Cirque du Soleil's Success: Blue Ocean Strategy and Innovation

The Blue Ocean strategy is a concept that challenges the existing market place and creates a new market space by eliminating, reducing, raising, or creating factors that make competition irrelevant. Cirque du Soleil is an example of a company that successfully implemented this strategy to reinvent the circus industry. Initially, they targeted adults and corporate audiences, avoiding children and animals in their shows. They created a wide audience and grabbed a good market share, outpacing competitors like Ringling Bros and Barnum and Bailey. The Blue Ocean approach involves six steps: creating a new market space, making existing competition irrelevant, creating new demand, breaking the value-cost trade-off, aligning processes with differentiation and low cost, and finally, creating an uncontested market. Cirque du Soleil's success demonstrates that Blue Ocean strategy can lead to significant growth and profitability.

cirque du soleil
Analysis
ABSTRACT
The document provides the analysis of success factors
of the entertainment company Cirque Du Soleil.
Student’s name
[Course title]

Table of Contents
Introduction 1
Key Successes 2
Key drivers of innovation 3
Ansoff Matrix 5
Porter five forces 5
Value system 7
Pestel Analysis 8
SWOT analysis 9
Blue ocean strategy 10
References 11
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INTRODUCTION
Cirque du Soleil have a tagline that they reinvent circus. They are an entertainment industry;
a contemporary circus who do acrobatic performances, acting and various art forms all over
the world. They are known for their imaginary world. Cirque du Soleil is a $120 billion
industry who has a wide business of live entertainment. They have gained a good fame in the
world because of:
 Dance
 Daring
 Dexterity
 Grace
They started their business by performing road shows in streets and within few years of time
they created unbreakable records. This brand is recognized by around 60% Americans. Right
now Cirque has total 16 different shows all around the globe. Five of them are trending in Las
Vegas and one in Florida. It is an industry founded in 1984 with 50 million people watching
around 17 shows till now. They are creating more productions and thirteen of older
productions are running very strong. Cirque came on television with the first show in 1986
and grabbed 20 awards.
They started with a team of street players in around 1980 and soon in 21 years this became a
multibillion dollar industry. Cirques started with little touring shows and they became dearest
among the audience in Canada. In 1987 they took the biggest risk and agreed to perform in
the arts festival at Los Angeles.
Now they are constantly going ahead with introducing new shows every year.
KEY SUCCESSES: CIRQUE DU SOLEIL
There are various key successes of cirque du Soleil in the past.
They are a great sample of the strategy called blue ocean strategy. A good example of this
strategy. Major factors which kept the audience moving towards them are:
 Unique venue
 Unique theme
 Artistic moves
Innovation is one of the biggest success factor, for Cirque, they innovated the way to make a
move in the market. This move was successful enough to make them world famous. Each
industry has innovation factor in one way or the other. What is so special about cirque du
Soleil is that if you watch their performance, they don’t use animals. It is all acrobatic
performance, musical and arts performances. So this was something new for people, it was a
circus which was not yet explored by any other player in the industry. (Barker, 2002)
They get ideas from many artists on how to improve on the current status and what new they
can bring on the table. Not only their creative team but a variety of other resources, they get
their ideas from. The ideas come from the staff as well as from the performers all around the
globe. They conduct a workshop to grab the feedback of around 5000 employees annually to
take their ideas and work on them. Cirque has focussed on costs since beginning, they have
cut the cost by not taking animals in their moves. They don’t focus on big stars and the
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training cost which they need to pay for animals. Rather the creative team is not dependent.
They get their ideas implement it and are fully free to modify the same. For example once the
art director of Cirque has asked the creative team to use painting style for showing plots.
Data driven approach: Cirque du Soleil before venturing into any country or any specific
area, they do proper research. What is the type of audience, what will that kind of audience
prefer. A proper market research is done. The creative team work on the research and prepare
a story line for the performers. Cirque works differently from other circuses. They have
database of all the employees, their strength and weakness. If a crew perform well, they are
asked to perform a new show with the new theme in other circuses. But at Cirque, they
decide the performers as per the role and the theme from that crew. This provides an
assurance that the best performer is selected for that role.
Cirque believes that the most important thing which attracts audience is the move of artists,
their facial expressions with nice sync and taste of music.
