Blue Ocean Strategy
for Manufacture of paints, varnishes and similar coatings, printing ink and mastics (ISIC 2022)
The industry is mature and often commoditized, with intense competition driving down margins (MD07, MD03). There's a strong need for differentiation beyond incremental product improvements. Significant opportunities exist in sustainability, smart materials, and new application methods that can...
Eliminate · Reduce · Raise · Create
- High VOC content and hazardous chemical formulations Eliminating these addresses 'Structural Toxicity & Precautionary Fragility' (CS06), reduces regulatory compliance burdens, and mitigates health and environmental risks for customers and end-users.
- Complex, bespoke on-site mixing and preparation requirements Removing the need for extensive on-site preparation reduces labor costs, application errors, and specialized equipment requirements for customers, streamlining project execution.
- Sole reliance on one-time product sale transactions Moving beyond a transactional sale model shifts focus from product price competition to delivering continuous value and long-term partnership, fostering deeper customer relationships.
- Product differentiation based on minor aesthetic variations The industry's 'intense price competition' (MD03) and 'incremental innovation' (MD08) indicate an oversupply of subtly different aesthetic products. Reducing this focuses R&D on significant functional value.
- Over-engineered durability exceeding asset lifespan or use-case needs Designing products for excessively long lifespans when assets are replaced or updated more frequently can lead to unnecessary material cost and environmental impact. Reducing this aligns product life with customer utility.
- Customer dependence on specialized application knowledge and labor Current offerings often demand expert-level knowledge for selection and application, which can be a barrier for many. Reducing this complexity broadens the user base and lowers application friction.
- Transparency and verifiable sustainability/circularity metrics Raising this factor directly addresses 'Redefining Value through Sustainable and Circular Economy Solutions' by providing customers with credible data to meet their own ESG objectives and regulatory demands (CS06).
- Ease and speed of application, curing, and drying processes Significantly improving application efficiency reduces customer labor costs, minimizes operational downtime, and accelerates project completion, providing tangible economic benefits.
- Data-driven performance insights and real-time condition monitoring Elevating the provision of actionable data moves beyond static product features, empowering customers with intelligence for proactive maintenance and optimal asset management.
- 'Outcome-as-a-Service' business models (e.g., Protective-Coating-as-a-Service) This aligns with 'Shifting from Product to Outcome,' providing customers with guaranteed performance outcomes and predictable costs, eliminating upfront capital expenditure and maintenance burdens.
- Self-healing, adaptive, or smart functional coatings with integrated sensors This 'creates' entirely new functionality (Key Insight: Smart Materials), offering unprecedented asset protection, reduced maintenance, and dynamic response to environmental conditions, opening new high-value applications.
- Closed-loop material recovery and reprocessing services for end-of-life products Establishing true circularity (Key Insight: Circular Economy) creates a new value stream, reduces waste, and offers customers a verifiable path to managing product end-of-life responsibly, addressing CS06.
- Integrated digital platforms for full lifecycle management (selection, application, monitoring, disposal) This unifies the customer experience, providing a comprehensive solution that simplifies every stage of product interaction, from initial decision-making to sustainable disposal, enhancing operational efficiency and value.
This ERRC combination targets industrial operators, infrastructure managers, and asset owners who prioritize total cost of ownership, operational continuity, and verifiable sustainability over upfront product price. They would switch to gain predictable performance through 'Coating-as-a-Service' models, minimized downtime via smart and self-healing materials, and a significantly reduced environmental footprint through circular economy practices, transforming coatings from a commodity purchase into a managed, value-added service.
Strategic Overview
The 'Manufacture of paints, varnishes and similar coatings, printing ink and mastics' industry (ISIC 2022) often operates in highly competitive 'red oceans' characterized by intense price competition (MD03), incremental innovation (MD08), and significant market saturation (MD08). Blue Ocean Strategy offers a compelling alternative by focusing on 'value innovation' – simultaneously pursuing differentiation and low cost to create new, uncontested market spaces, making competition irrelevant. This approach is vital for an industry grappling with technological shifts (MD01), environmental pressures (CS06), and the need to break free from chronic margin compression (MD07).
Instead of battling competitors over existing demand for traditional coatings, inks, or mastics, Blue Ocean Strategy encourages companies to redefine market boundaries. This could involve developing entirely new product categories, innovative service models, or addressing non-customer segments. For instance, developing 'smart' coatings with embedded sensors or self-healing capabilities redefines surface protection beyond traditional paint. Similarly, creating novel, bio-based or circular economy solutions for paints and inks that eliminate waste and environmental hazards (CS06) can target a new segment of eco-conscious industrial or consumer clients, creating a new value curve.
By adopting this strategy, firms can move away from 'red ocean' tactics of cutting costs or incrementally improving performance. Instead, they focus on eliminating/reducing factors that customers take for granted or find undesirable, while raising/creating entirely new value elements. This strategic shift can lead to significant growth, higher profit margins, and a distinct competitive advantage in an industry prone to commoditization.
4 strategic insights for this industry
Redefining Value through Sustainable and Circular Economy Solutions
Current environmental and regulatory pressures (CS06) compel the industry to re-evaluate its impact. A blue ocean move involves not just 'greener' products, but creating entirely new solutions (e.g., truly bio-based, waste-derived, or fully recyclable coatings/inks) that eliminate traditional environmental trade-offs, appealing to a new segment of eco-conscious industrial and consumer clients. This can create demand where none existed, rather than just competing on existing green attributes.
