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Why do some companies succeed in creating ‘blue oceans’ of uncontested market space, while others remain stuck in ‘red oceans’ of intense competition?
To answer this, we’ll explore a range of examples from various industries, highlighting the strategic actions that enabled certain companies to achieve profitable growth by moving beyond traditional competition.
These case studies will illustrate the application of Blue Ocean Strategy tools and principles developed by Chan Kim and Renée Mauborgne, providing practical insights into how companies can unlock new market spaces.
We’ll delve into examples from the tech, healthcare, fintech, and retail sectors, along with a classic case from the entertainment industry. Additionally, we’ll take a close look at how one company made a remarkable transformation from a red ocean to a blue ocean, demonstrating the powerful impact of this strategic approach.
Red oceans are all the industries in existence today – the known market space.
Cut-throat competition in existing industries turns the ocean bloody red. Hence the term ‘red ocean’.
Red Ocean’s strategy is all about competition. As the market space gets more crowded, companies compete fiercely for a more significant share of limited demand.
Competing in red oceans is a zero-sum game. A market-competing strategy divides existing wealth between rival companies. As competition increases, prospects for profit and growth decline.
Blue oceans are all the industries that are not in existence today – the unknown market space.
Unexplored and untainted by competition, ‘blue oceans’ are vast, deep, and powerful in terms of opportunity and growth.
Blue ocean strategy creates new demand. Companies develop uncontested market space rather than fight over a shrinking profit pool.
Creating blue oceans is non-zero-sum. There is ample opportunity for growth that is both profitable and rapid.
Why do some companies succeed in creating ‘blue oceans’ of uncontested market space, while others remain stuck in ‘red oceans’ of intense competition?
To answer this, we’ll explore a range of examples from various industries, highlighting the strategic actions that enabled certain companies to achieve profitable growth by moving beyond traditional competition.
These case studies will illustrate the application of Blue Ocean Strategy tools and principles developed by Chan Kim and Renée Mauborgne, providing practical insights into how companies can unlock new market spaces.
We’ll delve into examples from the tech, healthcare, fintech, and retail sectors, along with a classic case from the entertainment industry. Additionally, we’ll take a close look at how one company made a remarkable transformation from a red ocean to a blue ocean, demonstrating the powerful impact of this strategic approach.
History shows that there are no perpetually excellent companies. The same company can excel at one moment and falter at another. This suggests that the company itself is not the most appropriate unit of analysis when exploring the roots of sustained high performance.
In their bestselling book, Blue Ocean Strategy, Professors Chan Kim and Renée Mauborgne emphasize that:
A strategic move involves the set of managerial actions and decisions required to bring a major market-creating business offering to life.
The following examples of Blue Ocean Strategy highlight strategic moves that delivered innovative products and services, captured new market spaces, and drove significant leaps in demand.
1. Marvel – a super-powerful blue ocean strategy example
2. Nintendo’s switch to a blue ocean
3. Stitch Fix – a blue ocean example in the fashion retail industry
4. HealthMedia – a blue ocean strategy example in healthcare
5. Nickel – a blue ocean in the fintech industry
6. Yellow Tail – a blue ocean example in the wine industry
7. Cirque du Soleil – a classic example of blue ocean strategy
Let’s jump right in, starting with one of the most extraordinary blue ocean turnarounds in corporate history.
Unless you’ve been completely off the grid for the past 50 years, you’ve certainly heard of Marvel, or at the very least, you’re familiar with iconic characters like Spider-Man, The Hulk, and many others. What you might not know is that Marvel’s journey is one of the most remarkable examples of a company transforming from a red ocean of cutthroat competition to a blue ocean of uncontested market space in modern business history.
Consider the blockbuster movies of the last decade. Year after year, Marvel films have dominated the box office, consistently topping earnings charts. Movies like The Avengers, Age of Ultron, Infinity War, Endgame, and Black Panther aren’t just popular—they’re record-breakers. These films make up half of the top ten highest-grossing movies of all time across all genres, with Endgame holding the title of the highest-grossing movie ever. All these cinematic milestones were achieved by Marvel.
But Marvel’s success wasn’t always guaranteed. Just over two decades ago, the company was emerging from bankruptcy, burdened with $250 million in high-interest debt, a shattered sales channel, alienated customers, and a drastically reduced staff. Their financial situation was so dire that they struggled to meet payroll.
Founded in 1939 as a comic book company, Marvel struggled in its early years, operating at a time when superheroes were losing their appeal. Their only notable character was Captain America, created primarily as wartime propaganda to rally support for WWII. By the 1960s, Marvel’s comic book division was on the brink of closure, producing uninspired, “me-too” content that failed to stand out in a saturated market.
