Advanced Strategy Case: Online Marketing

Marketing is founded on four critical elements: place, price, promotion, and product. Successful companies across the globe are distinguished by the manner in which they apply these principles. Traditional ocean-based strategies are largely defined by their competitive nature and are often called the red ocean strategies. This strategy involves companies stealing each other’s market shares with the aim of being on top. Consequently, these companies remain in a perpetual state of competition. A new strategy referred to as the blue ocean strategy applies the same principles of marketing, but with the sole aim of identifying alternative paths of competition. The blue ocean strategy involves creating new demands in a market that is considered to be uncontested instead of directly competing with the parties present in the segment. For the blue ocean strategy to remain successful in different market conditions, there is a need to create a sustainable strategy for an organization, which would add value innovation and value creation for some of the services that are offered. This strategy is often effective for companies that have directly invested in online marketing as compared to the traditional brick and mortar stores. An additional component of marketing, referred to as pride, has been included in the marketing mix, bringing the total number of factors that determine online marketing in relation to the blue ocean strategy to five. The application of blue ocean strategies utilizes all five principles of marketing.

Red and Blue Ocean Strategies

Red ocean approaches are principally founded on elements encompassing cut-throat rivalry among market players. Some of the critical aspects that define such relationships include focusing on the rivals and their specific products, as well as their competitive positions within the current market setting. Furthermore, the red ocean strategies focus on ensuring that the buyer group is well served. At the same time, they are supposed to ensure that they maximize the value of the products and services that are offered within a specific market setting within the bounds of the industry (Kim & Mauborgne, 2005). Lastly, they focus on improving price performance and focusing on the existing trends outside their current market setting. The blue ocean strategy is built on different principles that limit the use of competition within a specific market setting. First, this strategy focuses on looking for alternatives that exist within the current market setting that have not been exploited by other dominant players (Randall, 2015). Second, they look across the strategic groups that exist within the industry instead of focusing on the competitive position of the strategic group. Third, they focus on redefining the buyers in the industry as well as offering complementary services and products for the players in the industry (Chakrabarti, 2014). Lastly, they shape the manner in which the external environment defines the nature of business within the industry.

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Application in Online Marketing

A large section of consumers has moved from their traditional brick and mortar housing units to online marketing. The convenience, pricing of product, and reduced hustle in selecting products make online shopping one of the most lucrative forms of businesses. Nonetheless, it is impossible for most companies to operate their online stores without having a physical location store that directly manages all issues associated with the organization. Some parties have argued that for the blue ocean strategy to work effectively, the company utilizing it must be the first one in the market to retail specific products (Randall, 2015). This is far from the truth, because the blue ocean strategy is intended to have the customer thinking in the right manner. In essence, it means that the company regards essential attributes, such as value, instead of speed of getting more customers. Companies need to drive the idea that although the speed of customer acquisition may be an essential element in managing any enterprise, it is important to recognize the role of value in increasing the retention of customers. Value and constant innovation are two critical factors that define the blue ocean strategy within any marketing platform. Online marketing is already founded on a fundamental principle of applying the constant use of innovation through the use technology (Kim & Mauborgne, 2005). Therefore, from an innovation-based perspective, the use of online platforms that market their products online, such as Xiaomi, could be directly associated with the blue ocean strategy even before the different elements come into full effect.

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Online marketing forms apply the four principles of marketing in a unique manner as compared to the traditional forms of marketing, because the utilize the fifth principles of marketing. The five elements identified in the case are price, promotion, place, product, and pride. The price of any element within a specific market setting is essential, because it defines the nature of the interactions between the consumers and the company, as well as contributes to the revenue and income levels which are key to the survival of any company. In the case of Xiaomi, the company sells manufactured handheld mobile devices at almost a third of a price as compared to the largest dealers, such as Samsung and Apple (Lee, 2017). Xiaomi profits are exponentially higher compared to the other two companies since the company is largely an online platform and reduces specific costs associated with the technical expenditures, such as the hiring of staff, and other essential elements related to the traditional brick and mortar stores in the process (Lee, 2017). Nonetheless, this should not be considered the only way in which the company makes a profit, considering that there are several other online platforms that operate on the same principles and make low profits. Companies that engage directly in the blue ocean strategy, such as Xiaomi, are more likely to engage in several other different strategies that reduce the specific attributes of products, such as low costs and differentiation (Lee, 2017). These strategies are pursued simultaneously by such organizations, which is supported by the number of different items sold by Xiaomi (Lee, 2017). This form of strategy aims to capture mass buyers in any setting, using strategic pricing rather than low-cost pricing. In essence, the company never seeks to pursue the price of products against the competition within the company, but uses various alternative and substitutes that are likely to capture the responsiveness of the customers and non-customers in specific industry settings. This is especially apparent in the case of Xiaomi, which chose not to follow the competitive nature of the industry when selling mobile phone devices (Lee, 2017). The low cost of the same product with similar capabilities to the products of such companies as Apple and Samsung would later directly drive customers to this online platform. Consequently, the elevated profits were expected on the part of the company.