Leadership: Cirque is known for the leadership feature which the CEO has. He serve as a big
empowerment for the team and don not impose any restrictions on the team. The team is free
to employ their own ideas. He realises the full potential of the employees and give them
enough opportunities to excel. When there is the time to take a decision, he is the one who
pays large attention to details. He features and examine every employee very closely because
he want quality work. The team under him works with a little pressure to deliver excellence
and power.
The CEO Laliberte does not get involved with the creative team daily or is not in touch with
them. Once the scene is ready he watch it with fresh ideas and does not mind even if he needs
to make a major change in the last moment. He observes the rehearsal with full dedication
and open mind to make it perfect. (“Blue ocean strategy for creating value innovation: A
study over Kedai digital in Yogyakarta, Indonesia,” 2015)
Entrepreneurship, innovation, data driven decision making are the success factors of cirque
du soleil. If the resources are utilised wisely with focus and determination, it will lead to a
good success in business.
PART A
KEY DRIVERS OF INNOVATION AND ENTREPRENEURIAL OPPORTUNITIES
CONTRIBUTING TO THE ONGOING SUCCESS OF CIRQUE DU SOLEIL:
Cirque du Soleil serves a big advantage in field of innovation. The value innovation model
which they followed is as shown. Reduce costs and buyer value fosters value innovation
which drived their growth.
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MARKET: When Cirque ventured into the market of entertainment industry, it overpowered
the exiting competition and made a good place in the market. The entrance into the market
can be analysed with Ansoff matrix.
ANSOFF MATRIX
Ansoff matrix shows the curve and trade-off between products and markets. There are four
quadrants depicting the existing and new combinations of products and markets. The four
quadrants depicts:
Market Penetration is when the market and the product both are existing. At this stage the
firm should use methods like ambush marketing and viral advertisements. Cirque du Soleil,
they used online media for promotion of their shows new as well as existing. They started
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online bookings and much more use of online media. Many posts of ambush marketing are
shared on Facebook and gathered the audience. Various advertising techniques were used like
subliminal to penetrate the market.
Market development is when the product is existing and the market is new. You have to
modify the product or service to suit the needs of new market. Whenever Cirque team goes
and perform in a new country or city they study the market. A proper market research is done
and then the shows are presented as per the audience. They started developing the market by
celebrity endorsements and using their icons to promote and develop.
Product Development is when the product is new and market is existing. So to promote new
shows in the existing country or area. They started circulating merchandise like CDs and
DVDs to retain the interest of people. They delivered some lectures and conducted seminars
to help people watch their shows which are there in the market. Some trailer release can be
made for the development of product.
Diversification is when the product or service is new and the market is also new. So new
shows for new country or new areas. This requires both market development and product
development to start with. To impress new audience, identify the competitors in the area and
grab the position of a good entertainment company. They can diversify and collaborate with
other organizations to diversify and expand more.
Technology: Cirque du Soleil has various technologies to work with. They performed at one
of the best venues at Las Vegas with appropriate technology. They have high quality stage
and that is around 152 feet grid level. They use automation and machinery grid to perform.
They have high training to match the moves. Extraordinary machines they are using these
days. They recruit high profile and experienced gymnasts and acrobats. In many shows they
have doubled the computing capacity and made some scenes fully automated. Technology is
one of the big success factors for cirque. They use SAP solutions to drive the data load. (Kim
& Kim, 2016)
High Capabilities of the performers and growing demand in the industry for entertainment.
Their shows are highly in demand. Their customer base is increasing tremendously and now
it has reached around millions in USA and all over the world.
PORTERS FIVE FORCES
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1. Threat of new entry: Low because the cost involved is high in the entertainment
business.
2. Threat of substitutes: This is high because various TV shows are also available as a
substitute which attract the audience.
3. Bargaining power of customers: This is high because the switching cost is zero.
4. Bargaining power of suppliers: This is low because no suppliers are there in
entertainment sector.
5. Competitive rivalry: This is low because there are no major competitors.
CIRQUE DU SOLEIL VALUE SYSTEM
The value system of cirque du soleil includes the supplier, the channel and the customer. The
suppliers are the performers themselves, the technology which they use, and the third party
service providers who drives their shows. These suppliers are interlinked with the channel
which comprises ticket master and Cirque’s website to get the tickets. This then in turn is
linked with the customers which includes family, friends and all other relatives comprising
the customer base.
