This article is Part 2 of a review of the concept of Blue Ocean Strategy for Travel Agents. Click here for Part 1.
The authors of Blue Ocean Strategy point out participants in red ocean markets all follow a conventional approach. Everyone more or less does things the same way. As the markets become more crowded, competition increases, prices are cut and margins fall. Costs go up. Soon, the only differentiator is price. Well educated consumers no longer need the expertise that distinguished the early markets.
Authors Kim and Mauborgne place the concept of “Value Innovation” as the cornerstone of Blue Ocean Strategy. Instead of an attempt to “beat” the competition at the game, a Blue Ocean Strategist will make the competition irrelevant by creating a value for the market that is a leap out of the red oceans. There will simply be no competition.
This is not mere “added value” – we are not discussing a small, incremental value. I’m not talking about the bottle of wine in the cabin or hand delivering documents. We are looking for a leap radical enough to make the company stand out in the marketplace. Likewise, we are looking to actually eliminate many of the cost burdens of the conventional market while increasing profits.
Can it be done? Sure. Let’s take a 7 night Caribbean cruise as an example.
How’s the market look right now for that cruise? The oceans look pretty red, don’t they? Try to “beat out” any number of online discounters. Try to convince your clients that you are the expert in the field. Match the rebates and the discounts and the onboard credits everyone else is offering. Market to the conventional market for this cruise and may the best travel agent win. How does that sound for a good time? Is it any wonder so many travel agents are frustrated with “selling” cruises?
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Blue Ocean Strategy would say to look for a market other than the conventional one. So I’m going to do some homework. I personally like to bike. I’m a mountain biker and a lot of my friends like road racing. There are three or four clubs right here in Tallahassee. I look at Celebrity Cruise lines:
7 Night Southern Caribbean Cruise
Cruise Ports: San Juan, Puerto Rico, Charlotte Amalie, St. Thomas, Philipsburg, St. Maarten, St. Johns, Antigua, Castries, St. Lucia, Bridgetown, Barbados, San Juan, Puerto Rico
I Google “Biking in Antigua”, “Biking in Puerto Rico”, Biking in St. Lucia, etc. Hey, I might be onto something.
What do I know about bikers? They love to bike in new locations! They will travel across country to bike new terrain. Here is an opportunity for them to bike in a string of new countries on a single trip, with all of the amenities of cruises thrown in to boot!
Naturally, there is some work to be done. I would need to contact various biking companies in each locale, get references, learn about the terrain, the equipment provided, etc. I would have to put together a program. My business plan calls for me to achieve wholesale rates with the local bike outfitters.
My package is not a cruise, it’s a biking vacation using cruise transportation. The elements I put together will not be easy to duplicate on a casual basis. My package will be appropriately priced and highly profitable. I have re-constructed the market.
Hey, look around. Where’s my competition? There isn’t any, and I have a great big blue ocean of bike clubs across the country to fish.
Here are some Blue Ocean principles this example bears out:
- I created a new market – I didn’t market to conventional cruisers where everyone else was. In fact, I went to bikers – people who would probably otherwise despise cruising as “Not active enough”.
- I have created new value – I’m appealing to the clients’ desire to bike in new locations, new destinations in an economical manner. Yet, I’m putting an entirely new “spin” on cruise economics. It’s now great, economical, transportation between exotic biking destinations with nightlife and food thrown in to boot.
- I’ve eliminated some costs – discounting and rebating.
- I’ve increase my profits by increasing value substantially over the mere cruise.
- I’ve eliminated competition. Try to find another company that even offers biking cruises, has set up contacts in ports of call, who has vetted the outfitters and put together the great plans I offer.
- Note, too, that this is not merely “niche marketing”. I have created true differentiation, not in the cruise product, but in the market to which I am appealing and in the value I am offering. This is no small incremental value – it is a leap, a new offering in a new market – cruise biking.
This same exercise can be accomplished time and again, not just with cruising but in many areas of travel. In fact, I dare say that no other industry so lends itself to blue ocean strategy!