When you are just about to create a new product, you probably dream that your startup will be unique and game-changing. The reality is often different. You will most likely have to fight with other similar products and it’s not that easy to put a brand-new category on the market. Still, competition does not mean you are doomed to fail.
Red ocean strategy is a plan of action aimed to make your product survive in the market full of competitors.
As a design agency, we’ve been working on many projects and most of them were a red ocean. To beat the competition companies tend to search for something that differentiates them from others. It can be a unique feature, outstanding customer service, specific target audience, or excellent user experience.
For example, Gridle, a client management platform we helped redesign focuses on automating sales and marketing processes for small businesses. There are many CRM systems on the red ocean market, but most of them look too complicated for small business owners. Gridle stands out because of its full client lifecycle management automation and ease of use. To be able to compete in the red ocean, Gridle's design needed to be simple for users, and this is exactly what we did for Gridle. You can read more about it in our case study.
Improving the usability of your product can be a helpful point in your strategy. Still, is it enough to be successful in an already existing industry?
In this article, you will find five tips on how to beat the competition by making your product better in your customer’s eyes. But first, let’s remind ourselves what’s the difference between the red and blue ocean strategies.
Short insights on red and blue oceans
The terms blue and red oceans were introduced by W. Chan Kim and Renée Mauborgne in their book Blue Ocean Strategy. These two notions represent two types of markets. According to color associations, the bloody red sea stands for the market with fierce competition, while the blue water is a symbol of a market free of competitors and full of opportunities.
The book says that it is extremely difficult to become successful in the red ocean. You need to spend heavily on aggressive advertisements or sell the product at a lower price. Whereas, the blue ocean offers all the convenience for startup growth in the uncontested space and the almost full amount of the market share.
Many startup founders find it extremely difficult to develop a blue ocean strategy. But the red ocean isn’t that inaccessible. In case you apply the right strategy, you will have all the chances to become successful in a mature industry.
5 Tips to beat the competition
The red ocean is actually not fully red. Even in the highly competitive market, there is always a place for adding something new, something that would differentiate your product from similar propositions. If you want to beat the red competition, do not become obsessed with your rivals. Better find a way to improve your business.
Here are five tips on how to overcome the competition by creating better product value.
Don’t offer a product, offer a solution
You and your competitor have the same target audience. If you manage to identify the client’s needs better than your opponent, the customer is more likely to choose your service.
Talk with your clients and ask them straight-forward questions. Learn what they expect to achieve using your product by asking personal questions like What stops your company from growing? What task takes the most time to complete in your job? What do you think maybe the reason for your business's recent failures? etc.
Once you have a clear picture of the issue, you should provide the client with an effective solution and not just try to sell your product.
Back in 2004 Tobias Lütke and Scott Lake, the founders of Shopify, a popular cloud-based eCommerce platform, wanted to create an online store to sell equipment for snowboards. Online platforms for creating shops weren’t something new those days, but Tobias and Scott faced the problem that all the existing services provided poor user experience.
They decided to create their system that later turned into Shopify. This way, identifying the right pain point of their target audience and providing a better solution, Shopify became a well-known platform for creating online stores.
The ability to solve customers’ issues fast and effectively contributes a lot to becoming successful in the mature industry.
Find a new target audience
Analyze which demographic category, that your rival does not satisfy, is the most willing to buy your service.
Tracking the right metrics can be very helpful here. You should collect the data to learn your customers’ company types, their job positions, the content they prefer reading, etc. When you understand common tendencies for different clients, you can come up with customer types. This way your company can recognize the audience that likes your service or product.
A good example of a red ocean company here would be Hatchbuck, sales, and marketing solutions for small businesses. At the beginning of their life cycle, Hatchbuck tried to sell its service to a variety of different demographics, from sales assistants to business entrepreneurs.
This kind of strategy was, of course, not effective in red ocean waters. Then Hatchbuck conducted a survey, analyzed the data, and talked with customers to define their perfect user. After having analyzed the results they discovered that Hatchbuck’s biggest supporters are small business owners.
Identifying the right target audience can show you the way to growth.
Changing the price is perhaps the most traditional way to act in a competitive market, but it still can work out. If the price of your opponents is nearly the same, you can sell your product or service at a lower cost, or vice versa, if you can provide high-quality products you can sell on a more expensive market.
For example, Amazon, the world's largest online retailer, launched its latest Kindle Oasis E-reader with a price that is much higher than other competitive e-readers. Amazon knows what customers value most in this type of device. The company focuses on producing a lighter e-reader with better battery life and overall ease of use. These features make people buy the product even despite the higher cost.
Learn more about pricing strategies to make better strategic decisions.
Take care of your employees
The founder of a startup needs to be a professional in their industry, but you can’t be the best in everything. Hiring people that are good at things you are not, helps to develop a better product. If it is difficult to find such experts, you can “grow” them yourself.
Give your employees opportunities for self-improvement. Provide them with training, courses, invite special speakers, etc. Create a company culture that would contribute to constant product improvement.
For example, Google gives its employees 20% of their work hours just to think of new ideas. This Google’s philosophy has led to the development of such innovations as Google News and Google Cardboard (a device for VR experience).
The former CEO of SurveyMonkey (a cloud survey software), Dave Goldberg, grew the company from 12 to more than 500 employees. He believed that company culture prompts Surveymonkey's growth.
Goldberg once said: “There are the people who don’t have any experience but are just really smart, talented, and motivated. When you get those people right, they’re your ‘homegrown talent’, if you will.”
Train and improve your team to see higher results.
Advertise your product
All the ways of differentiating your company among others are useless if your customers are not aware of your benefits.
Your ad campaign should explain to the viewer why you are valuable. Be straightforward and put your biggest benefit right in your advertisement. Make it clear from the ad if you are cheaper, easier to use, or suitable for different audiences than your competitors.
As well, you can find a different channel for ad campaigns. If most of your rivals are on Instagram, but you want to target people from a specific industry, try to put your ads on Linkedin, for example.
As well, you can compare your product’s advantages with your well-known competitor, or think of some creative advertisement.
Snapchat, a multimedia messaging app, did a great job at red ocean marketing strategy. They used other companies to promote their product. Popular businesses use this application to attract new customers and at the same time advertise Snapchat.
Create the visibility of your company to stand out when the ocean turns red.
It is challenging to operate in the red ocean, it requires applying the right strategy and constantly analyzing the market. Firstly, you don't need to get obsessed with your competitors, but you should always keep an eye on the new features they launch in the market. Also, never stop improving your product. Find something that differentiates you from your rivals and let all your customers know about your value proposition.
Learn how to create a value proposition in the Product value proposition.