Marketing Report: Blue Ocean Strategy Implications for Businesses

This report delves into the Blue Ocean Marketing Strategy, examining its implications for businesses, with a specific focus on the Turkish market context. The research begins by evaluating existing literature, highlighting the strategy's significance in developing untapped and uncontested markets. It describes the frameworks proposed by Kim and Mauborgne, crucial for identifying and developing suitable market criteria. The report further identifies the implications of the Blue Ocean Strategy in various contexts, detailing how organizations can leverage innovation and value generation to enhance their revenue margins. The study includes an abstract in both English and Turkish, a table of contents, and sections covering the introduction, literature review, discussion, implications, and recommendations. The literature review explores the Blue Ocean Strategy, its principles, value innovation, strategy canvas, and the four-action framework. It also examines successful implementation strategies, theoretical frameworks, and risk management. The discussion section analyzes the literature and its implications, followed by recommendations and references, providing a comprehensive overview of the strategy's applications and benefits for businesses.

Running head: MARKETING
Marketing
Name of the student
Name of the university
Author note

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BLUE OCEAN MARKETING STRATEGY AND ITS IMPLICATIONS FOR
BUSINESSES
ABSTRACT
The report examined the implication of blue ocean marketing strategy on businesses
in the global context by keeping focus on the Turkish perspective. The research has
critically evaluated past literature which shows that blue ocean marketing is critical
for developing a new market which is untapped and uncontested. The research
described the different framework suggested by Kim and Mauborgne essential for
companies to identify and develop suitable market criteria. It has also identified the
implication of blue ocean strategy in different context and the way organisations can
use different strategies to increase their revenue margin by using innovation and
value generation.

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MAVİ OKCEAN PAZARLAMA STRATEJİSİ VE İŞLETMELER İÇİN
UYGULAMALARI
ÖZET
Rapor, mavi okyanus pazarlaması stratejisinin küresel bağlamda işletmeler
üzerindeki etkisini, Türkiye perspektifine odaklanarak incelemiştir. Araştırma, mavi
okyanus pazarlamasının henüz keşfedilmemiş ve tartışmasız yeni bir pazar
geliştirmek için kritik olduğunu gösteren eski literatürü eleştirel bir biçimde
değerlendirdi. Araştırma, Kim ve Mauborgne tarafından önerilen ve şirketlerin uygun
pazar kriterlerini belirlemesi ve geliştirmesi için gerekli olan farklı çerçeveyi tanımladı.
Ayrıca, mavi okyanus stratejisinin farklı bağlamdaki anlamını ve kuruluşların
inovasyon ve değer yaratmayı kullanarak gelir marjlarını arttırmak için farklı stratejiler
kullanabilmelerini tanımlamıştır.

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Table of Contents
1.0 Introduction.............................................................................................................5
1.1 Introduction.........................................................................................................5
1.2 background to the study......................................................................................5
1.3 statement of problem..........................................................................................7
1.4 purpose of the study...........................................................................................7
2.0 Literature review.....................................................................................................7
2.1 Introduction.........................................................................................................7
2.1 Blue ocean strategy............................................................................................8
2.2 Blue ocean vs red ocean strategy....................................................................10
2.3 Six principles of blue ocean strategy................................................................11
2.4 Value innovation...............................................................................................12
2.5 Strategy Canvas...............................................................................................14
2.6 four action framework.......................................................................................15
2.7 Successful implementation of Blue Ocean strategy.........................................15
2.8 Theoretical framework......................................................................................17
2.9 Summary...........................................................................................................23
3.0 Discussion and implication...................................................................................23
3.1 Discussion of literature and implications..........................................................23
4.0 Recommendation.................................................................................................25
5.0 References...........................................................................................................27

