Blue Ocean
Professors W. Cahn Kim and Renée Mauborgne came up with the common sense (but unique) concept of using a blue ocean as a financial metaphor, in their book appropriately called Blue Ocean Strategy, published in 2004.
In the book, they describe red oceans as all the industries currently in existence. Their products are well-known and popular, but competition runs rampant, hence the red, or bloody, ocean. In order to gain more market share, they have to outperform their rivals with better prices or better quality of service, plus a heck of a lot of advertising. As the industry gets even more crowded, profits can decline.
A blue ocean, on the other hand, represents an unknown market that has little or no competition. It might be a brand new company, or one that’s been around for a while but is creating a new product set or services.
Think of Starbucks, which entered a rather crowded coffee shop market (who would pay $4 for a cup of coffee?), but offered tea, smoothies, and fancy coffee drinks, as well as comfortable seating, to encourage customers to hang around for a while. And, uh...buy more coffee.
Another blue ocean would be eBay, which started a totally new industry of online auctions. Then there’s Cirque du Soleil, which did not try to imitate or compete with traditional circuses, but invented their own category by blending opera and ballet...and losing the performing animals. Rather than fighting over a limited set of customers, a new demand was created.
Related or Semi-related Video
Finance: What is a thin market?13 Views
Finance allah shmoop what is thin market peahen happens when
few stocks are trading on bonds to actually thin is
illiquid thin is when there just aren't a lot of
buyers at the given price levels Thin is when trading
volumes are described by the kindly wise cnbc commentators as
being anemic Thin is when the headlines ask where have
all the stock buyers gone Long time passing bob dylan
i'll go ask your parents finn is it Well not
this guy Fat is high volumes lots of cash being
put to work Buying securities fat is big demand to
buy a big supply of supply Fat or liquid markets
are generally driven by cash being put to work which
either came from investors who simply saved their pennies to
then deploy them in the market's taking on more risk
by being exposed to more volatility and generally speaking hi
liquidity even in a world where the stock market is
flat is generally perceived as bullish or positive voting in
the future of stock market values Yeah so what does
all that mean Money being put to work is good
It adds liquidity It means people are hopeful optimistic lots
Of opinions Then goto work assessing the upside and downside
of the market such that the gumball estimate effect is
in place And if you didn't go to third grade
in the last decade the gumball estimate game revolves around
the idea that if many opinions estimate the number of
gumballs in this big fish tank those numbers get averaged
and way more often than not The average guesses in
fact very close to the actual number of gumballs crushing
down on the innocent guppies and other goldfish below The
same holds true in the stock market where the aggregation
of many opinions usually makes for better decisions or at
least more accurate estimates And in the case where a
market suddenly grows thin it means that a lot of
educated well heeled invest astors have been spooked by the
notion of taking on risk in their portfolios by taking
their safe cash and risking it in the market So
they d risk or simply then keep cash in their
wallets Not wanting to put it to work until better 00:02:15.065 --> [endTime] signs come from you know on high
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