Factors of competition are the areas that businesses within an industry provide value to customers. When the emphasis companies place on these value areas is plotted on a Strategy canvas, it creates the value curve.

Some examples of factors of competition are:

• Price
• Durability
• Eco-friendliness
• Technical specs
• Ease of use

In a Red ocean, business compete by differentiating themselves with varying levels of emphasis on the factors of competition. They typically follow the value-cost trade-off where changes in emphasis on the factors result in directly proportional changes in cost - whether up or down. The most common way to differentiate is lower value and cost products vs higher value and cost products.

Blue oceans are created when companies create new factors of competition and reduce costs - value innovation.