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1.0 INTRODUCTION
1.1 INTRODUCTION
This report examines the role of blue ocean strategy in the modern business
environment and the way it provides sustainability to the organizations. The global
business market has become highly competitive in nature and management in global
organization are forced to make changes to their strategy to manage their
sustainable in global conditions. The past decade has witnessed the development of
significant frameworks for developing the business model. Kim and Mauborgne
(2004) introduced a new business model named Blue Ocean Strategy which gained
acceptance and popularity rapidly. This concept has been widely used by various
companies all over the world but making the competition irrelevant is comparatively
bold statement in cases of economic crisis and in specific markets. Blue ocean
strategy has helped firms in developing effective innovation strategy and incorporate
them into their business model for gaining sustainable profit. Blue Ocean marketing
strategy facilitates the business organizations in developing an uncontested market
by changing the current competition concentration to an innovative demand and
value competition differentiated from the red ocean strategy. Moreover, as the profit
pool is shrinking to due to the increase in the large number of companies present in
the market it is necessary to develop uncontested market which is one of the major
aspects of the blue ocean strategy.
Blue Ocean strategy has defined the uncontested market as an environment
where the products are not defined properly, market is not known and the
competitors are unstructured. The companies focusing of innovative and developing
value innovations are able to gain the competition in the market by developing
uncontested market. This is achieved by balancing the economic cost with the
needs of the consumers by reconfiguring the offerings. This results in the
development of a new value proposition.
1.2 BACKGROUND TO THE STUDY
In the past two decades, the business and market has changed drastically
due to the development of new theories and strategies such as Chaos theory and
Blue Ocean which offer diverse viewpoints addressing this issue of gaining

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sustainable competitive advantage in the market1. Chaos theory deals with the
irregularity and complexity of strategic decisions in an environment which is dynamic
in nature. Various authors suggested incorporation of both the theories to develop a
model which is able to readily adapt to the future possibilities. Chan and
Maubourgne (2005) developed Blue Ocean strategy by evaluating 30 different
sectors and 150 strategic actions with a century of data. However, blue ocean
strategy cannot be considered as a new concept and has been used in business
administration for a considerable amount of time2. This strategy provides a practical
roadmap and theoretical framework for organisations to prevent rivalries by
developing market niche which facilitates in market growth. Globalisation has made
changes in the market need and demand quite rapid and companies need to be
innovative to cope with these changes. This has made blue ocean strategy as one of
the most significant concepts in the past decade.
Capitalism and industries in various countries have boomed in the past
decade has made many countries grow significantly where the implementation of the
free market economy has become one key elements of driving this change.
However, there are many where the gap between the poor and the rich have
increased which led to the disappearance of middle-class segments and polarization
of the classes3. This shows that in majority of the growing economy, the emerging
capitalist have increased in numbers. This shows that companies have new
opportunities of addressing to the needs of these set of consumers having increased
disposable income in the market. These situations have enhanced the importance of
sustainable development of businesses as it is critical to develop competitive
advantage by creating effective strategies through innovative processes to create
sustainable competitive advantages.
However, in this high level of competition in the market, majority of the
companies are facing issues in maintaining a blue market due to the ability of all the
rival companies to replicate each other’s products. This means that even a blue
ocean turns into a red after a certain period of time due to the intensity of the
1 Ercetin, S.S., Ray, N. and Sen, S., 2019. Economic Growth and Demographic Transition in Third
World Nations: A Chaos and Complexity Theory Perspective.
2 Aspara, J., Hietanen, J. and Tikkanen, H., 2010. Business model innovation vs replication: financial
performance implications of strategic emphases. Journal of Strategic Marketing, 18(1), pp.39-56.
3 Chan Kim, W. and Mauborgne, R., 2005. Value innovation: a leap into the blue ocean. Journal of
business strategy, 26(4), pp.22-28.

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competition in the market. Various companies have shown that it is possible to
develop a blue ocean even after it has been turned intro red. The economy of Turkey
is at its lowest point at its past decade and there has been significant influence on
the operations of the companies in the market.
1.3 STATEMENT OF PROBLEM
The economy of Turkey is in turmoil and is affected by the increase in inflation
and unemployment4. Even though, Turkey is one of the most developed countries in
the world, the business organisations are affected heavily due to the change in the
disposable income of the population which has reduces the sales volumes in various
sectors. Blue ocean strategy is one of the most suitable of addressing crisis
situations for organisations by developing superior policies and processes that
guarantees sustainable competitive advantage. However, still is rapid growth and
investment in the country and being a developing nation, the companies are faced
with multiple challenges while operating with the irregularities in the market. The
research examines the different types of blue oceans and explore the topic to
increase the awareness of the companies working in Turkey.
1.4 PURPOSE OF THE STUDY
The purpose of the study is to research the existing theories on blue ocean
marketing to evaluate options that can be used by the organizations in the country to
improve the process and policies and develop an uncontested market for
themselves. The research will evaluate the successful attempts made by past
companies to determine the key factors that have led to the success of the
organizations in the past and how it can be used in this present context. However,
this would be comparatively difficult in the present as the economy is still recovering.
This research will highlight this aspect of the economy to understand the way the
companies both large and small can use blue ocean marketing to gain competitive
advantage in the market.
2.0 LITERATURE REVIEW
2.1 INTRODUCTION
This section of the research deals with the detailed analysis of blue ocean
strategies, concept, principles and other examples essential for providing a detail
4 Shinnar, R.S. and Zamantılı Nayır, D., 2019. Immigrant Entrepreneurship in an Emerging Economy:
The Case of Turkey. Journal of Small Business Management, 57(2), pp.559-575.

