Have you ever wondered: Should you fight with competitors on better prices and incrementally better features or focus on product innovation to create a new market?

In this concept, existing markets are known as the Red Ocean. Red Ocean has boundaries and rules that are well-known and accepted by businesses and consumers. Any new business in the red ocean is just another drop. In the Red Ocean, the main tools for growth are better prices and improvements to the product offering.

The Red Ocean Strategy is about capitalizing on existing demand. Growth is limited.

The Blue Ocean Strategy creates a new demand and as a result, a new market that will have no set rules and the potential for hyper-growth. In a Blue Ocean, your product is the first of its kind, making the competition irrelevant, similar to the famous examples of Uber vs. Classic taxis or Airbnb vs. hotels.

The key to building a Blue Ocean Strategy is The Strategy Canvas, which is a simple visualization that helps you understand the current market situation and the future possibilities for your business.

In the Strategy Canvas, the horizontal x-axis lists the different value factors that companies within an industry are competing on. On the vertical y-axis, you can indicate the buyer’s value for each of these factors.

Value factors could be anything, from better prices & special features to emotions customers get from interacting with your customer support team.

The buyer’s value could be collected through customer surveys, interviews, or public opinion in the press.

The strategy was developed by INSEAD professors W. Chan Kim & Renée Mauborgne in their 2004 bestseller titled “Blue Ocean Strategy.”