Bringing Blue Ocean Strategy to FMCG Markets

An emerging concept in strategic management directed at finding new business and value propositions is the framework coined ‘Blue Ocean Strategy’ (BOS) by Kim and Mauborgne, from INSEAD, Fontainebleau. The authors developed the BOS-framework, which comprises of a set of tools, on the basis of ex post studies of over 150 cases from 30 industries. The results were most extensively covered in the book ‘Blue Ocean Strategy’, published in 2004. The success of their work may be illustrated by, for example, Deloitte, Procter & Gamble, and HP, who use this strategic management concept. This scientific paper is one of the first that tests the applicability of BOS in Fast-Moving-Consumer-Good Markets (FMCG). Our prime objective is to investigate whether the application of BOS enables the identification of an uncontested market, or not. The second objective concerns the adaptations required to make the BOS applicable to the FMCG Industry. The field of research is the European fruit and vegetables industry (EFVI), which is one the most competitive industries in Europe, lacking fundamental innovations. The complexity of bringing BOS to FMCG Markets required a two-stage research strategy; the first stage comprises of the combination of desk research with orientational case study research, followed by a second stage comprising of a large survey. In the first stage, six CEOs, chairmen and consultants, were interviewed to tailor the research to the insider perspective. In the second stage, a quantitative questionnaire was send to 299 fruit and vegetable companies, active in Europe. The realized response was 24 (response rate: 8%). Although not high, the response may be understood as sufficient, because the research was primarily intended to learn whether the BOS-framework is strong enough to identify uncontested market spaces even in very competitive industries. The research delivered two major results. Based on identified strengths and weaknesses, recommendations were identified to enable the usage of BOS in FMCG Markets. We brought the tools, strategic canvas, six searching paths framework, four actions framework (FAF) and the sequence of the BOS, in a logical and practical order, making it efficient to apply. From the application, we conclude that, out of six searching paths, the path to search across alternative industries finds difficulties in making the competition irrelevant, as assumed. Using individual searching paths in isolation will hardly enable the derivation of an uncontested market space. Next, we learned that the FAF overemphasizes the-taken-for-granted business, keeping attributions to value propositions out of consideration. This learning contradicts the claim of Kim and Mauborgne that the strategy shapes industry structure. In the paper we will present the identified uncontested market space which we labeled ‘Youngfruit’. It will also present the related future key success factors to differentiate from competitors in the EFVI, and thereby change in the long run the rules of the game in this for long very competitive EFVI. We conclude that the findings do not refute but confirm that the BOS enables the identification of an untapped market.

Schiefer, Gerhard
Rickert, Ursula
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Conference Paper/ Presentation
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ISSN 2194-511X (Other)
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 Record created 2017-04-01, last modified 2018-01-22

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