Marketing Terms: - Red & Blue Ocean
While entering the market, an entrepreneur will always look for his sustainability in it. The sustainability of his business depends on various factors, for example, if his business plans to change the services they’re providing with change in demand of public with time.
Sustainability, being a secondary part while entering the market, his business should be able to survive for it to be sustainable. There are two types of markets he can get into while having a startup. Both types of markets have different requirements for it to be successful.
The Red Ocean is the kind which already has an existing market. Entering this type of market stimulates to have tough competition with the existing competitors. Preparing your place in this type of market is a very tough job; proper execution of marketing & a lower cost base product is required. In a Red Ocean, the market is already established and it is clear what type of product & services do customers want. Market space gets very crowded & cut-throat competitors turn the market place red. The market consists of number of competitors & the aim is to fight back and gain maximum profit. The red ocean makes the value cost trade-off & captures more existing demand. Here, the entrepreneur should focus on his USP (Unique Selling Point). This will be the part where customers will choose him over his competitors.
The Blue Ocean is the market which does not exist yet. It leads to create a totally new, uncontested market. In a Blue Ocean, the company works within a new space to make the competition irrelevant. A new market is created by launching new offerings which leads to irrelevant competition. This helps a company or organization to grow. The Blue Ocean creates and captures new demands and breaks the value cost trade-off. There is a very high profit margin in a new market & it also creates a brand equity which could last for years. But, entering a Blue Ocean also has a big risk with big investments and also, preparing a huge customer base is a big challenge for the new market.
Reliance Jio, created a totally new space in the market by giving free internet and with their schemes. In their initial phase they created a Blue Ocean with an irrelevant competition. This was done by the introduction of 4G network which no other company had at that point of time. But now, as Jio has entered a Red Ocean, the competition with other telecom companies has increased. But now as most of the companies have acquired this, Jio has adopted its very low rates as its major USP, attracting most of the Indian population.
The most important aspects in both the markets, is to have proper execution with a proper consumer base.