Cirque du Soleil—Blue Ocean Strategy Case Study
Yinting Li (1155081729)
After Wednesday’s class, I got more interested in which companies or organizations have applied Blue Ocean Strategy and created a blue ocean of new market space to gain the success. Cirque du Soleil, which is one of the successful cases on blueoeanstrategy.com. Two years ago, I went to Las Vegas with my mom and we enjoyed and impressed by the three different shows: “O” show, “KA” show and “Zumanity” performed by Cirque du Soleil. I became a huge fan of Cirque du Soleil, the Canadian entertainment company, which is also the largest theatrical producer in the world. That’s why I am going to analyze how Cirque du Soleil succeed in creating blue oceans of uncontested markets and become popular in over three hundred cities all over the world.
Three Tiers of Noncustomers
Originally, the performance of circus is mainly created for children, which was the current market (see Figure 1). By breaking the market boundaries of theater and circus, Cirque du Soleil gained a new understanding not only of circus customers but also of circus noncustomers: adult theater customers (Tier 3 in Figure 1). Therefore, Cirque du Soleil created a new market space in the entertainment sector. As for Tier 2, Cirque du Soleil tried to eliminate the traditional animal shows so that they could gain the support from the animal protectors and SPCA.
Cirque du Soleil did not try to compete with its biggest competitors Ringling Bros. and Barnum & Bailey. Instead, it created uncontested new market space that made the competition irrelevant. It appealed to a whole new group of customers: adults and corporate clients prepared to pay a price several times as great as traditional circuses for an unprecedented entertainment experience.
Figure 1. Three Tiers of Noncustomers
Source: http://myweb.ncku.edu.tw/~yehcc/EMBA_NCKU_DATA/(10.1)Blue%20Ocean%20Strategy(Mark)(100.01.02).pdf
Strategy Canvas
After noticing the non-explored customer segments, Cirque du Soleil needed to capture the current state of the play in the known market space to see what are the success factors and propel to shift their focus. Traditional Circus Industry usually succeeds in star performers, animal shows, aisle concessions, danger and thrill, etc. Instead of following the conventional logic of outpacing the competition by offering a better solution to the given problem, Cirque du Soleil sought to offer people the fun and thrill of the circus and the intellectual sophistication and artistic richness of the theater at the same time. Compared with other circus, we can clearly see what changes did Cirque du Soleil made from Figure 2.
Figure 2. Strategy Canvas
Figure 2. Strategy Canvas
Source: http://myweb.ncku.edu.tw/~yehcc/EMBA_NCKU_DATA/(10.1)Blue%20Ocean%20Strategy(Mark)(100.01.02).pdf
ERRC Grid
Based on the analysis of the strategy canvas of Cirque du Soleil, the ERRC Grid tells us more about what Cirque du Soleil tried to eliminate, raise, reduce and create so that it can increase the profitable growth. First, Cirque du Soleil eliminated the “Star Performers” and “Animal Shows.” Compared with the movies celebrities, circus star performers are not that famous. Moreover, the animal show is not only protested by the Society for the Prevention of Cruelty to Animals (SPCA), but also the expense of training and medical is the biggest part of the cost (40%). Meanwhile, Cirque du Soleil eliminate aisle concession sales for high audience engagement during the show. Cirque du Soleil instead set up a store close to the theater to let some audience who wants to buy IP purchase what they like after the show. Therefore, Cirque du Soleil eliminate these two elements to cut the cost (see Figure 3).
Secondly, because Cirque du Soleil focused on adults and corporate clients who are willing to pay a higher price to see an extraordinary show, Cirque du Soleil raises the price and improve the unique venue. At the same time, Cirque du Soleil tried to reduce the traditional elements (humor and fun, danger and thrills) of the circus so that it can emphasize its themes and stories of the shows (see Figure 3).
Cirque du Soleil learned from Broadway show, Ballet, Opera, Theater Performance and created an intellectual and artistic orientation to attract both children and adults. Cirque du Soleil combined all these elements including acrobatics, theater, movies, dance, martial art, rock n roll into the show. Also, utilizing high-tech lighting, scenic design, costumes to create new forms of performance. To date, Cirque du Soleil has more than 13 original performance and there are still more new shows coming soon. Furthermore, Cirque du Soleil refined the environment and built up unique venue (tents) to let the audience enjoy and involve the show(see Figure 3).
In conclusion, Cirque du Soleil has generated profitable growth by creating a blue ocean of new market space. It achieves high WTP by targeting adult and corporates. Cirque du Soleil gained high volume due to different shows, global product (no language) and flexible location. It also reduced the cost because of no animals, stars and with global sourcing.
Today, homogeneous market and harsh competition make the enterprises stuck in the “red ocean” and wait for death. Cirque du Soleil as one of the typical example, it tried to seek differentiation, open up its own “blue ocean.” Using the Blue Ocean Strategy, Cirque du Soleil implements innovative breakthroughs and maintain profitable growth, which is a wise decision and may become a new development trend.
Reference:
The Book - Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne
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