How did Canva, Netflix & Airbnb create their market share?

7 min readFeb 19, 2024

How did Canva, Netflix & Airbnb create their share in a market that was full of already successful giants?

While their specific strategies differed, one thing that is common to the success stories of these giants is their pivot from a ‘Red ocean’ to a ‘Blue’ or ‘Hybrid ocean’ strategy. They identified unmet needs, offered innovative solutions, and prioritized user experience.

Canva: Democratizing Design

Identified an unmet need: Traditional design software was complex and expensive, leaving non-professionals out. Canva offered a user-friendly, drag-and-drop interface with pre-designed templates, making design accessible to everyone.

Netflix: Streaming Revolution

Pivoted from physical rentals: Recognizing the shift towards digital consumption, Netflix transitioned from DVDs to online streaming, offering a vast library of content.

Airbnb: Creating a Sharing Economy

Offered a unique value proposition: Leveraging the sharing economy, Airbnb offered travelers unique and affordable accommodation options, disrupting traditional hotels.

As Product managers, we are constantly navigating the competitive landscape gearing towards securing a coveted market share. But what if there were a way to break free from this zero-sum game and carve out your own uncontested territory? This is where the powerful concepts of red and blue ocean strategies come into play.

This blog aims to explain the difference between these two approaches and why understanding these two approaches is crucial for crafting a winning product roadmap.

Hello beautiful fellas,
Welcome to the Daily Product Management Show! 📺 I’m your host, Bhavya, and I’ll be bringing you fresh insights & ramblings on product management every week! 👋

Let's dive into the deep end:

Blue oceans vs Red oceans

Blue Oceans:

Unexplored market spaces created by innovating beyond existing features and categories. Think: Uber (disrupting taxis), Airbnb (creating a new model for accommodation). Growth is driven by creating new demand rather than fighting for existing shares.

Red Oceans:

Existing, competitive markets characterized by fierce rivalry and limited growth potential. Think: productivity apps, social media platforms. Success here depends on outperforming rivals, often leading to price wars and commoditization.

So, why should product managers care?

Knowing your ocean helps you chart a course for success:

Red Ocean: Hone your competitive edge. Use differentiation, cost leadership, or niche strategies to dominate. Analyze competition, refine features, and optimize pricing.
Blue Ocean: Unleash your inner innovator! Identify unmet needs, redefine value propositions, and create entirely new markets. Think outside the box, experiment, and disrupt the status quo.

But wait, there’s more!

The best strategies often blend both worlds. Canva did this beautifully, offering a freemium model and user-friendly features in a crowded space (red), while also opening up design to new users (blue).

To craft your own winning strategy?

Let’s explore powerful frameworks like the Value Cost Canvas and the Four Actions Framework to help you:

Analyze your red ocean: Is it worth fighting in? Where are your weak spots, and how can you differentiate?
Chart your blue ocean: What unmet needs can you address? How can you create new value propositions?
Blend the oceans: Can you combine red and blue strategies for maximum impact?

Canva, Netflix and Airbnb are excellent examples of how understanding and applying red and blue ocean strategies can lead to incredible success.

Canva:

Red Ocean: Faced fierce competition in the crowded design software market.
Blue Ocean: Democratized design by making it accessible and user-friendly to everyone, even non-professionals.
Result: Carved out a unique space, attracting a massive user base with their freemium model and intuitive interface.

Netflix:

Red Ocean: Competed with traditional video rental stores and cable TV.
Blue Ocean: Revolutionized entertainment by offering streaming on-demand, creating a vast library of original content, and personalizing recommendations.
Result: Disrupted the industry, becoming a global leader in streaming with millions of subscribers worldwide.

Airbnb:

Red Ocean: Took on established hotels and lodging services.
Blue Ocean: Created a peer-to-peer marketplace for unique and affordable accommodations, appealing to both hosts and travelers.
Result: Transformed the hospitality industry, offering a new travel experience and generating billions in revenue.

Lessons for PMs:

Red oceans aren’t dead: You can still win by outperforming competitors through differentiation, cost leadership, or niche strategies.
Embrace blue ocean thinking: Look for unmet needs and create entirely new markets by redefining value propositions.
Blend the oceans: The most successful strategies often combine red and blue elements.

