In a competitive business landscape saturated with rivals competing for customer base and market share, the Blue Ocean Strategy focuses on creating a new market space instead of competing in an existing and saturated markets. This strategy advocates reshaping market boundaries by eliminating, reducing, raising, or creating factors that fundamentally transform customer value. By enhancing their products or services and prioritising innovation and untapped demand, enterprises can seize new business opportunities and differentiate themselves from competitors.
The ERRC grid is a practical tool that
helps enterprises eliminate, reduce, raise, and create, thereby redefining industry
boundaries.
Use
Case: WeChat
An
example of the Blue Ocean Strategy is WeChat, developed by Tencent and first
released in 2011. At that time, the messaging app market in China was dominated
by SMS services and other providers like QQ, Sina Weibo, Renren and Feixin.
Instead of merely competing in the saturated red ocean, Tencent revolutionised the
market by creating a multifunctional app that redefined user interaction with
digital services, thus creating its own blue ocean.
Application
of ERRC Grid
l Eliminate:
WeChat eliminated the reliance on traditional SMS and desktop-based instant
messaging services. By bypassing traditional methods, Tencent sought to free
users from the constraints of carrier charges and device limitations.
l Reduce:
The app simplified usage by eliminating unnecessary complexity and providing a
clean, intuitive and user-friendly interface that appealed to advanced users
and those less familiar with digital platforms, promoting inclusivity for a
diverse audience.
l Raise:
Tencent raised the value of connectivity and enhanced user stickiness by
incorporating voice messaging, group chats and video calls, offering features
beyond standard text communication. WeChat also increased convenience by
integrating payment services and mini-programs within the app.
l Create:
WeChat created an ecosystem where users could not only chat but also make
payments, book services, play games and engage with businesses through the app
and mini-programs. Its comprehensive functionality made WeChat integral to
daily life.
The
Blue Ocean Strategy adopted by WeChat reshaped the messaging app market, transforming
it into a dynamic and interconnected ecosystem. By addressing and satisfying
diverse user needs within a single platform, WeChat evolved into an all-in-one application,
while maintaining simplicity and providing a seamless and engaging user experience,
positioning itself as an indispensable tool in the daily lives of people in
Mainland (while the network effect is observable, it is beyond the scope of
this essay).
WeChat’s
approach highlights several key aspects of the Blue Ocean Strategy:
l Traditional
messaging apps focused either on communication or specific functionalities. WeChat combined these seamlessly, breaking the trade-off between
simplicity and functionality.
l By
integrating services like WeChat Pay and mini-programs, Tencent attracted users
who valued a one-stop platform for communication, financial transactions and
day-to-day activities, driving new demand in the process.
l WeChat’s
continuous innovation and differentiation of itself from others, from Moments to
enterprise tools, made it challenging for competitors to replicate its value
proposition.
WeChat’s
success story illustrates the power of the Blue Ocean Strategy; however, it
also reveals the challenges of maintaining a blue ocean. Tencent’s ongoing
investment in enhancing the app’s functionality highlights the importance of
staying ahead of competitors and adapting to evolving user expectations. For
instance, the rise of Douyin / TikTok may threaten WeChat’s leading market
position in terms of user engagement and content consumption within the social
media landscape, forcing Tencent to enhance its platform and explore new
innovations.
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