Finding a Blue Spot with a Silver Lining

Changing markets demand that businesses constantly evolve. As Theodore Levitt wrote in Marketing Myopia (1960), companies must be willing to both 'create' and 'destroy' with equal fervour. Over the years, several strategic frameworks have been introduced to deal with the cycle of ‘product life’ - from Clayton Christensen’s theory of Disruptive Innovation in 1990 to McKinsey’s Three Horizon Model in 1991, and the Blue Ocean Strategy by Kim and Mauborgne in 2005.

Among these, the Blue Ocean Strategy stands out for its structured and comprehensive approach. It focuses on creating new market space through disruption and innovation.

Businesses operate in what the authors call a 'Blue Ocean', rather than competing in overcrowded markets or 'Red Oceans' where competition is intense. A well-known example is Cirque du Soleil. It created a Blue Ocean by combining the best of Broadway musicals and traditional circus shows. The result was a unique experience - a musical performance with circus acrobats, colourful costumes, and clowns, offering something completely new to the audience.

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Typically, firms adopt two ways to create a Blue Ocean: either they reconstruct the value in an existing sector by looking at a product/category benefit no one visualised—case in point - Spotify. ‍

In a space where you had to legitimately (iTunes) or illegitimately (Torrent, Limewire) download music, Spotify created a revolutionary mechanism for accessing and listening to your favorite music with its Freemium seamless on-demand streaming service. Firms that redefine sectoral value are several, from Airbnb in hospitality, PVR multiplexes in theatres, Paytm in cashless transactions, Masters Union in management education, IPL in Cricket and the list goes on.

The other is to establish a blue ocean by creating a product or service category that has never been thought of or dreamed about. Interesting here is the case of CRED. On the face of it, it is just another version of a payment gateway that allows you to pay your credit card bills. However, when you closely examine it, it makes a boring payment activity exciting by offering rewards for paying credit card bills.

The targeting was niche, targeting only the high credit-worthy individuals, creating an elite club of brand partnerships and benefits.

With tongue-in-cheek advertising and the use of technology and gamification, CRED captured eyeballs instantaneously. It is these Blue Oceans that skyrocket way ahead of the competition. Byjus, Dunzo, Peebuddy, Licious are some stars in this category. A closer-home example that garnered a blue spot and, in the process, also delivered value for its parent company is - Carvaan.

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Launched in 2017, Carvaan was a portable music player with 5000 pre-loaded songs from yesteryears. It had an in-built stereo, Bluetooth speakers, a USB drive, and an FM radio. In a world proliferated with technological innovations that transformed the consumer's user experience, this paradoxical smart device, packaged as a retro transistor, balanced the best of technology with the simplicity of a button press.

While it created an amazing retro-music experience for the silver-haired user, it was the true-blue hero scripting the next chapter of the music giant Saregama India Limited’s story.

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Tracing the Legacy

Saregama India Limited had an impressive lineage that paralleled the saga of the Indian music Industry chronicle. Established as the first overseas Indian branch of Electrical & Musical Industries Ltd (EMI), London, in 1901, it recorded its first song in 1902 by the then-star performer Gauhar Jaan.

In 1946, pre-independence, it was established as the Gramophone Company of India Ltd, more popularly remembered as HMV (His Master's Voice). Christened and rechristened several times, it converted into a public company on 28 October 1968 as, 'The Gramophone Company of India Limited.'

However, increased and aggressive competition led the company to substantial financial losses. It was in 1985 that the legendary business doyen, Dr Rama Prasad Goenka, took over the financially ailing Gramophone Company with a vision to restore the cultural heritage and tradition of the music industry in India. On November 3, 2000, the company was again renamed 'Saregama India Limited’.

True to its legacy, Saregama always looked for market growth and expansion by exploring new business opportunities. However, market volatility and aggressive competition, compounded with changing consumer preferences, were a constant challenge for the music giant. In 2011, the firm officially joined the RP-Sanjiv Goenka group. The centurion's legacy was monumental, but so was the competition, creating a Red Ocean in the Indian music and entertainment sector.

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To ensure that the legacy did not become an 'albatross around the neck,' the firm did not just need a shot in the arm but a catalyst who could pivot the story on a new path.

Saregama’s transformation journey began under the tutelage of its new Managing Director, Vikram Mehra - a seasoned professional with a proven track record.

Rather than the conventional and traditional, Mehra opted for an alternative track. He quizzed, “What is convention? Technology is the buzzword today, but you need to keep reinventing it and remember that technology has to be slaved to what consumers want. The roadmap for new offerings does not come from ideating in glass chambers. You need to be sitting in your customer’s home.”

What the firm did next was to create a novel Avatar that shaped crystal-clear blue waters, exemplifying the Blue Ocean strategy.

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Transforming the Oceanscape

Vikram Mehra followed a phased approach to design the hero who would navigate the Saregama ship.

Mehra shared, “When I joined Saregama, the one gyan that everyone in and outside the company gave me was, 'Customers will not pay you anything. B2B deals will happen. You may license your music to streaming applications, TV channels, and other movies to use your content, but the end customer will never pay.'' And this was the trigger for a comprehensive study."

