Charting Untapped Waters: Creating New Market Space Instead of Battling Competitors

Markets crowded with rivals feel like gladiator arenas—everyone fighting for the same scraps of demand. But what if you could sail into uncharted waters instead? By focusing on innovation and value creation over head-to-head competition, you open “blue oceans” of opportunity where you set the rules, command premium prices, and redefine customer expectations.

Red Ocean versus Blue Ocean

  • Red Ocean

    • Compete in existing industries
    • Beat rivals for market share
    • Often leads to price wars and shrinking margins

  • Blue Ocean

    • Create uncontested market space
    • Make competition irrelevant
    • Achieve rapid growth through differentiation and low cost

Charting a blue ocean requires rethinking industry boundaries, delivering leap-in value, and aligning your entire system of activities around both differentiation and cost efficiency.

Principles of Creating New Market Space

  1. Value Innovation
    Simultaneously pursue differentiation and low cost to break the value-cost trade-off.

  2. Focus on Non-Customers
    Identify why potential buyers stay on the sidelines and tailor offerings to unlock latent demand.

  3. Reconstruct Market Boundaries
    Look across alternative industries, strategic groups, buyer chains, and complementary products.

  4. Align the Four Actions Framework

    • Eliminate factors the industry takes for granted
    • Reduce well-below industry standards
    • Raise factors well above industry norms
    • Create elements the industry has never offered

Case Study: Cirque du Soleil

Cirque du Soleil reinvented the circus by blending theater, dance, and live music. Traditional circuses competed on star animals, star performers, and low ticket prices—often driving costs through animal care and talent fees. Cirque eliminated animal acts, reduced the emphasis on star performers, raised the bar on storyline and production design, and created a new form of live entertainment that could command five-figure production budgets and premium ticket prices.

Aspect Traditional Circus Cirque du Soleil
Main Attraction Animal acts Themed storytelling and acrobatics
Cost Drivers Animal care and transport Set design, original music, costumes
Audience Experience Variety acts without cohesive theme Immersive narrative with theatrical flair
Pricing Strategy Low-to-mid ticket pricing Premium pricing for upscale audiences

By redefining value for both customers and the company, Cirque du Soleil opened an entirely new market space and achieved global scale without a single ringmaster.

Case Study: Apple

Apple’s entrance into multiple product categories demonstrates blue ocean thinking:

  • iPod (2001)
    Saw MP3 players as clunky and confusing. Apple eliminated physical buttons in favor of a click wheel, integrated seamless iTunes integration, and created an ecosystem rather than just a standalone gadget.

  • iPhone (2007)
    Reimagined mobile phones by eliminating physical keyboards, reducing device complexity, raising the bar on user interface design, and creating a multi-touch experience that fused phone, music player, and web browser.

  • iPad (2010)
    Sat between laptops and smartphones, creating a new category for casual computing. It combined touch-first navigation, instant on/off, and a rich app economy.

Each time, Apple reconstructed market boundaries, targeted non-customers frustrated by complexity or poor design, and aligned product development with a singular focus on user experience.

Applying the Approach to Your Business

  1. Map Your Industry’s Value Curve
    Identify what factors your competitors compete on and where they overserve or underserve customers.

  2. Spot Non-Customer Blockers
    Conduct interviews to understand why three tiers of potential customers say “no” to your industry.

  3. Brainstorm Unbundling and Bundling
    Break apart existing offerings and bundle features in novel ways that deliver unexpected benefits.

  4. Test with Minimum Viable Prototypes
    Rapidly iterate on concepts to validate demand before scaling up investment.

Conclusion

Battling competitors head-on can feel like a zero-sum game. By contrast, creating new market space through value innovation turns competition into irrelevance. Learning from Cirque du Soleil and Apple reveals how powerful it can be to challenge industry logic, target non-customers, and align your activities around both differentiation and cost. That’s the essence of a blue ocean strategy.

Further Exploration

  • Dive into the Blue Ocean Strategy book by W. Chan Kim and Renée Mauborgne
  • Study Clayton Christensen’s work on disruptive innovation
  • Explore design thinking methods for customer-centric ideation
  • Analyze platform business models like Airbnb and Uber for unlocking network effects
  • Investigate how digital transformation can create new ecosystems and revenue streams

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