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analysis on the research topic. The blue ocean strategy is a relatively new strategy
which evaluates the market boundaries to create a new market or an uncontested
market. The majority of the developed countries have become highly saturated due
to the presence of large number of global companies and these companies are not
able to maintain a competitive advantage for a longer time frame5. This can be
understood by the example of the retail industry in United Kingdom which consists of
all the big global industry giants which has made the companies focus on improving
the short-term sales volumes. These organizations develop innovative product
strategies that last for shorter period of time which results in temporary competitive
advantage. Capitalism and industries in various countries have boomed in the past
decade has made many countries grow significantly where the implementation of the
free market economy has become one key elements of driving this change. Blue
Ocean strategy can be a means for all the companies to develop effective strategies
to create a market which is uncontested by developing the target segment or
disruptive innovation6. Even though, disruptive innovation and blue ocean strategies
go hand in hand, they are different from each other as blue ocean does not only
mean innovation in developing new technologies but also innovative approaches and
methods to improve the overall efficiency of operation. However, there are many
where the gap between the poor and the rich have increased which led to the
disappearance of middle-class segments and polarization of the classes. This shows
that in majority of the growing economy, the emerging capitalist have increased in
numbers.
2.1 BLUE OCEAN STRATEGY
Blue ocean strategy has been defined as one of the tools of strategic
management developed in the twenty first century. This strategy aims at developing
frameworks which are directed as discovering new value propositions and
businesses. The strategy emphasises on the fact that are key to sustainable
competitive advantage is developing uncontested market and not by competing in
the existing market. Blue ocean strategy develops market that have high demand,
opportunity and no competition7. This framework moves towards achieving
5 Yang, J.T., 2012. Identifying the attributes of blue ocean strategies in hospitality. International
Journal of Contemporary Hospitality Management, 24(5), pp.701-720.
6 Yang, J.T., 2012. Identifying the attributes of blue ocean strategies in hospitality. International
Journal of Contemporary Hospitality Management, 24(5), pp.701-720.
7 Jeon, S., Park, S.R. and Digman, L.A., 2008. Strategic implications of the open-market paradigm
under digital convergence: the case of small business C2C. Service Business, 2(4), pp.321-334.

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differentiated strategy and low-cost positions. This implies that blue ocean strategy
makes effort in aligning innovation with price, utility and cost positions which results
in achieving lower cost along with product or service differentiation.
Blue ocean strategy enables companies to accomplish their objectives by
implementing specific strategies. The consumers receive value for money for all the
products offered to them. If we compare the blue ocean strategy to the red ocean
strategy, it can be seen that the blue ocean strategy nullifies the relevancy of the
competition. Simultaneously it also makes sure that differentiated low cost is
achieved. Blue ocean strategy is named as such as companies fight over the same
thing to develop a bloody market and eliminating all the competition results in
generation of blue ocean which does not consists of the major sharks preying for the
same thing. Extreme competition in the market due to the advent of globalisation has
affected global markets. This has resulted in the adoption of strategies which are
able to create a differentiated market for the organizations in the country8.
Organizations aim to penetrate in markets where there is no competition or the
needs of the consumers have not been addressed by the other companies in the
market. This results in rapid growth and profitability of the organizations. A different
definition of blue ocean strategy states that it aims to satisfy the consumers by
developing products and services in a market which is private and free from
competition by developing innovative services and goods. Firms using strategy does
not compare themselves with other organizations in the market but aim to make sure
that there is differentiation among the products and how they can be used to gain
competitive advantage through value innovation. These organizations compete in
smaller market and aim to reduce the operating cost to achieve diversification in the
market. This companies aim to be different rather than directly competition in e a
pool consisting of large number of companies in the market. Blue ocean strategy
embraces the approach where the organizations competition in red oceans are
considered to be weak when compared to the companies have their own niche
market to cater to. The companies operating in red oceans become weak as they
are trying to grab each other share in the market and pursue the consumers of the
competitors to become loyal consumers. These types of consumers have high
8 Kim, W.C., 2005. Blue ocean strategy: from theory to practice. California management review, 47(3),
pp.105-121.