So, why should PMs care about both?

Think of BOS as finding a hidden lagoon. It’s creating products or services no one else offers, solving problems in a fresh way, and basically, chilling out with new customers in your own little oasis. Sounds pretty sweet, right?

ROS, on the other hand, is about swimming smarter in the main beach. It’s understanding the competition, where the battles are being fought, and figuring out how to outmaneuver them. You might not create a whole new market, but you can still win big by being the fastest, strongest swimmer.

Be a Beach Bum or a Shark? Knowing both strategies helps you pick the right approach for your product. Maybe there’s an untouched market waiting to be explored, or maybe you need to dominate the existing competition.
Innovate with Confidence: Understanding how markets work helps you dream up better products. You can see where there are gaps and opportunities, and avoid wasting time on ideas that already exist (or wouldn’t fly)!
Make the Most of What You Got: Resources are precious, especially in a crowded market. By understanding the competition and your own strengths, you can allocate your team and budget wisely, focusing on what truly matters. No more getting caught in pointless tug-of-war with other sharks.

GTM Components Impacted:

Target Audience: Red oceans demand precise audience segmentation to win over existing customers. Blue oceans call for broader targeting, potentially even creating new customer segments.
Value Proposition: In red oceans, focus on offering better features or prices than competitors. Blue oceans necessitate unique value propositions that redefine the category or create whole new ones.
Pricing Strategy: Red oceans often involve competitive pricing and price wars. Blue oceans allow for premium pricing due to the lack of direct competition.
Marketing & Sales: Red oceans require targeted marketing and sales efforts to stand out. Blue oceans necessitate creating awareness and educating potential customers about the new value proposition.

Frameworks for Decision Making:

Strategy Canvas:

This tool helps visualize your current market position, identify potential blue oceans, and define the value proposition. It graphically captures, in one simple picture, the current strategic landscape and the future prospects for a company.

Value Innovation Framework:

This framework identifies three value disciplines (differentiation, cost leadership, and focus) and helps determine the optimal strategic approach.

Eliminate-Reduce-Raise-Create Grid:

The four actions framework is built on four key questions that will help you challenge an industry’s strategic logic and business model to arrive at blue ocean moves that break the trade-off between differentiation and low cost.

Example

Imagine you’re launching a new music streaming app. As a product manager, you understand the fierce competition — Spotify, Apple Music, YouTube Music, and countless others. This is a red ocean: crowded, established, and driven by constant price wars and feature upgrades. To survive, you need a red ocean strategy:

Red Ocean Strategy:

Focus: Outperforming existing competitors.
Examples: Differentiation (unique features, exclusive content), Cost leadership (affordable pricing), Niche targeting (specific genre focus).
Practical Advice: Analyze rivals thoroughly (strengths, weaknesses, pricing). Refine your value proposition (what makes your app unique?). Optimize core features to offer a better user experience. Consider freemium or niche pricing models to attract wider audiences or specific user groups.

Example: Your music app focuses on high-fidelity audio, offering lossless streaming at competitive prices. You partner with independent artists for exclusive content and target audiophiles willing to pay a premium.

However, there’s another option:

Blue Ocean Strategy:

Focus: Creating uncontested market space by addressing unmet needs.
Examples: Redefining existing industries, Offering entirely new functionalities, Targeting previously ignored user groups.
Practical Advice: Identify unmet needs through user research and market analysis. Brainstorm solutions outside the box. Challenge industry assumptions and traditional features. Experiment and iterate rapidly to validate your concept.

Example: Instead of music streaming, you create a personalized music creation app. It allows users to easily compose music, collaborate with others, and share their creations on social media. You target aspiring musicians and music enthusiasts who lack technical knowledge.

Which strategy is right? It depends!

Red ocean: Safe approach for established markets, provides clear benchmarks for success.
Blue ocean: Higher risk, higher reward, requires innovation and vision. Market size is undefined and requires the heavy lifting of category creation to be done.

Rock on, fellow & aspiring PMs! 🚀

I’m a product manager myself, and I know how hard it can be to find good resources on the topic. That’s why I started writing this blog.

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Happy PM-ing! 🚀