An important element in the management of a brand is innovation. Successful brands are constantly innovating; developing new products and services, developing how those goods and services are delivered and developing new promotional channels.
As products move through their life cycle, they are continually innovated, packaging is redesigned, new features and functionality are added. Take Listerine: It is currently sold as a mouthwash for bad breath but it started life as a household cleaning detergent. Take Canon cameras: they launch a new model every six to twelve months and each time there is product adaption such as GPS, internet connectivity and ever higher pixel counts on the cameras sensor.
When looking for new products there are three possibilities:
- An existing product class to meet an existing consumer need.
- A new product class to meet an existing consumer need
- A new product class to meet a new consumer need (possibly a need the consumer is yet to realise they have).
An example is Apple. When Apple launch a new iPhone, it is launching an existing product class to meet an existing product need, the mobile phone. When it launched the iPod, it was launching a new product class, the digital music player for an existing consumer need, a portable music device. Apple’s original product, the desk top computer was a new product class, the home computer, for a new consumer need, having a computer in the home instead of in the office or laboratory.
When computers were developed after the World War Two, they were seen as tools for science and mass computation. In the mid-1970s following the invention of the silicon microchip, computers could be put on a desk but no one considered them a product for the home, they were business tools for accountancy and word processing. It was innovators such as Sir Clive Sinclair and Steve Jobs who saw the possibility of a computer for the home and with the ZX 80, Sinclair was the first to put his to into that, Blue Ocean.
A word which is in common parlance currently is ‘Disruptor’. Many business leaders, such as Sir Richard Branson, have disruptor programmes. Disruptors sit neatly in the second of the three categories. They are individuals who aim to create new product or service classes to meet disrupt existing market expectations. These are businesses looking to do things differently and to present a radical marketing mix. This is was is often termed as Blue Ocean Marketing.
In recent years, many researchers have focused on Blue Ocean Marketing and they have highlighted prominent successes such as Ryan Air, Amazon and Ocado. Another example of blue ocean marketing is the estate agency business where companies such as Sarah Beeney and HouseSimple are breaking down the value expectations of the traditional estate agency market.
It is generally accepted that markets grow by the reduction of unit prices. The home computer market is one such example where the cost of a PC has fallen dramatically in real terms. Unit price falls and sales volumes increase.
However, when a market becomes mature the goal is not to increase sales volumes through expansive growth but to obtain the market share of your competitors. Often it is not a case of increasing sales volumes but increasing sales value.
No one considers brushing their teeth six times a day. Most people stick to brushing twice a day, or three times at most. Our usage of toothpaste doesn’t change so we are unlikely to buy more toothpaste. However, we may be persuaded to change to a different brand or to buy a more expensive version of toothpaste because it promises to whiten our teeth, kill bacteria or cure bad breath.
Businesses in mature markets aim not to sell more but to get consumers to pay more. It is not an accident that Dyson vacuum cleaners are amongst the most expensive on the market.
To allow premium pricing, many brands aim to find value innovations, a more for more strategy. This involves building an unprecedented bundle of marketing mix attributes.
Blue Ocean disruptors often aim to break this model. They suppress certain value innovations and promote themselves on a single value attribute.
Take as an example Premier Inns. They broke the accepted rules of the hotel. They realised that there were huge numbers of consumers who didn’t use hotels. Hotels were for the wealthy or paid for by your employer. Students, OAPs and Other demographic groups tended to use B&Bs or to stay with friends rather than the premium prices of hotel chains.
So Premier Inns and the likes of Travelodge removed some of the value innovations of traditional hotels. There is no room service. Room decor is basic. There is no mini bar of satellite TV service. Breakfast is either from a vending machine or it is a self-service buffet. These companies offer a value innovation of a hotel bed at a discount price but to enable that price they removed many of the traditional attributes of a hotel stay.
A critical element in blue ocean marketing is ‘identifying your oilfield’; the bundle off value attributes which are not offered by other providers. Often this can be through identifying an area of market growth not utilised by others. This can even be areas which others in the market see as unprofitable.
Blue ocean marketing is often a high risk strategy. For every blue ocean success, there are thousands of failures. Take Bic as an example. Bic was an early blue ocean pioneer. It applied blue ocean strategies to the pen market. Until Bic invented the disposable ballpoint pen, writing implements were seen as premium products. People would buy expensive fountain pens which would last a lifetime.
Bic then applied the disposable pen model to the cigarette lighter market. Again smokers would buy a refillable lighter which would last many years. Bic soon became the market leader in the lighter market. Bic applied blue ocean marketing principles again, taking on the likes of Gillette in the razor market. Again success.
However, Bic then tried to enter the mobile phone market competing with the likes of Ericsson and Nokia. Bic produced a phone which was able of making calls but which didn’t have the accessories offered by their competitors such as games, internet access and a camera. The Bic mobile phone was an utter disaster.
Other blue ocean firms, such as the Easy group, best known for the value airline EasyJet, have also had mixed fortunes in applying blue ocean strategies outside their original markets.
Blue Ocean innovations are risky. The television programme Dragon’s Den is replete with failed blue ocean pitches. Only a small minority of blue ocean innovations succeed. So is it worth considering only blue ocean marketing? Is it always advisable to ditch traditional incremental product innovation and to offer a radical alternative offer. Is the concept of making a superior product to your competitors dead and is modern marketing solely the strategy off meeting consumer needs in a different way?
Traditionally product innovation was all about creating a superior offer. However, some marketing academics dismiss this approach as ‘Red Ocean’. A blood filled sea of cutthroat competition where sharks fight to consume a shoal of tuna.
These academics argue that market disruption is the concept of our times. To succeed you must think in a radically different way and blue ocean marketing is the methodology. To succeed you must think differently and offer distinct value propositions. You must look at existing market beliefs and challenge them. You must suppress some traditional product or service attributes and enhance those which promote difference.
However, these studies often concentrate solely on blue ocean success stories ignoring the many failures such as the Bic mobile phone.
There are also lessons to be learnt from Blue ocean failures:
- Value innovations are not the only way to create new brands
- Value innovation – suppressing an attribute seen as necessary by existing market players – is no guarantee of success if there is insufficient demand for that innovation.
- Value innovation can lead to no innovation at all.
Some of the most successful products and brands in today’s market rely on traditional ‘red ocean’ innovation. The iPhone is one such example. It’s success is through the constant innovation of an existing product by adding better or additional functionality.
So if you are considering a new product or entering a mature market, do not only think of blue ocean innovation or a radical marketing mix. Sometimes the answer is just to provide a superior product to your competitors.