The Feasibility of Blue Ocean Strategy as a strategy development tool in the nutraceutical industry

Abstract

Nutraceuticals are marked as an advancing area of health innovation with the potential for providing compelling solutions in the prevention and management of complex non-communicable diseases worldwide. Yet the current nutraceutical industry landscape is characterised by intense rivalry, converging market boundaries and progressively homogenised products. Despite these industry conditions, present literature illustrates the unfulfilled needs of the consumers in this healthcare space, thus, presenting an opportunity for firms to deliver new sources of value. These intricate dynamics of the nutraceutical industry emphasise the need for a more structured approach in generating game-changing commercial strategies to ultimately achieve value for both the firm and the buyers of its products. This can be accomplished through the use of the Blue Ocean Strategy (BOS) framework, which focuses on identifying revolutionary value propositions and creating uncontested markets, and hence ensuring growth and profitability. This research project aims to utilise the underlying theories and frameworks of BOS, in the context of a nutraceutical product, to ultimately qualify whether it can be a useful tool in evaluating the current strategies and competitive landscape, as well as generating new ideas and insights into new market opportunities. Company X Olive Leaf Extract and the Metabolic Syndrome (MS) marketspace were engaged as the real-life contexts for application of this strategic management tool. The research question and objectives were addressed through an inductive exploratory qualitative study incorporating a three-stage integrated approach to data acquisition: 1) Stage 1 Executive Interviews; 2) Analyses of Customer and Noncustomer Interviews; 3) Stage 2 Executive Interviews. Semi-structured in-depth interviews and secondary data were utilised as sources of evidence, underpinning Blue Ocean theories and tools. The findings indicated that the BOS framework effectively clarified the key areas of investment in creating value for the OLE market, the strategic profiles and behaviour of the OLE industry players, and essentially, the functionally-oriented nature of the value offerings. Additionally, the BOS framework also provided insights into the potential opportunities for achieving value innovation in the MS space. The study recognised the inherently emotional nature of the MS health condition, justifying the buyers’ use of emotional heuristics (e.g. health benefits and information from trusted sources) to infer the perceived benefits and risks associated with a health product. The new ideas generated from BOS in terms of current product offering and wider offering entailed different levels of risk and costs, respectively. The current offering propositions were viewed as being more commercially viable compared to wider offering propositions.