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All the three components of the value system are equally important. Supplier, channel
partners and the customers. Value addition is required at the supplier level to the customers.
Every stakeholder creates value for the system. Their value system says that they should
maintain integrity in the process, respect the individual and to encourage the youths potential
towards their shows and participation in entertainment industry.
PESTEL ANALYSIS
POLITICAL: When they were about to start the operations, there was ban on animals in
around 33 countries. So, they cannot use animals for their circus.
ECONOMICAL: The government did not support the entertainment industry at that sort of
time. There was very less budget allotted for entertainment sector. And the economy was
running very slow.
SOCIAL: As entertainment business was just emerging in those days there was no popularity
among the audience so there was less opportunity to grow in that sector.
TECHNOLOGICAL: Cirque du soleil is one of the entertainment industries ranked high in
technology and innovation. They have won various awards for its technology and innovation
being one of the highest demand sector.
SWOT ANALYSIS
The company’s analysis of strengths and weaknesses includes the SWOT analysis. This is the
internal and external analysis. Internal analysis includes strengths and weaknesses of the firm
and external analysis includes opportunities and threats.
STRENGTH: Cirque du Soleil has a big brand associated with it. Large innovation base it
carries with itself. Design and staff are integrated with the concept of innovation. It has
varying diversity in the production shows. Another strength is the quality of shows they have.
It is one of the largest players in the industry.
WEAKNESS: The weakness is they are profound in one or two locations only. Sometimes
they use disguised or anonymous stars. They have zero shows which use children or for
children. They do not have any amusement like animals etc.
OPPORTUNITY: Cirque du soleil has an opportunity to expand in other regions and new
markets. They should provide tickets at affordable rates and should have shows for children
also because children is a big untapped market of high potential.
THREAT: They are facing good competition from various entertainment circus all around.
They need to keep a track of the growing competition in the industry. The resource
management and recruitment process needs to be improved upon.
RADICAL INNOVATION OR INCREMENTAL INNOVATION
Incremental innovation is about slow innovation. Firms’ wins the race by innovating slowly
and steadily but in radical innovation it is more risky and costly as compared to incremental
innovation.
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Cirque du Soleil analysed the existing market and slowly pushed a new market through
innovation by analysing the value cost trade off. They innovated incrementally to grab the
market. (Leslie & Rantisi, 2010)
PART B
Critically analyse the view that Cirque du Soleil’s success can be attributed to the successful
application of Blue Ocean strategy
Definition and explanation of Blue Ocean strategy
Blue ocean strategy is when you create those markets which did not exist till now. You invent
those kind of markets and grab the opportunity of first movers sometimes. You make the
competition irrelevant. Try to capture a new market altogether and create new demands.
Focus on differentiation and low cost. The firm can make the competition irrelevant only by
making something different and capture the new market in a different way. They are a big
example of blue ocean strategy used to teach the students in masters.
There are two kind of strategies Red Ocean and Blue Ocean. Red ocean strategy is where the
competition is existing, the market is existing and various competitors fight against each
other to grab the share in the market. Boundaries of the industry are already defined and
competitors understand the strategy to play the game in the market. All things revolve around
profit and growth, when the number of customers increase in the market, profit deems off.
Cirque du Soleil blue ocean strategy challenged the existing market place. The market of
entertainment was fully shattered. There were no earnings from that market. People and
children were moving away from circus to the TV shows and other entertainment shows on
TV. At this time, Cirque du Soleil realised that competing in the red ocean will not work.
They have to find out some new strategy to work with and find a place in the industry. They
created a new entertainment show targeting a completely new market of adults and corporate
audience who can afford the tickets and get interest in their show. They did not target
children initially and hence they did not use animals in their shows. He created a wide
audience altogether and grabbed a good market share in the industry. The industry came back
with a big bang and hit. (Lorenzo, Cyr, & Boulanger, 2004)
Their shows were seen by around millions of people in more than 300 cities all over the
world. Their strategy out casted Ringling Bros and other circus competitors like Barnum and
Bailey. They took around 100 years but then Cirque du Soleil worked and their revenues
shoot up more than any of the competitors in the industry.
