Red Ocean vs. Blue Ocean: How to Tap Into New Market Space

Wondering what the difference is between Red Ocean vs. Blue Ocean strategies? Here’s how each strategy compares and why it matters for your business.

Origins of Red Ocean vs. Blue Ocean

There are many different strategies for building a successful business, including red ocean vs. blue ocean strategies. Introduced in 2005 by W. Chan Kim and Renee Mauborgne, these are two inherent methodologies for how businesses run. Here’s how each strategy compares and why it matters for you and your business.

Red Ocean Strategy

A red ocean strategy involves businesses competing in established industries — a common practice in many industries, including fast-food restaurants, retail clothing chains, and car dealerships.  A successful red ocean requires you to overcome intense, direct competition in an industry where companies are competing mainly on who can offer the best price. The key goals are to beat the competition and exploit the existing demand.

Another example where red ocean strategy works is the soft drink industry. Even considering soda, your mind likely goes directly to Pepsi vs. Coke. Technically, Coca-Cola was first on the scene, back in 1886, with Pepsi soon to follow in 1893. The soft drink industry is a long-established stalwart, and there are many barriers to entry for young upstarts. While there are some smaller companies in competition for market share, shelf space is limited. Not to mention other barring factors such as licensing deals, brand recognition, and advertising dollars. This causes the soft drink industry to be very a competitive industry to enter and attain success.

Blue Ocean Strategy

On the other end of the spectrum, there's a blue ocean strategy. Rather than competing directly against established giants, a blue ocean strategy creates demand for a product or service that is not yet in existence. Most blue oceans are created by expanding the existing industry boundaries of red oceans. The key to success is finding a gap in the market and seizing the opportunity before any potential competition has even been conceptualized.

Because competition isn’t yet a factor, companies with a blue ocean strategy face less pricing pressure than other businesses. Blue ocean strategists aren’t necessarily inventing new industries, they are simply seizing unexplored opportunities, allowing up-and-coming concepts to make their mark within industries that may have once appeared prohibitively competitive.

Blue Ocean Strategy and Scenthound

The pet industry is a compelling example of red ocean vs. blue ocean strategies at work. Between food, toys, grooming, and other types of pet care, there are likely some big names that initially come to mind. However, within the larger pet market, there are still underserved areas where customers and their dogs have been waiting for an innovative concept to claim its territory.

Scenthound, one of the newest blue ocean strategy examples, was founded in 2005 as the solution to what was lacking in the traditional pet grooming space. Offering comprehensive care to all dogs, and a membership-based model, Scenthound planted its flag in a special corner of the $100 billion pet industry, making it appealing to both dog parents and franchise partners. No other dog grooming business offers the same affordable routine care and grooming for all dog breeds — even 90% of the most popular dog breeds don’t need regular haircuts.

Scenthound offers a prime business opportunity with a blue ocean strategy for prospective franchise partners, even if they don't have any experience in the pet care industry. Our recurring revenue business model and unique wellness-focused care make Scenthound a compelling example of how a blue ocean strategy can disrupt an established industry, and even make some heads turn.

Learn more about franchise opportunities with Scenthound at franchise.scenthound.com.