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purchasing power of the organizations which results in significant decrease in the
profit margin and causes a stagnancy in the growth of the business entities.
2.2 BLUE OCEAN VS RED OCEAN STRATEGY
Red ocean are the companies suffering from crowded market space where
there is significant increase in the number of competition and it increases the overall
price competition by reducing the differentiation of the products. On the contrary,
blue ocean is free of any type of competition as the market is exclusive to the
organization as other organizations has not been able to identify or cater to the
needs of these niche consumer segments9. These markets provide greater
possibility to the companies to succeed by increasing their profit margin by
developing new demand and changing the basis and nature of the competition. The
knowledge about the needs and the wants that has not been addressed by the
companies is the main focal point of blue ocean strategy where the companies are
focused on making changes by evaluating the characteristics of the consumers and
develop products and marketing strategies to address this particular need10. It can be
considered as constant pattern of developing strategies that results in the
development of a new market where the demand is generated and there is no
relevancy of competition to it. Therefore, blue ocean strategy act as a guideline for
escaping from the intense competition in a market consisting of limited consumers by
generating an untapped market.
Red ocean marketing strategy Blue ocean marketing strategy
Competition in the market space that is
existing in nature.
Developing and retaining a market that
is new and uncontested.
Exploitation of the existing demand in
the market
Create and grab the new demand
generated in the market.
Compete with the large of companies
and defeat them
There is no significance of competition
in such markets.
It is essential to make the trade-off
between value and cost
It is absolutely necessary to break the
trade off between value and cost.
9 Roth, S., Melkonyan, A., Kaivo-Oja, J., Manke, B. and Dana, L.P., 2018. Interfunctional business
models: map grid for an uncharted quadrant of the blue ocean. International Journal of
Entrepreneurial Venturing, 10(5), pp.581-595.
10 Chan Kim, W. and Mauborgne, R., 2005. Value innovation: a leap into the blue ocean. Journal of
business strategy, 26(4), pp.22-28.

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The overall business system needs to
be aligned with the strategic choice of
reducing cost or differentiation
The overall business system needs to
be aligned with the activities aimed at
achieving both differentiation and low
cost.
Table 1
Source: Chan Kim and Mauborgne (2005)
2.3 SIX PRINCIPLES OF BLUE OCEAN STRATEGY
Blue ocean strategy has developed and highlighted six major principles which
should be used by the companies pursuing to develop a differentiated uncontested
market which facilitates customer creation and enhances the market share11. These
six principles are divided into two parts, formulation strategies and execution
strategies. The first four strategies are used for developing effective blue ocean
strategy for developing an uncontested market. These principles have been
described below in detail:
 This principle deals with the reconstructing of the market boundaries through
searching for various alternative products, markets, strategic groups,
functional appeal of the consumers and complementary products of the rival
business entities. However, this phase is associated with search risk.
 The next principle deals with developing focus on the overall picture and not
the number by including the four steps of visualisation strategy which includes
visual exploration, visual awakening, visual communication and visual
strategy fair12. This principle may lead to0 scale and planning risk for the
organization.
 The next principle is going beyond the existing demand in the market by
retention of existing consumers and tapping into the tiers of non-customers.
This factor results in the development of business model risk if not executed
properly. The tiers in this case refer to three tiers where the first tier consists
of ones that are recently going to be non-customers being on the edge of the
11 Chan Kim, W. and Mauborgne, R., 2005. Value innovation: a leap into the blue ocean. Journal of
business strategy, 26(4), pp.22-28.
12 Kim, S., In, H.P., Baik, J., Kazman, R. and Han, K., 2008. VIRE: Sailing a blue ocean with value-
innovative requirements. IEEE software, 25(1), pp.80-87.