It was during this period that three visionary creators—Stan Lee, Jack Kirby, and Steve Ditko—decided to revolutionize the superhero genre. Instead of targeting the existing audience of children, Marvel began crafting more complex, relatable characters that resonated with college students—an untapped demographic for comic books at the time. Between 1960 and 1964, Marvel introduced Spider-Man, Iron Man, The Hulk, The X-Men, and many others, creating a roster of approximately 8,000 characters. This bold strategy breathed new life into Marvel, making it a dominant force in the comic book industry.
However, the 1980s brought a drastic shift when Marvel’s new owners adopted a short-sighted, red ocean approach that stripped the brand of its value. During this time, management prioritized personal profits, pocketing hundreds of millions of dollars while gutting Marvel’s staff and retail channels. This left loyal customers disillusioned and led to a sharp decline in the company’s fortunes, ultimately driving Marvel into bankruptcy.
Marvel took a blue ocean turn by focusing on noncustomer college students. Marvel invented characters that were people first and superheroes second: Spider-Man, The Hulk, Iron Man, the X-Men.
In 1999, Peter Cuneo, a renowned turnaround expert, was appointed CEO of Marvel and played a pivotal role in transforming the company from the brink of bankruptcy to being acquired by Disney for over $4 billion just a decade later.
One of Cuneo’s most significant blue ocean strategic moves was steering Marvel into the motion picture industry—a bold pivot that led to the creation of Marvel Studios. This move was more than just an entry into a new market; it fundamentally reshaped the movie production model. Under Cuneo’s leadership, Marvel didn’t merely participate in the film industry—they redefined it. By creating a shared cinematic universe, Marvel Studios opened up a blue ocean of uncontested market space, revolutionizing how franchises are built and dominating the 21st-century box office.
In the business world, there’s a conventional belief that companies face a choice: they can either create greater value for customers at a higher cost or offer reasonable value at a lower cost. This perspective frames strategy as a trade-off between differentiation and low cost—a classic red ocean mindset.
Marvel, however, adopted a blue ocean approach, defying this traditional value-cost trade-off by pursuing both differentiation and low cost simultaneously. To understand how Marvel achieved this, we can look at the Four Actions Framework developed by Chan Kim and Renée Mauborgne.
The Four Actions Framework challenges the conventional strategic logic of an industry by asking four critical questions:
By applying this framework, Marvel was able to break the traditional trade-off between differentiation and low cost, carving out a new market space where it could deliver unparalleled value while maintaining cost efficiency. This strategic shift not only set Marvel apart from its competitors but also redefined the possibilities within the entertainment industry.
The Eliminate-Reduce-Raise-Create (ERRC) Grid above demonstrates how Marvel successfully broke the traditional value-cost trade-off by implementing strategic actions that delivered unprecedented value at a lower cost.
Marvel’s blue ocean strategy showcases how the company combined differentiation with cost efficiency to rejuvenate its business. By entering the motion picture industry and fundamentally innovating the film production model, Marvel not only restored its blue ocean but also created the most profitable movie franchise in history.
For an in-depth exploration of Marvel’s transformation and strategic success, check out The Marvel Way: Restoring a Blue Ocean, a case study that won the 2020 Case Centre Award for Strategy and General Management.
Nintendo, the iconic Japanese video game company, launched its first console in 1977 and gained international fame with the release of Donkey Kong in 1981 and Super Mario Bros. in 1985. However, by the early 2000s, Nintendo faced significant challenges as industry giants Sony and Microsoft dominated the market with their advanced gaming consoles.
In 2006, Nintendo adopted a blue ocean strategy to break away from the fierce competition. While Sony and Microsoft focused on expensive, high-performance consoles for hardcore gamers, Nintendo shifted its attention to an untapped market: non-gamers. Instead of competing in the red ocean, Nintendo explored the needs of noncustomers in the gaming industry and reconstructed elements across market boundaries to create the Wii—a console centered on simplicity, functionality, and interactivity, with games that offered high utility to a broader audience.
Nintendo strategically eliminated or reduced features considered essential by the industry, such as high-definition graphics, fast processors, complex controllers, and violent lifelike games. Simultaneously, they raised and created factors that appealed to non-gamers, such as approachable games, an emphasis on fun over technical power, and intuitive controls.
The result of this blue ocean strategy was the Nintendo Wii, which opened up a new market, attracting traditional non-gamers and outselling Sony and Microsoft gaming products combined. The Wii’s success was unprecedented until the gaming industry faced a technological disruption with the rise of smartphones and tablets.
Fast forward to March 2017, Nintendo once again demonstrated its blue ocean thinking with the release of the Nintendo Switch. Responding to the growing demand for simple, mobile-friendly games, Nintendo created a hybrid console that could seamlessly transition between a home gaming system and a portable device. Unlike the PlayStation 4 and Xbox One, which focused on high-end processing power, the Switch offered versatility and convenience, capturing the best of both high-powered consoles and mobile gaming.