In the first quarter of 2015, he commissioned a nationwide qualitative study across 23 Indian cities to find out the usage and attitude of Indian consumers towards music. The consumer insights obtained were both intriguing and interesting.

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Mehra summarised succinctly, “It came out clearly that the older person was a primary customer of a Kishore, Rafi, Asha, Lata, Hemant kind of music. That customer was saying, ‘You have made it very difficult for us to consume your music.’ Our question was—why? It’s on so many apps. They said they don’t use the apps; they find them too complicated.

This group is a large consumer of entertainment; they are the people who watch Star Plus TV shows today. But they wait for their son or daughter to come home, do an illegal transfer of ten songs onto their phones, and keep listening to that music only.

Similarly, another insight was about retired Indian parents, especially those who retired from the public sector, and overnight, they become stingy and stop spending money on themselves. Selling something to someone like that might not work, as it would be perceived as an indulgence. However, it may work for a son or daughter to gift one to them.”

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Towards a Blue Ocean Strategy

Kim and Mauborgne proposed the Four Actions approach to creating uncontested market space - what they call blue oceans. If one debriefs the Carvaan story and traces how consumer insights were used to ideate and conceptualise the retro music player, the four steps become apparent.

The mandate for product development was to Eliminate the need for a stable internet connection, reliance on low-audio-quality pirated content, and complex interfaces.

The offering would Reduce technologically advanced features like algorithm-based recommender systems and personalisation options to almost nil, retaining only basic features like Bluetooth/USB compatibility.

Product features would be designed to Raise nostalgic value—songs from iconic yesteryear artists, simple user action (push button and listen), and a retro look resembling a portable transistor radio.

Finally, the idea was to Create the perfect companion for the 45+ user and an ideal music-themed gift for younger buyers.

The product idea was unconventional and a back-to-basics solution rather than a technological masterpiece.

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Thus, in an era when technological bigwigs like YouTube, Spotify, iTunes, and others competed within the confines of the existing industry structure, Carvaan was able to create a unique cost–value equation by adopting a 'Reconstructionist View' and delivering distinct emotional value - both to the user (the not-so-tech-savvy 45+) and the buyer (son, daughter, grandchild, or nephew).

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So, did the Blue Ocean create value for its parent, Saregama? Yes, indeed—the horizon, courtesy of the silver-haired end user, now had a silver lining (pun intended)!

With a structured approach based on data-driven consumer insights, the firm rode the Carvaan to begin the next phase of its journey. In FY 2017–18, the company sold 95,000 units of Carvaan in Q1 and was expected to touch 300,000 units by the end of the year.¹

Consequently, Saregama converted its conventional copyrighted music into high-quality digital form and made a rare stretch from B2B (business-to-business) to B2C (business-to-consumer) markets.

The transition was clearly visible when the firm recorded a revenue jump from INR 2.1 billion in FY 2016–17 to an unprecedented INR 3.5 billion in FY 2017–18. The profit before tax (PBT) also rose from INR 160.65 million in FY 2016–17 to INR 411.2 million by the end of FY 2017–18.²

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What Next?

The saga is inspirational and novel, but unlike a fairytale, corporate stories must return to the constancy of change as a core business philosophy for a happy ending. Thus, every firm, to survive and grow, needs to constantly ask: What next?

And Blue Oceans are no different. In fact, they come with an additional challenge, as they rest on a Reconstructionist Approach—where, because of the superior value created, the product life cycle is often shorter, and before you know it, the product category reaches maturity.

So, what are the lessons learned from previous Blue Oceans—some that stood tall and others that got entrapped in oceans that turned red as competition intensified?

Firms that created Blue Oceans, like Airbnb and Spotify, redefined industry norms. To maintain their competitive edge, they pursued clever category expansions: Airbnb into Experiences and long Staycations, Spotify into Podcasts and hyper-personalisation using AI.

On the other hand, OYO retained the same business model, focused on aggressive and dynamic room pricing, and pursued rapid global expansion—without evolving the core offering. Meanwhile, Blue Oceans like CRED, PeeBuddy, and Carvaan were original, new-to-the-world concepts.

These brands must constantly balance innovation and relevance—either by churning new product lines, extending the brand, or entering new market segments. For instance, PeeBuddy diversified into toilet and menstrual hygiene products, while Carvaan introduced Carvaan Gold, vernacular variants, and Carvaan Go.

However, rapid expansion also carries the risk of overexposure and, at times, cannibalisation. As brands grow, they must continuously ask how far they can stretch.

And finally—whether in Red or Blue Oceans—the rules remain the same: the brand must stay relevant and reinvent itself. If the waters turn murky and bloody, it's time to chart a new course in search of the next Blue Ocean...

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1. Naidu R. (2017), Saregama Connects with Consumers, Hits the Right Notes. Available at https://economictimes.indiatimes.com/markets/stocks/news/saregama-connects-with-consumers-hits-the-right-notes/articleshow/61858145.cms

2. Audited report Available at http://r.saregama.com/resources/pdf/investor/Audited_Financial_Results_for_the_quarter_and_year_ended_31st_March_2018.pdf

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