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How To Find The Right RED OCEAN vs. BLUE OCEAN For Your Specific Product (Service).

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The 10 Minute MBA, is a no-fluff daily podcast that teaches you practical business lessons you can use to grow your business immediately.

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Welcome to the ten minute MBA. I'm your host, Scott Dclary. On the ten minute MBA, I teach you actionable insight, strategies, tools techniques that you can use to start a scale, grow or x Your Business Tomorrow. Today I'm going to be teaching you the difference between something you may have heard of or me you may not have heard of, a blue ocean versus a red ocean. These are two types of markets where you can start a business or launch a product. I'm going to break down the difference between those two oceans and what you should think about if you are trying to start a business. Should you try and start a business in quote unquote, a Blue Ocean, or should you try and start a business in quote unquote, a Red Ocean? Or is there other options? So let's go right into blue ocean versus Red Ocean. So a blue ocean strategy means that you're launching a...

...product in an uncontested market space. You are essentially creating a market because there really is no competition yet. So you will have to create the industry for your product. Customers do not know about your product because there is no comparable there's no competition so blue oceans have an incredible advantage because you have the option to create the market for your product and then sell your product to that market. So a great example of a blue ocean product or strategy was Nintendo when they launched the WII. If you think about the traditional Gamer, it wasn't a family focused platform or wasn't a family focused audience. So game console makers were not making products for families, they were making it for the gamers. Nintendo came along, they created the WII that was focused for families, not hardcore Gamers, and that created a blue ocean and the created a product within a blue ocean for Nintendo. Now, in comparison to a blue ocean,...

...there is the Red Ocean and, as you may have already guessed, red ocean is the opposite of a blue ocean, where you are competing in an existing market, where everybody knows about the product already and you have to beat the competition, which comes with its own sets of issues but also some potential benefits. In a red ocean, you do not have to create a new market. People already know what the product is and what it can do for them. You just have to prove that your product is better than everyone else in the market. So in a blue ocean you're going in brand new. You're creating your market. You have to create demand for your product because nobody knows what it is. Then you're going to capture that demand. In a red ocean, you're exploiting existing demand. An example of a red ocean I forgot to touch on that would be, quite literally any product that you already own. If a new competitor came into the space, then you would look at the new competitive product and bench market against what you already own. So, for example, if you're buying a new phone and you have an iphone and you want to go buy a Samsung. Well, Samsung entered the market,...

...then that would be entering a red ocean or a red ocean market. Another term that you'll start to see when you talk about red ocean versus Blue Ocean is something called the value cost tradeoff, and this is something that companies have to consider. This theory is something that companies have to disider consider, excuse me, when they are deciding whether or not to go into a red ocean or go into a blue ocean. So let me explain. So the value cost tradeoff is a view that a company takes, one deciding to either create more value for a potential customer, but they will be charging a higher price point or a higher cost, which is what you technically have to do if you are going to be going into a red ocean. Or you can play the other end of the spectrum in a red ocean and you can offer a reasonable value but at a much lower cost. So you're trying to beat your competitors in the red ocean by lowering the price point of your product. So there is a value cost tradeoff analysis that you have to consider when you're...

...going into a red ocean. The value cost tradeoff also applies in a blue ocean, because in a blue ocean you may be able to achieve incredible value for your customers at a low cost, which can capture an incredible amount of market share. Now you can be successful in both a red ocean or a blue ocean. Both of them take certain strategy and they take significant time or resources. If you are in a blue ocean, you have to be able to create a market, you have to build a demand for your product. In a red ocean, you have to spend a lot of money to create something that's better than your competitor. So ideally, what is the perfect situation is actually neither a blue ocean or a red ocean, but a pink ocean, and what I mean by that is it's a market that has been established, so there has been somebody who has created a product that could be in competition to yours, but it is not a well established market, so it is still in the process of evolving and the customers are still trying to figure out exactly what this market is, and I would say an example of this...

...could be an NFT company or a blockchain company that's offering a product or service in a market that is still evolving. There's a lot of room to create a better product or to differentiate, but there is already some awareness there, so you can create something that's much better, easier and it's not super hard to compete, because there is no major fortune one hundred blockchain companies that have a huge monopoly on the market. But at the same time, it's been around for a little while, so people start to understand what it is your doing and you don't have to say I'm not only creating a block chain tool or piece of tech or company, but also I have to teach you what blockchain is so you can launch an incredibly successful I use the example nft just because nfts are new and there's a lot of buzz around them and a lot of hype, which actually leads to probably companies taking products to market that aren't as advancest or as refined or Polish as they could be. But if you do take a product to market that is an nft product or nft marketplace or...

...something like that, just because it's really relevant right now, you are really going into a pink ocean. So there is some awareness, there are there are some competitors, but you have a lot of opportunity to create the market, to be the incumbent, to have your brand name synonymous with the nft category. So I hope that paints a picture of what a blue ocean versus a red ocean is, some of the advantages and disadvantages of both, but also what you should look for if you're trying to have the easiest pathway to success, which is, in my opinion, a pink ocean. anyways, that's been another ten minute. Mba, if you have any business questions about starting, scaling growing a business, don't worry, I got you. That's it for tonight. I'll see you tomorrow. It's IT FOR TONIGHT.

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