore, by investing in such oceans, a business just increases the supply but adds no demand. However, in blue oceans, a new demand is captured and created, which is evidently essential, especially for building brands that last a lifetime. For Cirque du Soleil, value innovation was created by including aspects that attracted a new group of customers (Kim & Mauborgne, 2015). A differentiated offering, as was the case in Cirque du Soleil, appeals to a new brand audience. Usually, circuits attract children, but Cirque’s differentiation attracted an adult audience, as well. Such success demonstrates the effectiveness of creating new demand and setting a pedestal for other businesses.

Breaking the Value/Cost Tradeoff

The blue ocean strategy is based on the creation of value innovation. Here, a business creates a value leap for target consumers. The case of Cirque du Soleil demonstrates how imperative this strategy is. The company differentiated while venturing into the industry at lower costs. For example, the circuses needed to have and maintain animals, which was costly. Further, they required more people to perform three shows at a time. However, Cirque du Soleil used one venue and did not use animals. Further, it opted to use ordinary street gymnasts rather than brand stars (Kim & Mauborgne, 2015). As a result, their performance was of a higher value but at lower production costs. The audience paid higher costs and the revenue increased. Therefore, it is undeniable that this strategy is central in establishing a business in blue oceans.

Aligning the Whole System of Company’s Activities in Pursuit of Differentiation and Low Cost

The blue ocean strategy only works when the company’s whole system is aligned to achieve a suitable differentiation when lowering the costs. Cirque du Soleil aligned all systems such as pricing, efficacy, demand, and value to create a successfully functioning whole. When there is an interdependence of different parts of a system, a business is likely to perform well in blue ocean market spaces. The environmental view argues that companies usually operate at the mercies of economic factors beyond their control (Brown, 2012). However, with proper alignment of systems as demonstrated by Cirque, they can reconstruct the systems to their benefit, hence conforming to the re-constructionist view.

The Relationship between Step 1 and Step 2

The discovery in the blue ocean strategy discussion relates to the discussion on systematic thinking. To create a successful business, it is important to know not only how different systems interact to make a whole but also how the whole functions in various environments (Haines, 2016). The Cirque du Soleil example demonstrates that venturing into blue oceans requires suitable strategies to succeed. Factors, such as the environment, pricing, demand, value reaped, policies, and competitors, determine how successful a business will be (Brown, 2012). Therefore, the systematic thinking plays a major role in informing the operations of businesses established in blue oceans, whether new entrants or incumbents.

Conclusion

Cut-throat competition characterizes today’s business environment. Systematic thinking plays a role in the creation of successful brands as it allows business operators to know how different parts of the system operate and relate. As a result, systematic thinking increasingly affects the strategic marketing chosen. The blue ocean strategy is one of the approaches to achieving growth. Rather than venturing into red oceans, businesses should apply different strategies to create their sphere in uncontested market spaces.