The already exiting competition had a limited potential to grow, their methods were
traditional and their strategies were not effective enough to keep the industry surviving. The
power of buyers and suppliers was strong enough. All other entertainment shows were on a
rise. People in urban areas had various sources of entertainment like live shows and other
television shows to watch. The children were happy to play video games rather than attending
any shows. There was a ban on animals raising sentiments. So from the view of competition
the industry was totally unattractive and revenues were falling.
Earlier the circus industry was focussed only on children but Cirque du Soleil changed the
target market, they made the competition utter irrelevant and created a new market space for
themselves. They reinvented the circus industry and made the market shouting with a new
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tagline “We reinvent the circus”. Companies should stop competing against each other in a
red ocean, they should try for a blue ocean to create a new market.
ANALYSIS OF BLUE OCEAN STRATEGY
ERRC framework stands for eliminate, reduce, raise and create. Cirque du Soleil worked on
the ERRC framework of Blue Ocean. The eliminate phase is when the existing factors on
which the current industries are competing should be eliminated. They did not focus on what
the current industry is competing on. They tried something new to attract the people by
targeting new audience.
Reduce is to work on those factors which can be reduced below the set standards of current
industry. They raised the prices to high level which are affordable only to the corporate and
earning adults.
Raise is to get or develop some factors which are not their or existing in the current industry.
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Target a new crowd and not using animals. Technology driven approach will full innovation
are some of the new factors where Cirque raised their level above the existing industry.
Create is to offer some new factors and create new platform which the industry has not seen
yet. A new market was created by Cirque Du Soleil. (Saint-Denis, 2002)
CREATION OF THE BLUE OCEAN
 Six steps included in the creation of Blue Ocean are:
 Create a new market space which is not explored
 Make the existing competition irrelevant
 Create new demand and work to capture it
 Break the tread off of value and cost
 Align your processes with differentiation and low cost till the firm is profitable
CREATE UNCONTESTED MARKET
The three tier framework to create an uncontested market needs to be followed. The inner
most circle in the above figure depicts the current market which is generally the market of red
ocean. Soon to be market is when you are going to have a market and it’s near future.
Refusing is the second tier in which the market does not accept what is your planning and the
third tier which moves towards the blue ocean and is the untapped market which is targeted to
ignore the competition and move a step forward in the upcoming industry.
CONCLUSION
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Blue Ocean is created from the existing red oceans. It is not always the technological
innovation which creates Blue Ocean. There was always an opportunity for growth in the
industry created by Cirque Du Soleil. They studied the existing competition and the
drawbacks of the industry. The study revealed the points where they put their innovation and
grabbed the untapped market. Soon they became the best circus with largest revenue in the
next twenty years. First they grabbed the market share in Canada and won the heart of
Canadians, then they started touring to different places around the world. Now the focus is
China. They have a competitor in China and the strategy is built to out pass the competitor.
They focussed on differentiation: a circus with no rings, no animals, no rural venues and a
nice new tinge of music.
REFERENCES
Barker, S. (2002). Cirque du Soleil. Theatre Journal, 44(2), 235. doi:10.2307/3208747
Blue ocean strategy for creating value innovation: A study over Kedai digital in Yogyakarta,
Indonesia (2015). Journal of Administrative and Business Studies, 1(1), . doi:10.20474/jabs-
1.1.3
Kim, B. R., & Kim, J. B. (2016). A study on the innovation strategy of Dong-Chun circus in
comparison with Cirque du Soleil in Canada. The Journal of Humanities and Social sciences
21, 7(2), 139–158. doi:10.22143/hss21.7.2.7
Leslie, D., & Rantisi, N. M. (2010). Creativity and place in the evolution of a cultural
industry: The case of Cirque du Soleil. Urban Studies, 48(9), 1771–1787.
doi:10.1177/0042098010377475
Lorenzo, S. A., Cyr, R., & Boulanger, S. (2004). Scenographic structures for Cirque du
Soleil, Canada. Structural Engineering International, 14(4), 270–273.
doi:10.2749/101686604777963522
Saint-Denis, E. (2002). From creation to diffusion: Building historical archives at Cirque du
Soleil. Art Libraries Journal, 27(02), 16–17. doi:10.1017/s0307472200012633
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