Unlike a blue ocean, red oceans are packed with both customers and competitors.
Red oceans are markets where the customer segments and the competitors that serve them are already well established.
Red ocean strategy tends to be competition-based. Success is benchmarked in comparison to the competitors in the space. This is because the competitors are all fighting for the same customers.
Typically companies competing in a red ocean are competing on cost and quality.
Innovations of the last century have contributed to an increase in red oceans. This has been caused by factors such as:
- Manufacturing innovation increased supply, causing downward pressure on prices
- Globalization has reduced the barriers for international competitors to serve customers globally, making competition global and creating more opportunity to re-segment markets or compete directly