Creating New Functional Performance Categories with Smart Materials
Instead of merely improving durability or color, a blue ocean approach would focus on 'creating' entirely new functions (e.g., self-healing coatings that eliminate maintenance cycles, conductive inks for flexible electronics that create new product form factors, thermal-regulating paints that reduce energy consumption). This leverages technological shifts (MD01) to offer unprecedented value propositions that current competitors cannot match, opening up new market spaces beyond traditional protection or aesthetics.
'Coatings/Inks/Mastics as a Service' - Shifting from Product to Outcome
Many customers 'hire' these products for an outcome (e.g., 'asset protection,' 'brand communication'). A blue ocean could be to redefine the business model from selling a product to selling a 'service' that guarantees an outcome. For example, a 'coating performance as a service' model where the provider is responsible for maintenance, lifespan, and renewal, shifting the value proposition from unit cost to guaranteed operational uptime and predictable performance. This can tap into non-customers or significantly differentiate from existing offerings (MD06: Distribution Channel Architecture, MD03: Pricing Strategy Complexity).
Addressing Non-Customers by Eliminating Key Purchase Barriers
Identify non-customers – those who currently don't use paints, inks, or mastics, or are dissatisfied with existing options. For example, construction projects that avoid painting due to application complexity or drying times. A blue ocean move would be to create ultra-easy-to-apply, fast-curing coatings or pre-coated modular components that eliminate these barriers, thereby creating new demand rather than just capturing existing demand (MD08: Limited Organic Growth Opportunities).
Prioritized actions for this industry
Utilize the 'Eliminate-Reduce-Raise-Create (ERRC)' grid to systematically re-evaluate product and service offerings, focusing on creating unique value curves.
This framework forces a departure from incremental improvements and pushes for radical value innovation. For example, 'Eliminate' volatile organic compounds (VOCs), 'Reduce' application time, 'Raise' durability and 'Create' new functionalities like self-cleaning properties. This addresses 'Maintaining Competitiveness Amidst Technological Shifts' and 'Chronic Margin Compression'.
Invest significantly in R&D for disruptive technologies that can create new markets, such as truly circular materials, advanced functional coatings (e.g., smart, adaptive), or bio-integrated inks.
Focusing R&D on breakthrough innovations, rather than just incremental ones, is critical for creating uncontested market space and moving beyond existing industry boundaries. This also addresses 'Structural Toxicity & Precautionary Fragility' by offering inherently safer solutions.
Explore new business models, such as 'coating as a service' or performance-based contracts, to shift focus from product sales to delivering guaranteed outcomes and long-term value.
This can redefine the value proposition and unlock new revenue streams by addressing the complete 'job' of the customer, rather than just selling a product. It can bypass challenges associated with 'Distribution Channel Architecture' and 'Structural Competitive Regime' by creating new customer relationships.
Conduct 'non-customer' analysis to understand why certain segments or industries currently avoid or minimally use coatings, inks, or mastics, and then design solutions to address these barriers.
By understanding the pain points of non-customers, companies can create entirely new demand. This is crucial for overcoming 'Limited Organic Growth Opportunities' in mature markets and 'Market Erosion from Niche Innovations' by proactive value creation.
From quick wins to long-term transformation
- Organize internal 'blue ocean' workshops using the ERRC grid, challenging assumptions about current industry offerings.
- Identify 1-2 'non-customer' segments and brainstorm reasons for their non-consumption or dissatisfaction.
- Conduct a 'pioneer, migrant, settler' analysis of existing product portfolio to identify potential blue ocean candidates.
- Establish dedicated cross-functional innovation teams specifically chartered to pursue blue ocean projects.
- Pilot a new business model (e.g., 'coating as a service') with a key customer in a niche application.
- Develop initial prototypes or proofs of concept for a 'create' value element identified through the ERRC grid.
- Realign R&D investment strategy to significantly favor high-risk, high-reward blue ocean initiatives.
- Develop new market entry and distribution strategies for truly novel offerings that target non-customer segments.
- Foster an organizational culture that embraces experimentation, tolerates failure in pursuit of breakthrough innovation, and rewards value creation over cost cutting.
- Falling back into 'red ocean' thinking by simply trying to beat the competition on existing metrics.
- Lack of executive sponsorship and insufficient funding for long-term, speculative blue ocean projects.
- Inability to articulate and communicate the new value proposition to target 'non-customers' or existing customers.
- Organizational inertia and resistance to change, especially from sales and marketing teams accustomed to existing market structures.
- Underestimating the investment required to educate new markets or adapt production infrastructure (MD01: Adapting Production Infrastructure).
Measuring strategic progress
| Metric | Description | Target Benchmark |
|---|---|---|
| Revenue from New Market Spaces | Percentage of total revenue generated from products or services that have created new, uncontested market spaces. | Achieve >15% of total revenue from blue ocean offerings within 5 years. |
| Number of 'Blue Ocean' Patents/IP | Number of patents or intellectual property filings related to novel technologies or business models that create new market value. | Increase patent filings in blue ocean areas by 20% year-over-year. |
| Non-Customer Conversion Rate | Rate at which previously non-consuming segments adopt new blue ocean offerings. | Achieve >10% conversion rate of identified non-customers within 3 years of launch. |
| Blue Ocean Offering Profit Margins | Average gross profit margin generated by blue ocean products/services compared to traditional offerings. | Maintain blue ocean margins 5-10 percentage points higher than red ocean products. |
Other strategy analyses for Manufacture of paints, varnishes and similar coatings, printing ink and mastics
Also see: Blue Ocean Strategy Framework