Blue Ocean Strategy

Topics: Marketing, Blue Ocean Strategy, Småland Pages: 5 (808 words) Published: July 6, 2015


Blue Ocean Strategy
MKT 421
May 4, 2015
William Alan McIntyre

Blue Ocean Strategy
While blue ocean strategy entails creating new opportunities where one's do not currently exist, blue ocean strategy does is not exclusive to new business and new segments through R&D. Blue oceans can be created from current industry standards by redefining the customer experience. IKEA is a prime example of how crowding in existing business practices can offer blue ocean strategy to the company willing to redefine business culture. In this essay we will discuss the importance of blue ocean strategy. We will then discuss the blue ocean move that sets IKEA apart from other businesses in its industry. Finally we will consider a red ocean move for IKEA as well as the pros and cons of such a strategy. Ultimately, we will discover how IKEA found an alternative resources of blue ocean strategy within the highly concentrated furniture industry

At a basic level, competitive advantage in business is gained by strategy. The nature of traditional strategy is to out maneuver the competitive in order to gain competitive advantage. As competition mounted in the global marketplace, a slew of red ocean strategies emerged, all arguing that competition was the core of corporate success and failure. (Chan 2004) The blue ocean concept is based on an alternative strategy that is created by tapping into opportunity and value resources that do not currently exist. Pivotal moves in our culture have come from new ideas as well as research and development for improving existing ideas to create blue oceans. Technology as an industry is filled with examples of how new ideas and innovation can create market segments with little to no competition. Although, inevitably, hastened the commoditization of products and services eventually stoked price wars and shrunk profit margins. (Chan 2004)

The service based culture at IKEA is a key driver in the company's blue ocean strategy. Founded in 1963 in Norway as a mail order furniture company, IKEA's radical business practices was initially met a great deal of opposition from its competitors. "IKEA has found its own niche: beautiful, inexpensive and durable furniture for the majority of people. Not just in Sweden, but worldwide. We have met a need that nobody bothered about. And the response has been fantastic. But the way has sometimes been as stony and uneven as a field in Smaland. And that's why stone walls, a monument to human perseverance and optimism, symbolizes our corporate culture." (Edvardsson & Enquist 2002) By catering to an unsupported segment of the furniture market, IKEA created a blue ocean strategy. As IKEA evolved into brick and mortar operations, their strategy evolved as well. The company catered to the consumer through the development of a service culture that included brightly lit, minimalist stores that offered several amenities. Developing a service culture is a means of creating and enhancing good interactive marketing performance needed for implementing a relationship marketing strategy.(Edvardsson & Enquist 2002) The service aspect of their marketing strategy was radical, tapping into yet another area within the furniture industry that had gone unobserved. This aspect of blue ocean strategy, making current practices irrelevant by creating a leap in value for both buyers and the company itself. (Chan) irrelevant by creating a leap in value for bothbuyers and the company itself. (Chan) Alternatively, IKEA could have taken a red ocean approach. The fact that their furniture is less expensive and has a completely different design than the competition could have offered the company a niche market within the industry. Moreover, saving money by buying and building furniture could have appealed to an audience that favored such products over the offerings of Ashleys or Raymore & Flannagan touting quality furniture. Taking a red ocean approach by finding...


References: Edvardsson, B., & Enquist, B. (2002). "The IKEA Saga". How Service Culture Drives Service Strategy
IN BRIEF: Ikea marketing strategy. (2006). Marketing Week, , 10. Retrieved from http://search.proquest.com/docview/228180290?accountid=35812
IKEA strategy targets big/bigger/best stores. (2004). DSN Retailing Today, 43(21), 28. Retrieved from http://search.proquest.com/docview/228445478?accountid=35812
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