By 2018, the Nintendo Switch had become the fastest-selling home video game system in U.S. history and outsold every other console during the Christmas season that year. Nintendo had successfully reconstructed market boundaries, blending the strengths of traditional consoles and smartphone games to create a new and profitable blue ocean.
Explore in-depth the blue ocean strategy examples of Nintendo Wii and Nintendo Switch.
Stitch Fix is a prime example of blue ocean strategy in the fashion retail industry. Led by Katrina Lake, the youngest female CEO to take a company public in the U.S., Stitch Fix carved out a new market space in the highly competitive fashion sector. Stitch Fix offers a personalized styling service that delivers curated boxes of clothing directly to customers’ doors, providing the experience of having a personal stylist.
By 2019, Stitch Fix generated $1.5 billion in revenue from over 3 million customers, thriving in an industry where many traditional retailers are struggling. The company’s success lies in its innovative blend of artificial intelligence and human expertise to deliver a differentiated yet cost-effective service that has captivated its audience.
Katrina Lake’s vision created a new market space by combining cutting-edge technology with human creativity and ingenuity. Stitch Fix is also notable for its commitment to diversity. Women make up 86% of its workforce, making it one of the largest female-led companies in the AI space and across most industries.
To learn how Stitch Fix created a blue ocean in the retail industry, read the blog “Stitch Fix: A Blue Ocean Strategy in Retail“.
HealthMedia is a standout example of blue ocean strategy within the healthcare industry, specifically by looking across strategic groups to create a new market space.
At a time when HealthMedia was generating just $6 million in revenue, it found itself struggling in a highly competitive red ocean. The industry was divided into two strategic groups: one offering high-cost telephonic counseling for severe medical conditions, and the other providing low-cost, generic digital content similar to what you’d find on WebMD.
HealthMedia identified a critical insight—buyers traded up to telephonic counseling for its high efficacy, while they opted for digitalized content for its affordability. By understanding these trade-offs, HealthMedia created a new market space called “digital health coaching.” This innovative approach combined the low cost of digital content with enhanced efficacy, achieved through interactive online questionnaires that tailored health plans to individuals based on their self-reported challenges.
In just two years, HealthMedia’s blue ocean strategy was so successful that Johnson & Johnson acquired the company for $185 million, a testament to the compelling market space they created.
The HealthMedia case study is analyzed in detail in the New York Times and #1 Wall Street Journal bestseller Blue Ocean Shift.
Viagra is another example of a strategic move by Blue Ocean in the healthcare industry. Read how Viagra created a blue ocean in lifestyle drugs.
French fintech Nickel discovered a blue ocean in the overcrowded French retail banking sector by targeting noncustomers and crafting a strategy to meet their needs.
In France, the typical banking experience is notoriously cumbersome. Opening an account often requires an appointment with a bank manager, the submission of numerous documents, and the payment of fees to maintain an account that includes a range of financial services—many of which are irrelevant to the customer’s needs.
Hugues Le Bret, a visionary French entrepreneur, recognized the hidden pain points that both customers and noncustomers had come to accept as inevitable in traditional banking. In response, he founded Nickel, a simple, low-cost banking service designed to bypass the complexities of legacy banks. By focusing on low-income earners and individuals excluded from traditional banking, Nickel created a banking solution that was accessible, affordable, and user-friendly.
Since its founding in 2014, Nickel quickly rose to prominence as one of France’s leading fintech startups. Its success was so compelling that BNP Paribas acquired the company for over 200 million euros in 2017.
While traditional banks were preoccupied with developing financial technologies to enhance their existing offerings, Nickel identified a blue ocean by addressing the needs of noncustomers—specifically, low-income individuals and those facing financial exclusion. This strategic move allowed Nickel to tap into an underserved market and achieve rapid growth.
If you’re interested in learning more about Nickel’s Blue Ocean and how it went from a startup to achieving profitable solid growth, check out this case: Driving Sustainable Growth and Empowering Society: Nickel’s Blue Ocean Beyond Disruption
Casella Winery’s [yellow tail] is often celebrated as a quintessential example of blue ocean strategy. Let’s delve into how this small Australian winery created a blue ocean in the fiercely competitive U.S. wine industry.
By the year 2000, the United States boasted the third-largest wine market globally, with an estimated $20 billion in sales. Despite its size, the industry was characterized by intense competition, with mounting price pressures, powerful retail and distribution channels, and stagnant demand, even though consumers were overwhelmed with choices.
