“Which approach or tool should I use for defining the positioning strategy in a Red Ocean?”
There are two important terms here that require some definition before I get down to answering this question. The first is the term “Red Ocean” and the second is the term “positioning.” Let’s take a closer look at these first.
The term “red ocean” actually comes from a very popular strategy book called Blue Ocean Strategy, written by W. Chan Kim and Renée Mauborgne. In very short summary of what really is an excellent book, the basic idea is to find “blue ocean” market spaces where other competitors aren’t playing, rather than playing in “red ocean” spaces where competitors are fighting each other to their bloody deaths. So, when someone talks about a “Red Ocean,” they are usually referring to a typical strategic battlefield where two or more similarly armed competitors are fighting each other for the same customers.
The term “positioning” was made famous by Al Ries and Jack Trout in their co-authored book Positioning: The Battle for Your Mind. The idea behind this concept is that every brand should hold some unique position in the collective minds of its customers. So, Burger King’s hamburgers are flame-broiled while McDonald’s are grilled. They are both large-scale fast food burger joints, but they are also uniquely different in their own rights. And that difference is enough to allow them both to co-exist very successfully in the marketplace. Add Wendy’s with their square burgers and White Castle with their sliders, and you can see how positioning can create some pretty interesting opportunities even in some of the reddest oceans in the world.
Putting these two concepts together, the question practically answers itself because, at least in my opinion, when you are fighting in a red ocean marketplace, having a clear positioning strategy is actually the answer you’re looking for. The real question is (and this is actually what was asked), how do you know exactly what your positioning strategy should be?
There are actually many different ways that you can position your products differently than those of your competitors. For some guidance here, I usually turn to Philip Kotler’s well-known “Three Levels of a Product” concept, which separates the Core Product (the main benefits of a product), the Actual Product (the tangible parts of a product), and the Augmented Product (the ancillary services that support a product in use). When you look at your products through this lens, you have a seemingly countless number of options for differentiating yourself from your competitors, including your main value proposition, the individual product features, your packaging, the overall product design, any number of service and support options, your product warranty, and even your overall brand story. And that’s just on the product side of things. If you look to the rest of the 4 Ps, you also have a plethora of opportunities to differentiate yourself through your promotion, your channels and placement, and, yes, even your pricing. And, by the way, differentiating on price doesn’t always mean that you have to go low. You can think about different pricing models that might actually increase your bottom line – like when the advertising world moved from set placement fees to a pay-per-click model. So, yes, there are some really great positioning opportunities with respect to pricing as well.
Whichever way you choose to position yourself, the two main pieces of advice I would give are: 1) Don’t just consider the tangible product features, and; 2) Make sure you are positioning yourself with respect to something that your customers actually value.
And, of course, make it something different than what everyone else is doing. The point is, it doesn’t have to be something huge and breakthrough. Sure, we would all love to find those blue oceans. And, yes, there are lots of blue ocean yet to be had. But if you find yourself in a red ocean (which, unfortunately, most companies do), there are still plenty of ways to co-exist with competitors and find your own little blue spaces within those already bloodied waters.
Listen to the podcast episode
Dear Strategy: Episode 049