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Specific products within company settings are more likely to define the revenue impact within any organization. Xiaomi, like many other companies across the globe, sells technology-based products, including smart television products and mobile phone based goods. What differentiates companies that apply the blue ocean strategy from the remaining companies is the use of value addition and innovation based practices (Lee, 2017). For example, in the case of Xiaomi, a user interface has been created where the consumers can directly interact with other parties in selling specific products (Lee, 2017). This feedback is normally scrutinized by the company before making any customer based decisions in future products. This way consumers feel like they are a part of the organization in question. There are two major ways in which products are made in any blue ocean strategy mindset. The first is to launch an exclusive new product to the market not launched before and have total monopoly over the product in the process. The second method is through value innovation where a specific niche is created for products that previously existed under the red ocean strategy (Wee, 2017). Xiaomi smart television sets could have been created using the second principle as they showcase critical elements associated with the second product strategy and identified a new gap that could be filled by the company, providing it with an upper hand in the current market setting (Lee, 2017). However, there are specific limitations associated with the blue ocean strategy when it comes to the use of specific products. Companies employing the red ocean strategy are commonly in competition and value any new addition to their products provided it increases their sales and their profits (Chakrabarti, 2014). Thus, this increases the risk of imitating specific products from the blue ocean strategy. Once imitation occurs, the product has to compete with the others in the market (Chakrabarti, 2014). In addition, blue ocean strategy products allow for monopolized markets; once a second player emerges, the use of such a strategy becomes meaningless. 

Online marketplaces are considered more profitable as compared to traditional brick and mortar shops in cases where the blue ocean strategy is effectively applied. First, online marketplaces are available at all times, and the prices of all products are made clear to all buyers. Nowadays, there are numerous online platform that sell different products within specific settings. The inclusion of specific aspects related to the blue ocean strategy, such as the low cost of the numerous elements as well as value-based innovation services, presents a new dimension in online marketing. Some of the innovations adopted by Xiaomi, such as Orange Friday, ensures that there is constant interaction between the company and the consumers (Lee, 2017). The second specific element that makes companies such as Xiaomi stand out is the localization of its products in cities where the company has a mass following such Hong Kong. Already contested markets, such as those in Europe and America, have numerous players capable of controlling the market. Instead of choosing to compete against them, Xiaomi applies the principles of using uncontested marketplaces to curve its niche in the market

Promotion and pride are the last two critical elements that define the blue ocean online marketing strategy. Companies that invest in innovation-based practices are more likely to have a huge following of consumers who purchase their products across the market. Promotion based services are more likely to be purchased at a faster rate in an online setting as compared to the traditional brick and mortar stores. This is due to the high number of individuals that have access to such products and the timely feedback and information provided by the company. There are other effective strategies, including low costs and product differentiation, associated with the company (Rawabdeh, Raqab, Al-Nimri, & Haddadine, 2012). Pride is the last essential element in this marketing mix. It occurs due to the development of specific online portals that directly allow consumers to purchase particular products. These portals increase feedback from the clients as well as lead to customer loyalty. In turn, this improves the manner in which the company is viewed by its rivals and other players. The companies applying the blue ocean strategy may have a benefit as compared to other companies, but likewise face some key limitations in the application of their strategy across multiple settings (Bourletidis, 2014). Some key limitations include product imitation, value innovation strategies going against the vision of the organization, and building strategies that may directly conflict with the images of other established companies in the market. A good example of the latter is comparing Xiaomi to Apple (Lee, 2017). Other limitations include the production of a high number of products that discourages followers from entering the market, as well as the creation of a monopoly in the market and operational, cultural, and political costs associated with imitation. The most effective approach to dealing with such imitation is improving the value of the monopolized product and patenting such products.

Conclusion

The blue ocean strategy refers to the application of strategic management principles that seek to create alternative products within the market without creating any form of competition. These products swim in uncontested markets and are largely defined by value innovation, product differentiation, and low-cost strategies. The inclusion of the blue ocean strategy principles in online marketing introduces a fifth dimension in the specific principles of marketing. A new sense of pride is associated with the use of specific online products and creates some form of loyalty to the organization in the process. Specific elements of marketing are applied differently, though they are based on the inclusion of specific aspects associated with the blue ocean strategy.

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