In July 2001, Casella Winery, a relatively unknown player from Australia, introduced [yellow tail] into this crowded U.S. market. Initially, the company expected to sell 25,000 cases in its first year. However, they far exceeded their expectations, selling nine times that amount. By the end of 2005, [yellow tail] had sold an astounding 25 million cases. It quickly became the best-selling 750ml red wine in the U.S., surpassing well-established Californian, French, and Italian brands.
So, how did [yellow tail] rise to become the number one imported wine and the fastest-growing brand in the history of the U.S. and Australian wine industries?
Traditionally, wineries have competed on the prestige and quality of wine at specific price points, focusing on factors like the personality and characteristics of the wine, the uniqueness of the soil, the winemaker’s expertise, and the aging process.
Casella Wines, however, took a different approach. They redefined the problem of the wine industry as one of making wine fun and accessible. By analyzing the demand side of alternatives such as beer, spirits, and ready-to-drink cocktails—which together captured three times as many consumer alcohol sales as wine—Casella Wines discovered a critical insight: many American adults found wine intimidating and pretentious. The very complexity of taste that the wine industry sought to perfect was off-putting to the inexperienced palate.
Rather than compete on traditional metrics, Casella Wines simplified the wine-drinking experience, creating a wine that was easy to drink, approachable, and fun. By stripping away the pretentiousness and focusing on enjoyment, [yellow tail] appealed to a broader audience, including non-wine drinkers, effectively opening up a new market space.
This strategic move allowed [yellow tail] to transcend the red ocean of the traditional wine market and create a blue ocean of uncontested market space, leading to unprecedented success.
With that insight, Casella was ready to challenge the industry’s strategic logic and business model. To do so it considered four key questions outlined in the blue ocean analytical tool, the Four Actions Framework.
The result of this strategic analysis was [yellow tail], a wine whose profile diverged sharply from the competition, carving out a blue ocean in the U.S. wine industry. Instead of positioning wine as a traditional, often intimidating beverage, Casella Wines reimagined it as a social drink accessible to everyone.
By examining alternatives like beer and ready-to-drink cocktails, Casella introduced three new factors to the U.S. wine market: easy drinking, simple selection, and an element of fun and adventure. Everything else that had traditionally defined wine was either minimized or eliminated.
[yellow tail] offered a completely new blend of characteristics that resulted in a straightforward, approachable wine structure—one that instantly resonated with a broad base of alcohol consumers. The outcome was a wine that didn’t require years of developing a refined palate to enjoy.
This strategy allowed Casella to drastically reduce or eliminate elements that the wine industry had long competed on, such as tannins, complexity, and the need for aging. By minimizing the need for aging, they also significantly reduced their working capital requirements. While the wine industry criticized [yellow tail] for its sweet, fruity taste, consumers embraced it with enthusiasm. Casella further simplified the selection process by offering just two options—Chardonnay, the most popular white wine in the U.S., and red Shiraz.
Moreover, Casella turned wine shop employees into [yellow tail] ambassadors by infusing fun and adventure into the sales process. Outfitting employees in Australian outback attire, the company made the experience lively and engaging, encouraging enthusiastic recommendations of [yellow tail] to customers.
The success of [yellow tail] can be further understood through the Strategy Canvas, developed by Chan Kim and Renée Mauborgne. This diagnostic and action framework allows for the visualization of an industry’s competitive factors and the relative offering levels of these factors by various players. It clearly illustrates how [yellow tail] broke away from the traditional strategic profiles of its competitors to create a compelling blue ocean strategy.
[yellow tail] crafted a distinctive and powerful value curve that unlocked a blue ocean of opportunity. As illustrated in the strategy canvas, [yellow tail]’s value curve is characterized by focus: rather than spreading its efforts thin across all competitive factors, the company concentrated on a few key elements that truly mattered to its target audience. This approach resulted in a value curve that sharply diverged from those of its competitors, not by benchmarking against them, but by looking across alternatives and redefining the market.
The strategic profile of [yellow tail] was encapsulated in a clear and compelling tagline: “A fun and simple wine to be enjoyed every day.” This succinctly captured the essence of what made [yellow tail] unique and appealing.
When expressed through a value curve, a successful blue ocean strategy exhibits three complementary qualities: focus, divergence, and a compelling tagline.
Check out other powerful strategy canvas examples of companies like Apple or CitizenM.
To read more in detail about characteristics of good strategy read the strategy vs tactics blog where we describe it in-depth.
Arguably most well-known example of blue ocean strategy is Cirque du Soleil, a Canadian entertainment company that created uncontested market space and made the competition irrelevant. It appealed to a whole new group of customers: adults and corporate clients prepared to pay a price several times as great as traditional circuses for an unprecedented entertainment experience.
Cirque du Soleil is one of the flagship case studies in the Blue Ocean Sprint Online Course. Learn how Cirque du Soleil and others made the competition irrelevant by taking the course.
